Great by Choice

1 Thriving in Uncertainty

Overview

The chapter opens with a stark acknowledgment: the future is fundamentally unpredictable. Yet, the central challenge—and opportunity—is that while we cannot predict the future, we can create it. This paradox forms the heart of a nine-year research project launched in 2002, a period marked by crashing markets, terrorism, war, and disruptive change. The driving question became: Why do some organizations not only survive but truly thrive amidst chaos and uncertainty, while others falter?

The research team sought out companies that delivered extraordinary performance despite being buffeted by uncontrollable, fast-moving, and potentially harmful forces. These companies, labeled “10X cases,” achieved results at least ten times better than their industry averages. A prime example is Southwest Airlines, which, despite every conceivable industry shock over 30 years, delivered stock returns 63 times better than the general market.

This study distinguishes itself from prior research by deliberately selecting cases based on both spectacular performance and extreme environmental turbulence. The logic is that studying greatness in a calm environment is like watching an expert mountaineer on a sunny hike; you only see what truly makes them exceptional when they are on the side of Mount Everest in a storm. Extreme environments act like a centrifuge, separating the core behaviors of the truly great from the merely good.

The Research Method: A Study in Contrasts

Identifying the 10X companies required a rigorous selection process, sifting through over 20,400 companies to find those that met three strict criteria: spectacular 15+ year performance, achieved within a turbulent environment, and starting from a position of vulnerability. The final set included companies like Amgen, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker.

The power of the research, however, lies not just in studying these winners but in contrasting them with carefully chosen comparison companies. These were firms in the same industry, facing the same opportunities and environmental storms during the same era, which failed to achieve greatness. For instance, Southwest Airlines was contrasted with Pacific Southwest Airlines (PSA), and Microsoft with Apple (focusing on its struggle in the 1980s and 1990s). As a group, the 10X companies outperformed their comparisons by more than 30 to 1.

The research was intentionally inductive. The team collected over 7,000 historical documents and built understanding from the ground up, allowing the evidence to guide them to conclusions, which often shattered conventional wisdom.

Surprising Findings: Myths Undermined

The historical analysis yielded insights that directly challenged several entrenched myths about leadership and strategy in turbulent times:

• Myth: Successful leaders are bold, risk-seeking visionaries.
  • Finding: The 10X leaders were not more visionary or risk-taking. They were more disciplined, empirical, and paranoid.
• Myth: Innovation is the ultimate key to thriving in chaos.
  • Finding: While innovative, the 10X companies were not consistently more innovative than their comparisons. The key differentiator was their ability to scale innovation, blending creativity with rigorous discipline.
• Myth: In a fast world, you must always be fast.
  • Finding: The 10X leaders understood that a blanket “fast, fast, fast!” ethos is dangerous. They cultivated the ability to know when to act decisively and when to pause.
• Myth: External radical change demands internal radical change.
  • Finding: Counterintuitively, the 10X companies changed less reactively than their comparisons. They did not conflate external chaos with the need for internal upheaval.
• Myth: Great companies have more good luck.
  • Finding: Both 10X and comparison companies experienced comparable amounts of good and bad luck. The critical difference was not the amount of luck, but what each did with the luck they received.

Key Takeaways

• Greatness in uncertainty is not about predicting the future but about creating it through disciplined action.
• Studying performance in extreme environments magnifies the distinguishing behaviors between great and good companies.
• The 10X companies achieved extraordinary results not because they were luckier, more visionary, or more radically innovative, but because they were more disciplined, empirical, and deliberate.
• Effective leadership in chaos involves a paradoxical blend: fanatic discipline around core values and processes, empirical creativity guided by evidence, and productive paranoia that drives consistent preparation.

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Antifragile

by Nassim Nicholas Taleb

The Psychology of Money

by Morgan Housel

Built to Last

by Jim Collins

Great by Choice

2 10Xers

Overview

The chapter opens with a gripping contrast between two Antarctic explorers, Roald Amundsen and Robert Falcon Scott, whose identical challenges led to starkly different fates. Amundsen’s victory stemmed from meticulous, evidence-based preparation and building enormous buffers, while Scott’s tragic failure resulted from thin margins and reliance on untested methods. This story isn’t just history; it’s a powerful metaphor for the modern 10Xer—leaders who don’t merely succeed but outperform their peers by at least ten times in the same volatile environments. Their success isn’t about luck or circumstance but a unique mindset: accepting that they can’t control everything, yet refusing to let external forces dictate their outcomes.

At the heart of this mindset are three core behaviors that intertwine to drive exceptional performance. First, fanatic discipline means unwavering consistency to values and goals, as seen in leaders like Peter Lewis of Progressive Insurance, who invented monthly financial reporting to uphold honesty amidst Wall Street pressure, or Herb Kelleher of Southwest Airlines, whose eccentric showmanship was a disciplined tool to cement company culture. This discipline fuels the second behavior, empirical creativity, where 10Xers bypass conventional wisdom to engage directly with evidence. Andy Grove’s hands-on research into his prostate cancer treatment or Amundsen’s meticulous study of explorer logs to choose a better base camp show how empirical grounding leads to bold, yet calculated, decisions.

