IT frugality can be defined as putting cost considerations at the forefront of technology decisions.

Ten years of tight budgets indicate that IT frugality has largely worked, Based on Gartner Executive Programs CIO survey results, a $100.00 in CIO IT budget in 2002 is now worth $105.50 in 2012.  Adjusting for inflation that same $100.00 in 2002 would be worth $125.75.  In other words, constant dollar terms CIO IT budgets have decreased by $20.25.

CIO IT budgets are influenced by a number of factors and the calculation reflects a global weighted average, so your personal experience will be different based on your company’s strategy, industry, geography and other factors.  This is a crude factor at best, but it indicates the extent of IT frugality.

Based on this crude indicator, CIOs been adept at managing from a financial perspective in demonstrating their frugality and their ability to do more with less. While technology advances, improved price/performance ratios and other developments have ‘saved’ IT, made it more operationally productive, has IT been recognized as a source of productivity, has this frugality made IT better?

I doubt it.  A decade of IT frugality with limited catastrophic IT failure seemed to prove the point that IT is a cost rather than a capability.  The result is a cycle of cost cutting, benchmarking, renewed cost cutting, etc.  Each cycle was driven by macro-economic conditions and micro-executive vision about the role of technology.  So long as you were measuring IT spend as a percent of revenue, you could claim success as it appeared that IT frugality worked – we were getting more for less, right?

While IT spending appears to be in check, what has happened to company capability and corporate IT?

I believe that IT frugality has failed.

Failed in the sense that IT frugality has not delivered ‘more‘ so much as it has cost ‘less‘,

Ten years of tight budgets have changed IT costs but done less to raise IT capabilities.

IT frugality has required CIOs to devalue IT, lowering its unit costs either through sourcing, services, the cloud, renegotiating supplier contracts or cutting IT resources.

These strategies have worked by emphasized the “less” part of IT Frugality and in many cases failed to deliver more to the business.

How can I say that?

Because, the average IT organization is still plagued by the issues it faced a decade ago: weak alignment, poor project performance, limited skills, constraining complexity, lagging legacy systems, a overall weak benefits realization performance. All of these are issues that IT cannot invest its way out of.

All of which create a cycle that re-enforces further IT frugality rather than looking for IT re-imagine its role and how technology amplifies the enterprise rather than just having IT continue to automate and administer back office systems.

The simple answer is to spend more on IT. But I am not so sure that more money is the answer.  Sure IT budgets need to keep pace with the rest of an enterprise’s operations, but throwing money at IT does not solve these problems.  CIOs need more resources, but they also need to reform IT, change the way it works, manages, plans and measures its success.

Frugality begets more frugality.  Reform requires thinking differently.

What do you think?  About IT frugality?  About IT reform or re-imagination?

More on that subject in latter posts.

Related posts

Maximizing IT performance by amplifying performance rather than administering a budget

Technology > IT

2012 begins a pivotal three years for IT

PS:  I borrowed the title after reading Peter Coy’s article in Bloomberg Businessweek, December 26, 2011-January 8, 2012 Page 48.

Cutting IT is not the same as cutting other functions.  IT spending is peculiar because it’s indirect.  Properly managed, IT spending changes performance disproportionality more than it costs. IT is particular to your firm resisting ‘best practice’ or ‘across the board cuts’.  This is not to say that IT budgets cannot be cut, but that blindly cutting IT saves pennies but locks in a legacy of inefficiencies sealed in silicon.

Maximizing the value of IT requires changing attitudes from administering an IT budget to applying IT to amplify business performance.  Leaders amplify their organization by concentrating on IT productivity’s numerator – value created rather than just denominator cost.  This helps them avoid the fantasy of ‘more for less’ by doing the following:

• Focusing on few projects.  Nothing focuses managers like a crisis and focusing IT on fewer, more important things creates results now rather than dissipating them by spreading resources like peanut butter.

• Shortening planning, project and governance cycle times to keep IT’s limited resources concentrated on the most important things and management agile to respond to change.

• Changing IT’s cost structure rather than the budgeted spend by adopting cloud and other light weight technologies, dropping underused systems, software and hardware to reduce the per unit cost of IT.

• Measuring IT value based on changes in business performance rather than costs.  IT has no value and no place in the budget if it does not raise performance.

• Managing IT productivity not projects.  Changing the way IT works to be more productive rather than choking off IT resources and expecting IT to muddle through.

• Stopping demand management and starting benefits realization.  Do not deny yourself the ability to improve, rather concentrate your attention on realizing improvements.

These steps lead to technology that amplifies business performance.  Sure it is easier to administer an IT budget but all that gets you is fewer activities with even less results.  It is better to think small about IT, in terms of how it can have short, sharp and focused impact rather simply lightening the weight of an already blunt IT organization.

Here is a test of whether you are managing IT budgets or managing business results.  The average IT organization spends 70% of its budget on running the business and 30% on changing the business.  Your CIO is able to cut the ‘run’ component by 10%, moving from 70% to 63%, what would you do with that money?  Do you save it? Or do you re-invest it in change by increasing change spending by 23% moving it from 30% to 37% of the budget?

It is not a test of IT.  Rather it is a test of your confidence in management and their ability to realize business benefits.  You take the 7% savings if you have no confidence in your management otherwise you know that the 23% increase makes sense because you can manage the business benefits.

