I don’t think it’s news that most publishers are struggling with the same changes that accosted the music industry a few years ago. Shrinking demand for traditional products coupled with very specific needs for digital content. Challenging times are testing most sectors of the economy and companies of every type are looking for new models of operation. Why then are some companies thriving? That’s the subject of a book I read recently called Great by Choice, by Jim Collins and Morten Hansen. The subtitle, I think, is even more provocative: Uncertainty, Chaos and Luck—Why Some Thrive Despite Them All.
To make its case the book relies on data compiled over nine years. Several case studies are featured comparing the methods of successful companies to unsuccessful ones in the same market. For instance they contrast Southwest Airlines and PSA, Progressive and Safeco, Microsoft and Apple and so on. The companies they featured weren’t just successful; they were better performers by orders of magnitude, or as they called them, 10Xers.
So what’s their secret? According to the book it’s a set of practices that’s virtually the same as the ones that enabled Roald Amundsen to beat Robert Falcon Scott to the South Pole in December of 1911. In short they are:
- 20 Mile March
- Bullets, then Cannonballs
- SMaC: Specific, Methodical and Consistent
Let’s break down these three points. When the authors cite a 20 Mile March they allude to Amundsen’s practice of progressing no more and no less than 20 miles everyday no matter the conditions, good or bad. The most adverse condition of course was the weather. Scott would hunker down during bad weather and push well beyond 20 miles in good weather. On good days when Amundsen hit his 20 mile goal he didn’t press on. Instead, he opted to keep something in reserve for any unknown difficulties that lay ahead. For companies it’s not 20 miles but 20% growth for instance. It’s challenging to achieve 20% growth year in and year out. But it can be even more difficult to refrain from expending resources when market conditions permit unprecedented growth. Savvy investors know to invest in a company that has a steady growth rate as opposed to one that swings wildly back and forth from say 5% to 50%.
The second point about Bullets, then Cannonballs refers to new products or services. One shouldn’t bet big on new products, or cannonballs, until one has tested the market first with smaller bets that leaves the company less exposed. The analogy comes from old sea battles where sail-driven ships square off with two sizes of projectiles. Since bullets are cheaper it’s smarter to use them first until the range has been determined before firing off the more expensive less abundant cannonballs. Companies that didn’t use bullets first can be called great innovators, hitting the market with sexy new but untested products. Innovation is a key to success but surprisingly the most successful companies weren’t the most innovative. They were typically ‘one fad behind’. According to this research, first to market with the riskiest digital offering shouldn’t necessarily be the goal for publishers. Did you know that Amazon didn’t pioneer online bookselling?
The third point is called SMaC, which stands for Specific, Methodical and Consistent. Basically, it means determine a specifically defined process and if it proves successful, stick with it. “Fly only 737’s”, for example, was part of the specific process that Southwest Airlines maintained to remain successful for decades in spite of market shocks like deregulation. Even after 9/11 Southwest didn’t cut one job or cancel any flights. Are there times where change is appropriate and necessary? Certainly, but most successful companies changed their methods very little compared to their competitors. For publishers, maintaining core successful practices while adapting to the digital age is the current challenge.
The digital revolution is a market shock to publishers like deregulation and 9/11 was to Southwest and the airline industry. Resources are being depleted but there are oases of success in the industry too. Whatever segment of the market you happen to be in you know who’s doing well in spite of the Uncertainty, Chaos and Luck as cited in the book “Great by Choice”. Do you think they’re practicing the 20 Mile March, Bullets Before Cannonballs and the Specific, Methodical and Consistent approaches that are common to all successful companies? That’s a rhetorical question.