But even with this creativity, 10Xers operate with a relentless productive paranoia, maintaining hypervigilance to prepare for worst-case scenarios. Bill Gates and Steve Ballmer at Microsoft, for instance, famously cataloged risks and maintained cash reserves during success, turning fear into proactive strategy. This paranoia isn’t paralyzing; it’s a catalyst for safeguarding their creative work and ensuring resilience. Underpinning all these behaviors is Level 5 ambition, where fierce drive is channeled outward toward a larger cause—like building a great company or achieving lasting impact—rather than personal glory. Figures like Dane Miller of Biomet, who prioritized fair compensation over personal gain, exemplify this ambition for the mission.

The chapter culminates with a practical call to action, encouraging self-assessment of these three behaviors—fanatic discipline, empirical creativity, and productive paranoia—and brainstorming steps to strengthen the weakest link. By fostering this balanced toolkit, individuals can mirror the 10Xer’s ability to thrive amidst uncertainty, transforming vulnerability into a strategic edge for achieving extraordinary results.

A Tale of Two Expeditions

The chapter opens with a stark contrast between two Antarctic explorers: Roald Amundsen, the victor who reached the South Pole first and returned safely, and Robert Falcon Scott, who arrived second and perished with his team on the return journey. This story is presented not as a matter of luck, but as a "near-perfect matched pair" for analysis. Both men were of similar age and experience, embarked on a similarly grueling journey in the same harsh environment at the same time. Their dramatically different fates, therefore, stemmed from their fundamentally different behaviors and preparations.

Amundsen's approach was characterized by meticulous, fanatical preparation rooted in empirical evidence. He apprenticed with Inuit peoples to learn effective polar survival techniques, adopted their clothing and steady-paced travel methods, and relentlessly trained for every conceivable scenario. He built enormous buffers into his plans, marking supply depots with multiple flags over a wide area and carrying surplus supplies. He prepared for the worst, even bringing four thermometers for a critical instrument where Scott brought only one.

Scott, in contrast, relied on untested technology (motor sledges), chose unsuitable animals (ponies over dogs), and left dangerously thin margins for error. His supply depots were minimally marked, his supplies were calculated to the bare minimum, and he lamented his "ill-fortune" in his journal when things went wrong. Amundsen embraced the uncontrollable by preparing for it; Scott was defeated by it.

Introducing the 10Xer

This historical analogy directly frames the chapter's core subject: the 10Xer. These are the leaders in the research study who built companies that didn't just succeed but outperformed their industry by at least ten times. Crucially, the research found that 10Xers and their less successful comparison leaders operated in the same volatile environments. Their success was not due to better circumstances, more inherent creativity, greater charisma, visionary brilliance, or even better luck.

The 10Xers distinguished themselves through a specific set of behavioral traits. They embody a central paradox: they accept that they cannot control or predict everything in a chaotic world, yet they refuse to believe that external forces will determine their fate. They take full responsibility for their outcomes. This mindset is brought to life through a triad of core behaviors, two of which are introduced in this section.

Fanatic Discipline

Discipline here is defined as unwavering consistency—consistency with values, long-term goals, and performance standards. It is self-discipline, the inner will to do what's necessary for a great outcome. 10Xers are "fanatics" in their discipline; they are relentless and monomaniacal about their quest, refusing to be knocked off course by external pressures or the "madness of crowds."

• Peter Lewis (Progressive Insurance): Faced with Wall Street's volatility due to his refusal to play earnings-guidance games, Lewis didn't capitulate or ignore the problem. He invented a third option: making Progressive the first SEC-listed company to publish monthly financial statements. This gave analysts real data, mitigating the irrational stock swings while upholding his principle of honesty.
• Herb Kelleher (Southwest Airlines): His outlandish public behavior (wearing dresses, arm-wrestling over lawsuits) was not mere eccentricity. It was a fanatically disciplined performance to animate and sustain the company's unique, fun-loving, and rebellious "Warrior Spirit" culture. Underneath the showmanship was a deadly serious, monomaniacal focus on building the best low-cost airline.

Empirical Creativity

When facing high-stakes uncertainty, 10Xers do not rely solely on conventional wisdom or expert opinion. They engage directly with the primary evidence to make their own creative, yet empirically-grounded, decisions.

• Andy Grove (Intel): When diagnosed with a potentially life-threatening prostate condition, Grove didn't simply follow doctor's orders. He became a rigorous researcher of his own disease, reading primary scientific literature, testing lab variations, and plotting data. He discovered deep disagreements within the medical establishment itself. By engaging directly with the evidence, he crafted his own treatment plan—a combination radiation therapy—concluding, "I decided to bet on my own charts." This wasn't arrogance, but a rational response to significant uncertainty and consequence.

Empirical Creativity: Evidence Over Echo Chambers

When navigating uncertainty, 10Xers bypass conventional wisdom, punditry, and peer behavior. Their primary compass is empirical evidence. This isn’t about contrarianism for its own sake, but about grounding creative instincts and independent thought in direct observation, practical experimentation, and tangible data. This empirical foundation allows them to make bold moves while simultaneously bounding their risk.

The chapter illustrates this with the story of Roald Amundsen’s choice for his South Pole base camp. While the entire explorer community accepted McMurdo Sound as the only viable option, Amundsen questioned the consensus. He immersed himself in the original logs and journals of prior voyages, studying the evidence himself. His meticulous analysis revealed a stable, dome-like feature in the supposedly unstable Bay of Whales—a location that positioned him 60 miles closer to the Pole. He drew a logical conclusion others missed because he went directly to the source material.

The research found that 10Xers weren’t necessarily bolder or more confident than their less successful counterparts. Both groups took big bets. The difference was that the 10Xers' confidence was well-founded, built on a deeper empirical base. This empiricism doesn’t lead to indecision; it’s the prerequisite for it. Leaders like Andy Grove and Amundsen acted decisively after immersing themselves in the evidence.

Productive Paranoia: Hypervigilance as a Strategy

Despite their empirical confidence, 10Xers operate with a pervasive sense of vulnerability. They maintain hypervigilance, especially during good times, operating on the conviction that conditions will inevitably turn against them unexpectedly. This isn't debilitating fear; it's a catalyst for relentless preparation.

The behavior of Bill Gates and Steve Ballmer at Microsoft exemplifies this. During preparations for Microsoft's IPO, Ballmer shocked underwriters by aggressively cataloging every conceivable risk and nightmare scenario. Gates famously wrote a "nightmare memo" detailing severe threats even as Windows was ascending to dominance. This paranoia was channeled productively into actions like maintaining massive cash reserves, hiring meticulously, and relentlessly innovating.

This stands in stark contrast to leaders like Apple’s John Sculley, who, during a period of spectacular success in 1988, announced a nine-week sabbatical. The 10Xer mindset, demonstrated by figures like Herb Kelleher and Intel’s Andy Grove, is to constantly "look for the black cloud in the silver lining." They distinguish themselves not by paranoia itself, but by transforming that fear into methodical preparation, conservative financial management, and a constant cycle of asking "What if?"

Level 5 Ambition: Ambition for the Cause

The driving force behind these extreme behaviors is a distinct form of ambition. 10Xers channel their formidable egos and intensity into a purpose larger than themselves—building a great company, achieving a monumental goal, or creating lasting impact. Their ambition is first and foremost for the cause, not for personal aggrandizement.

This aligns with the concept of "Level 5 Leadership" from Good to Great, which blends profound personal humility with intense professional will. While some 10Xers, like Southwest’s Herb Kelleher or Progressive’s Peter Lewis, had flamboyant, outsized personalities, they shared the Level 5 core trait: their ferocious will was directed at building something enduring that could excel without them.

Examples range from Dane Miller of Biomet, who for years was ranked among America’s most "underpaid" CEOs because he refused stock options, believing excessive personal gain reflected "an uncontrollable greed complex," to Bill Gates, whose ego was poured into Microsoft as his "firstborn child" and later into philanthropic ambitions like eradicating malaria. They defined themselves by contribution and impact, not by money, fame, or power.

Key Takeaways

• Empirical Creativity is a Discipline: 10Xers make bold, creative decisions by going directly to the evidence, not by following the crowd. This empirical rigor bounds their risk and fuels decisive action.
• Paranoia is a Productive Tool: They maintain constant vigilance, assuming success is fragile. This productive paranoia is channeled into concrete preparation, strong financial buffers, and relentless work to stay ahead of potential threats.
• Ambition is Channeled Outward: The motivating engine for 10Xers is Level 5 Ambition—a fierce drive to achieve a purpose or build an entity far larger than themselves. Their ego is in service of the mission.

Productive paranoia serves as a vital mechanism that allows 10Xers to channel potential anxieties into constructive, creative action. Rather than being paralyzed by fear, they actively presume worst-case scenarios and meticulously prepare for them. This forward-thinking approach significantly reduces the likelihood that a sudden disruption or streak of bad luck will interrupt their creative work, turning vulnerability into a strategic advantage.

The chapter closes with a practical exercise designed to foster self-improvement. It prompts you to rank the core 10Xer behaviors—fanatic discipline, empirical creativity, and productive paranoia—from your strongest to weakest. Following this assessment, you are encouraged to brainstorm actionable steps to transform your weakest behavior into a robust skill, thereby creating a more balanced and resilient personal toolkit for achieving exceptional results.

Key Takeaways

• Proactive preparedness drives creativity: Productive paranoia isn't about worry; it's about systematic preparation that safeguards and enables creative endeavors.
• Honest self-evaluation is essential: Continuously assess your mastery of the three core behaviors to pinpoint growth opportunities.
• Intentional development bridges gaps: Focus on crafting specific, actionable plans to strengthen your weakest behavior, ensuring all three work in harmony for 10X performance.

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Great by Choice

3 20 Mile March

Overview

Picture a simple investment choice between two similar, high-flying companies. One, Stryker, promises steady, consistent growth. The other, USSC, offers a far more spectacular but erratic trajectory. The long-term result is shocking: a dollar in Stryker grew over 350-fold, while the same investment in USSC eventually vanished. This paradox sets the stage for a powerful principle: consistent, disciplined progress crushes volatile, aggressive growth every time.

This principle is embodied by the 20 Mile March, a metaphor for relentless, manageable progress. Imagine walking from San Diego to Maine. The successful hiker commits to marching exactly twenty miles every single day, regardless of perfect weather or brutal storms. This disciplined pace beats a second hiker who alternates heroic sprints with long periods of waiting for ideal conditions. The lesson is that sustainable, step-by-step advancement always wins.

Stryker itself became the corporate exemplar of this march. Under CEO John Brown, it instituted an uncompromising "law" of 20% annual net income growth, enforced through cultural mechanisms and, crucially, self-imposed constraint. Even when rivals grew faster and Wall Street pressured them, Stryker refused to exceed its upper-bound limit. In stark contrast, USSC pursued explosive, uncontrolled expansion until external storms hit, leaving it overextended and leading to its collapse. This对比 highlights a counterintuitive research finding: in chaotic environments, the most successful companies weren’t the ones making radical leaps, but those practicing steady, disciplined progress.

This discipline takes many forms. Southwest Airlines marched to the audacious beat of profitability every single year for three decades, while deliberately constraining its growth to preserve culture. Progressive Insurance adhered to a strict combined ratio, treating it as an unbreakable law, while its rival Safeco abandoned similar discipline with disastrous results. An effective 20 Mile March requires clear performance markers, self-imposed constraints, and metrics within the organization’s control, tailored to its specific context and pursued with unwavering consistency.

Such discipline forges genuine confidence, built not on rhetoric but on tangible achievement under pressure, as seen in high-performing schools that focus relentlessly on what they can control. More critically, the march acts as a shield against catastrophe. By preventing overextension, it provides resilience against sudden industry turbulence. The data is striking: companies adhering to their march when entering turbulent times succeeded in 29 out of 29 instances, while those without that discipline failed in most cases.

Ultimately, the 20 Mile March provides a mechanism for self-control when everything else is chaotic. It acts as an internal anchor, much like explorer Roald Amundsen’s decision to stop after 17 miles of good progress to preserve his team, ensuring steady progress toward the pole. This focus on disciplined execution over chasing the "Next Big Thing" is perfectly illustrated by Genentech’s turnaround. Under new leadership, it shifted from visionary overpromising to fanatical, incremental yearly progress, transforming into a spectacular performer and proving it’s never too late to start the march. True success lies in the power of consistent, managed effort, proving that discipline, not just breakthrough innovation, unlocks enduring performance.

The Stryker vs. USSC Investment Paradox

The chapter opens with a compelling investment choice between two similar, fast-growing companies in the same industry. Company A (Stryker) promises a steady 25% average annual growth, while Company B (USSC) offers a more spectacular 45% average. However, the volatility tells a different story. Stryker’s growth is consistent and controlled, while USSC’s is wildly erratic, swinging from +313% to -200%. The long-term result is staggering: a $1 investment in Stryker grew more than 350-fold over 19 years, while the same investment in USSC eventually disappeared as the company was acquired. This paradox—where consistent, disciplined growth dramatically outperforms volatile, aggressive growth—frames the entire chapter.

The 20 Mile March Metaphor

The core concept is illustrated through a metaphor of a 3,000-mile walk from San Diego to Maine. The successful hiker commits to marching exactly 20 miles every single day, regardless of conditions—whether facing scorching desert heat or blizzard conditions in the mountains, or resisting the temptation to go farther when the weather is perfect. This disciplined, relentless pace wins over a second hiker who alternates between heroic 40-50 mile days and long periods of inactivity, waiting for ideal conditions. The first hiker reaches Maine long before the second even enters Kansas City. The lesson is that consistent, manageable progress, sustained through all conditions, triumphs over sporadic bursts of effort.

Stryker’s "Law" of Consistent Growth

Stryker is presented as the corporate embodiment of the 20 Mile March. When CEO John Brown took over, he instituted “the law”: the company would achieve 20% net income growth every year. This was not a vague aspiration but a rigorous cultural mandate. Brown created mechanisms like the “Snorkel Award” for underperformers and segregated seating at company events to enforce discipline. Crucially, Stryker also practiced self-imposed constraint, refusing to grow faster than its 20% target even when rivals like USSC were growing more aggressively and Wall Street was applying pressure. This dual discipline—achieving a lower-bound hurdle in bad times and adhering to an upper-bound ceiling in good times—provided stability and endurance.

The Spectacular Collapse of USSC

In stark contrast, USSC pursued explosive, uncontrolled growth. It aggressively expanded into new markets like sutures, directly challenging giant Johnson & Johnson, and pushed inventory onto hospitals with famously aggressive tactics. While this led to a period of spectacular revenue growth, it left the company overextended and vulnerable. When external “storms” hit—including healthcare reform uncertainty and fierce competitive counterattacks—USSC had no resilience. Revenues collapsed, and by 1998, it ceased to exist as an independent company. Its story serves as a cautionary tale of what happens without the disciplined pacing of a 20 Mile March.

A Counterintuitive Finding: Discipline in Chaos

The research revealed a counterintuitive finding: in volatile, fast-changing environments, the most successful (“10X”) companies were not the ones making radical, aggressive leaps. Instead, they were the ones practicing the consistent step-by-step progress of the 20 Mile March. The less successful comparison companies were actually the ones pursuing more aggressive growth and big-leap changes. This discipline was not a result of their success but a driver of it, adopted early in their histories.

Southwest Airlines: A Profitable March

Southwest Airlines exemplifies the 20 Mile March in action. It set for itself the audacious goal of being profitable every single year—a feat considered impossible in the notoriously cyclical airline industry. It achieved this for 30 consecutive years, even when the entire industry lost billions. Equally important, Southwest practiced constraint in growth. It expanded slowly and deliberately from its Texas base, opening only four new cities in 1996 despite over a hundred clamoring for service. This discipline preserved its culture and profitability.

Elements of an Effective 20 Mile March

The chapter outlines the key components that make a 20 Mile March effective:

• Clear Performance Markers: A concrete, challenging lower bound of achievement that must be hit even in difficult times.
• Self-Imposed Constraints: An upper bound to limit growth in exceptionally good times, creating productive discomfort.
• Tailored to the Enterprise: The march must be relevant to the specific organization and its environment (e.g., a combined ratio for an insurer, Moore’s Law for a tech company).
• Within Your Control: The metrics should be largely influenced by the company’s own actions, not external forces.
• Appropriate Time Frame: A “Goldilocks” timeline—not too short, not too long—to maintain focus and power.
• Self-Designed and Consistent: The march must be internally generated, not copied, and achieved with relentless consistency.

Progressive Insurance vs. Safeco: Discipline and Its Abandonment

Progressive Insurance’s march was a combined ratio averaging 96% (meaning it paid out no more than $96 in claims and overhead for every $100 in premiums). CEO Peter Lewis treated this as an uncompromising law. Progressive achieved this profitable ratio in 27 out of 30 years. Its comparison, Safeco, initially had similar discipline but abandoned it in the 1980s, becoming seduced by investment profits and neglecting its core underwriting business. In a final, fatal departure from the march, Safeco made a huge, transformative acquisition in 1997, proclaiming it would no longer be “dull” or “conservative.” The result was years of unprofitability and massive underperformance versus the steadfast, “boring” discipline of Progressive.

Confidence Forged in Adversity

True confidence, the chapter argues, is not born from rhetoric or optimism but from tangible achievement under pressure. Stryker’s consistent performance under John Brown exemplifies this. The "Beat the Odds" study of Arizona schools powerfully illustrates the principle. It found that successful schools in tough environments shared a core mindset: they refused to blame external circumstances like funding or parent involvement. Instead, they focused fanatically on what they could control—individual student learning. Principal Juli Tate Peach at Alice Byrne Elementary embodied this by implementing a relentless cycle of instruction, assessment, and intervention, creating a "20 Mile March of learning." This consistent progress, kid by kid, built a self-reinforcing cycle of achievement, confidence, and greater discipline.

The Shield Against Catastrophe

Failing to maintain a consistent march can leave an organization dangerously overextended when unexpected turbulence hits. The stark contrast between Intel and AMD in the mid-1980s semiconductor crash demonstrates this. AMD, having pursued explosive growth and tripled its debt, was devastated and never fully recovered its competitive position. Intel, which had deliberately restrained its growth (a key aspect of the March), endured the storm and emerged stronger. The research data is striking: in 29 out of 29 instances, companies that were 20 Mile Marching when they entered a turbulent period emerged successfully. In contrast, companies that were not marching succeeded only 3 out of 23 times. The lesson is clear: in an unpredictable world, disciplined consistency is your primary defense against being crippled by sudden shocks.

Exerting Self-Control When Everything is Chaotic

The 20 Mile March provides a mechanism for disciplined self-control in an environment where almost everything else—markets, competition, technology—is uncontrollable. The story of Roald Amundsen’s polar expedition perfectly captures this. Despite perfect conditions and the anxiety of racing Robert Falcon Scott, Amundsen stopped after 17 miles, adhering to his regimen of consistent daily progress to preserve his team’s energy. Scott, by contrast, pushed hard on good days and was immobilized on bad ones. Similarly, 10X companies use their march as a tangible, shared focal point that keeps the organization moving forward systematically, regardless of external chaos, fear, or temptation.

The Genentech Turnaround: Discipline Applied

The story of Genentech under CEO Arthur Levinson synthesizes these themes. Before Levinson, Genentech was a visionary but undisciplined pioneer, constantly overpromising on five-year plans and underdelivering. Levinson instituted a 20 Mile March discipline, breaking ambitious long-term goals into incremental, mandatory yearly progress. He stated, "The only way we're going to get to where we want to be in five years is to make incremental progress year by year." This shift from chasing the "Next Big Thing" to fanatically executing on existing opportunities transformed Genentech into a spectacular performer. This case highlights that it is never too late to start the march and that discipline, not just breakthrough innovation, is what unlocks sustainable success.

Key Takeaways

• Confidence is Earned: Sustainable confidence comes from proving you can achieve consistent markers in both good times and bad, creating a virtuous cycle of achievement and self-reliance.
• Catastrophe Insurance: A 20 Mile March acts as a critical shield; by preventing overextension, it drastically reduces the probability of a catastrophic setback when inevitable industry turbulence strikes.
• The Anchor of Self-Control: In a chaotic world, the march provides a controllable, internal discipline that focuses effort and maintains progress, regardless of external conditions.
• Discipline Over Pure Innovation: The pursuit of the "Next Big Thing" is dangerous without the fanatical discipline of a march. Superior results come from making more of your current opportunities through consistent execution.
• It’s Never Too Late: An organization can adopt 20 Mile March discipline at any stage, transforming underachievement into superior performance, as demonstrated by Genentech’s resurgence.

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Antifragile

by Nassim Nicholas Taleb

The Psychology of Money

by Morgan Housel

Built to Last

by Jim Collins

Great by Choice

4 Fire Bullets, Then Cannonballs

Overview

At first glance, it seems obvious that breakthrough innovation should be the engine of extraordinary success, but a curious puzzle upends that assumption. Consider the tale of two airlines: Pacific Southwest Airlines (PSA) was a brilliant innovator, creating a revolutionary low-cost model with a famously fun culture. Yet when a new airline in Texas meticulously copied PSA’s entire playbook, the copycat—Southwest Airlines—soared to legendary status while the innovator eventually vanished. This paradox isn’t an outlier. Across industries, from biotechnology to medical devices, the data reveals a startling pattern. Companies like Genentech, bursting with patents and scientific firsts, were often outperformed by less innovative rivals like Amgen, which delivered far superior financial returns. Being the most innovative, it turns out, is not a reliable predictor of becoming a 10X winner.

This leads to a crucial concept: threshold innovation. Every competitive field has a minimum level of innovation required just to stay in the game. Once a company crosses that threshold, simply piling on more creativity doesn’t systematically lead to dominance. The real differentiator for 10X companies is how they blend creativity with relentless discipline. Intel’s early focus wasn’t on innovation for its own sake; it was on delivery, manufacturing excellence, and systematized efficiency. This fusion solves a core dilemma in an uncertain world: how to adapt without betting the farm on unproven ideas.

The solution is embodied in a powerful metaphor: fire bullets, then cannonballs. A bullet is a low-cost, low-risk experiment designed to test an idea and gather real-world evidence. A cannonball is a massive, all-in commitment of resources. The 10X method is to fire lots of bullets first. When one hits its target—showing genuine promise—only then do you concentrate your firepower to launch a calibrated cannonball along that proven line of sight. Amgen exemplified this, testing recombinant DNA technology on numerous small ideas before its erythropoietin (EPO) bullet hit, leading to a blockbuster cannonball.

The grave danger lies in skipping this empirical step. Comparison companies frequently fired uncalibrated cannonballs—huge, debt-fueled bets made on intuition or hope alone, like PSA’s disastrous expansion into hotels and jumbo jets. These had a catastrophic failure rate. Even a lucky win from such a gamble can reinforce a reckless process. What sets 10Xers apart is not that they never make mistakes; they do. But when they fire an uncalibrated cannonball, they learn fast and correct course. Progressive Insurance, after an $84 million loss from an untested push into trucking insurance, treated it as “expensive tuition.” It then returned to discipline, testing auto insurance in a few states with careful bullets before committing fully with a calibrated cannonball that transformed the company.

This underscores the supreme principle: empirical validation. In turbulence, analysis and prediction are fragile. 10X leaders don’t rely on seeing the future first; they let evidence reveal what’s working. Bill Gates, despite publicly backing OS/2 with IBM, kept a small team working on Windows as a strategic bullet. Market response, not his own prediction, dictated the ultimate cannonball. This disciplined creativity is perfectly illustrated by Apple’s renaissance. Steve Jobs began not with a magic new product but with rigorous operational discipline. The iPod’s development followed the bullets-then-cannonballs process: a well-designed player for Mac users was a bullet; iTunes for Mac was another. Only after overwhelming validation did Apple fire the world-changing cannonball of iTunes and iPod for Windows.

Ultimately, the chapter reveals that 10X success is less about visionary innovation or predictive genius and more about a systematic, disciplined approach to discovery. It’s the consistent practice of blending creative exploration with fanatical execution, ensuring that big bets are always informed by real-world proof. The methodology separates winners from also-rans, proving that in a chaotic environment, the greatest advantage comes from knowing when to experiment cautiously and when to strike with overwhelming force.

The PSA-Southwest Puzzle

The chapter opens with a vivid depiction of Pacific Southwest Airlines (PSA), a fun-loving, efficient, and highly successful intrastate airline in California, famous for its "Smile Machine" aircraft and zany customer service. It was a true innovator, creating a revolutionary low-cost, point-to-point business model. When entrepreneurs in Texas sought to start an airline, they didn't innovate; they meticulously copied PSA. Southwest Airlines' early leaders visited PSA, took detailed notes, and essentially photocopied its operating manuals and culture.

This presents the central paradox: the innovator (PSA) eventually vanished as an independent brand, while the copycat (Southwest) became a legendary 10X success. This directly challenged the authors' initial hypothesis that innovation would be the primary driver of extraordinary performance in turbulent times.

A Counterintuitive Pattern Across Industries

The surprise deepened when examining other industries, particularly biotechnology, where innovation is paramount. The data compared Genentech, a pioneering powerhouse responsible for major scientific firsts and a prolific patent output, against Amgen. While Genentech was vastly more innovative, Amgen delivered dramatically superior financial returns—by a factor of more than thirty to one.

A systematic analysis across all the studied company pairs revealed that in only three out of seven cases was the 10X company more innovative than its comparison. In some pairs, like Stryker versus US Surgical Corporation, the less innovative company ("one fad behind") outperformed the celebrated innovator. The data clearly showed that being the most innovative is not a reliable predictor of 10X success.

Threshold Innovation: The Minimum Viable Creativity

The research led to the concept of "threshold innovation." Every competitive environment has a minimum level of innovation required to be a viable contender. Industries like biotech have a high threshold; airlines have a lower one. Companies that fail to meet this threshold cannot win. However—and this is the crucial insight—once a company is above that necessary threshold, simply being more innovative does not systematically correlate with becoming a 10X winner. Other factors become far more critical.

The Critical Blend: Creativity and Discipline

The differentiating factor for 10X companies is not innovation alone, but the fusion of creativity with relentless discipline. Intel’s early motto wasn’t "Intel Innovates"; it was "Intel Delivers." They focused obsessively on manufacturing, scale, reliability, and consistent execution. Andy Grove even modeled operations after McDonald's for systematized efficiency. This discipline amplified the value of their creativity.

This blend solves the core dilemma: in an uncertain world, betting everything on unproven innovations is dangerous, but failing to adapt is fatal. The solution is a method for disciplined creativity.

The Principle: Fire Bullets, Then Cannonballs

This method is captured in the metaphor of firing bullets, then cannonballs. A bullet is a low-cost, low-risk, low-distraction empirical test designed to learn what works. It might miss, but losing a bullet is inconsequential. A cannonball is a major commitment of resources to a single, concentrated direction.

The 10X pattern is to first fire many bullets—small experiments, pilot projects, or tiny acquisitions. Once a bullet hits its target (shows empirical promise), you then concentrate all your resources to fire a calibrated cannonball along that proven line of sight. Amgen exemplified this by testing recombinant DNA technology on over a dozen different ideas (bullets) before its erythropoietin (EPO) hit. They then fired a massive cannonball to develop and launch EPO, which became a historic blockbuster.

The Peril of Uncalibrated Cannonballs

The critical distinction between 10X companies and the comparisons was not whether they fired cannonballs, but when. Comparison companies were far more likely to fire uncalibrated cannonballs—major bets made without prior empirical validation. These had a disastrous success rate of only 23%. In contrast, 10X companies fired calibrated cannonballs 69% of the time, after bullets had confirmed a path, leading to an 88% success rate.

The failure of comparison cases like Kirschner Medical, which made huge, debt-fueled acquisitions (cannonballs) without testing the waters, starkly illustrates the danger of bypassing the bullet-firing stage.

The Peril of Uncalibrated Cannonballs

PSA's trajectory illustrates the catastrophic risk of committing massive resources to an unproven idea. Its ambitious "Fly-Drive-Sleep" expansion into hotels and rental cars was a classic uncalibrated cannonball—launched without first testing the concept with smaller, low-cost experiments. This was quickly followed by another huge, uncalibrated bet: an enormous investment in L-1011 jumbo jets, aircraft ill-suited to its short-haul business model. These bets left the company acutely vulnerable. When external shocks hit—an oil embargo, recession, regulatory pushback, and a strike—PSA had no resilience. The compounded strain from its failed cannonballs and relentless bad luck led to its eventual demise and acquisition.

This case reveals a subtle danger: even a successful uncalibrated cannonball can be perilous. A big win from a reckless bet reinforces a bad process, creating an illusion that such gambles are a viable strategy, much like a lucky roulette win encouraging ever-riskier bets.

How 10Xers Recover from Strategic Mistakes

Even the most exceptional companies are not immune to firing an uncalibrated cannonball. The critical difference lies in their response. Southwest Airlines and Intel made such mistakes but quickly learned from them and returned to their disciplined, empirical approach. Progressive Insurance provides a powerful example. It broke its own rule by making a huge, untested push into trucking insurance, resulting in an $84 million loss. Leadership took full responsibility and treated the mistake as "expensive tuition."

The lesson was applied immediately. When considering a move into standard auto insurance, Progressive returned to discipline. It fired carefully measured bullets by testing the concept in a handful of states. After years of positive empirical validation, it then committed fully—firing a calibrated cannonball that transformed the company. Conversely, when its bullets for homeowners insurance failed to hit a target, it wisely chose not to fire a cannonball at all.

The Supreme Principle: Empirical Validation

The core lesson from these contrasts is that in a turbulent world, analysis alone is insufficient and can be dangerous. The 10Xers' superior method is not predictive genius but empirical validation. They use creativity to generate ideas, but they insist on validating those ideas through real-world, low-cost experiments before making large commitments.

This principle is beautifully demonstrated by Bill Gates's handling of the OS/2 versus Windows dilemma. Despite publicly predicting OS/2's dominance and partnering with IBM on it, Gates was paranoid enough to keep a small team working on Windows—a strategic bullet. He let empirical market evidence, not his own prediction or IBM's power, dictate the ultimate cannonball commitment. This underscores that 10X success doesn't require seeing the future first, but rather seeing what's working first.

Disciplined Creativity in Action: Apple's Renaissance

Apple's rebirth under Steve Jobs is a masterclass in combining fanatical discipline with empirical creativity. Jobs's first move was not a magical new product, but imposing rigorous operational and financial discipline, cutting costs and sharpening focus. He first made the most of the existing "Big Thing"—the Macintosh—revitalizing the core business.

The development of the iPod followed the bullets-then-cannonballs process perfectly. Apple did not invent the MP3 player market; it observed the empirical evidence (the rise of Napster, existing clunky MP3 players) and fired a bullet: a well-designed iPod for the Mac. It validated the concept, then fired more bullets (iTunes for Mac). With overwhelming evidence of demand and a viable model, it finally fired the monumental cannonball: iTunes and iPod for Windows, exploding its accessible market. What looks in retrospect like a single revolutionary leap was actually a step-by-step climb, each step validated by evidence before proceeding.

The Discipline of Calibrated Bets

This final portion reinforces the "fire bullets, then cannonballs" methodology as a disciplined system for navigating uncertainty. It’s not a one-time tactic but a repeatable framework that separates 10X companies from their less successful peers. The critical distinction lies between calibrated and uncalibrated cannonballs. A calibrated cannonball is a massive commitment fired only after empirical validation from successful bullets. An uncalibrated cannonball is a giant, untested bet launched on intuition or hope alone.

The research reveals that while both 10X and comparison companies sometimes fired uncalibrated cannonballs, their responses to the inevitable misfires differed drastically. 10Xers displayed a capacity for quick self-correction, treating the failure as a learning signal. The comparison cases, however, often compounded their errors by doubling down, firing yet another uncalibrated cannonball in a desperate attempt to fix the problems created by the first.

Counterintuitive Insights on Innovation and Prediction

Perhaps the most surprising findings challenge conventional wisdom about breakthrough success. The data showed that 10X winners were not systematically more innovative than their direct comparisons; in some pairs, they were even less innovative. This led to the concept of an innovation threshold—the minimum level of innovation required to be a viable contender in a given industry. Once above this threshold, simply being "more innovative" did not correlate with 10X success.

Furthermore, 10X leaders demonstrated no superior ability to predict the future. They were not prescient visionaries but relentless empiricists. Their advantage came not from knowing which bets would win ahead of time, but from using a disciplined process to discover what would work through low-cost experimentation. Their greatness lay in the consistent application of blending creativity (to generate bullets) with fanatic discipline (to calibrate and then commit resources to cannonballs).

Key Takeaways

• The core of the methodology is the sequence: low-risk bullets first, then all-in cannonballs only after empirical validation.
• The greatest danger is not failure, but firing uncalibrated cannonballs. 10X success is defined more by rapid recovery from these mistakes than by never making them.
• Beyond a certain innovation threshold, consistent execution of a validated idea matters more than sheer innovative brilliance.
• Ultimate success is explained by the synthesis of creativity and discipline, not predictive genius or single, legendary breakthroughs.

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