It is natural to reduce budgeted cost in the face of a downturn.  That approach works best when costs are directly tied to business activity – sell less and you need to make less.  IT is connected to the cost structure of your operations.  Treat it as another administrative expense and you degrade performance across the board.  Combine limited IT resources with strong benefits realization and you amplify business performance and organization wide results.  The choice is yours.

Note this post appeared as an interview in the Financial Times.

India is a diverse and dynamic economy at the center of transformation of the IT industry and of the nation itself.

IT’s evolving role

While CIOs are continuing their focus on building out administrative and ‘management’ systems they see the need to evolve their role in the enterprise toward more direct business impact in areas like revenue generation and innovation.  The progression from IT as a function to IT enables the business to a goal of IT contribution has happened faster in India than in any other market I have visited. CIOs in Indian companies looking to raise IT’s role need to demonstrate ITs value and how it

Leadership and Management Capability

Leadership and management talent within Indian companies are as good as anywhere in the world, but talent is thin and unevenly distributed around the company.  Companies are growing well where it is concentrated and encountering problems in areas where operational demands have outstripped management capability.

IT is seen as a way to make up for limited management capability, by creating more controls and process.  That approach may work in the short term, but it establishes IT in a role of protecting/preventing improvement and as responsible for poor performance, particularly when managers have to work around IT to create results.

This represents a particular trap for CIOs as they respond positively for requirements to build new control systems without requiring a requisite increase in management capability.  This sets the stage for misinterpretation of IT’s role and value as when good managers do appear, they frequently have to fight through constraints created by IT to protect the company from prior weak management.  This makes IT seem like a stumbling block or barrier. It makes it the object of management derision rather than enablement.

A better course of action is to keep Executive Responsibility focused on building management capability and capacity.  Link future plans for new systems investments to management education, recruitment and employment so the organization has the people to lead and knows how to use the system to get results.

Cloud Computing is part of the plan

Interest in cloud computing was particularly high with the CIOs and others at Symposium.  Cloud, while not immediately or widely available, is part of future CIO plans despite challenges related to internet reliability and the cost of workstation computing.  From what CIOs were discussing, it looks like plans for cloud call for fusing it with mobile and handset technologies to enable work processes and practices at a national scale.  When you consider the scale and geographic diversity of India this approach seems a reasonable path for future investigation.

Social media is of increasing interest.

Social media was of particular concern as Indian companies look at what is happening in popular culture and other countries.  India is ripe with social media potential as it is a young country with 50% of people under the age of 25. India is also a diverse country creating opportunites for mass collaboration as a path to greater performance.  Indian CIOs indicate that their executive teams are wary of social media either seeing it as Folly or Fearful that social media is a waste of time and uncessary distraction.  Both attitudes are understandable, but CIOs are interested in seeing what mass collaboration might bring to their organizations. Assess your own company at gartner.com/socialreadiness.

Overall

Indian CIOs indicate that their organizations are at multiple places all at the same time.  Organizationally they are evolving from closely run companies with an emphasis on hierarchy toward divisionalized business units.  Technologically they are leapfrogging the functional and task based technology investments to adopt leading information, process and mobile-based solutions.  Managerially they are dealing with a diversity of management talent and the need to build capability.  Globally Indian companies are playing on a world stage in ways never contemplated before either by the nation or by the leadership teams.

This is a dynamic time for Indian companies in general and their use of technology in particular. The decisions they make will re-imagine the organization, IT and their future.  It was an honor to talk with CIOs who are leading from the front and I look forward to future symposium in India.

While there were a few operational glitches, it was the first time at this location, overall the CIOs I spoke with were pleased with the experience, exercised their issues and exchanged their ideas.  CIOs face the need to find new answers to new questions in an increasingly complex set of economic, operational and financial contexts.   Change is on the agenda of the CIO.

Economics and the debit crisis provided an important context to the event, particularly given events in Italy that happened while the symposium was in session.  I will talk more about that at the end of this post.

In years past, CIOs faced a similar tide of change.  This year there is no single type of change that is pervasive across the CIOs.  This makes 2012 different from 2008/2009 where there was change all in the direction of cost control.  CIOs are changing to support growth initiatives in Asia and Latin America.  CIOs are changing in response to new strategies or regulatory requirements.  And yes, CIOs are changing to reduce costs.

While every one recognizes the need to change, the nature, dricection and challenges of that change are increasnlgy company and contextually specific.  In this regard there is no “European” view on IT for CIOs as each faces their own context and challenges.

Change is at the top of the agenda, but unlike 2008 – 2009, when everyone was changing in the same direction — cutting budgets — change comes in many flavors.

Here are a few things that stick with me as I leave Barcelona.

• European firms are going through structural change in response to the structural economic and business challenges.  There is no clear pattern as some are breaking their companies into smaller divisions while others are consolidating and standardizing to save cost.  These changes are not temporary indicating that leadership believes the current conditions are not temporary.

• The existence of fragmented applications, data centers and operations is a particular target as financial conditions have opened the door to deeper change than simply holding the budget line on spending.  Eliminating the results of accretive change is increasing CIO visibility at the board level and creating new conversations with their business peers.

• Mobility is a hot topic and one that appears to be at the peak of expectations in Europe. The discussions I had related to mobility, tablet devices, etc revolved around understanding how they created value in practice rather than in theory.  The CIOs I spoke with were looking for hard and demonstrable facts rather than relying on the novelty of consumer technologies to create value.  Clearly in this area CIOs have a focus on the longer term rather than the quick value of meeting consumer needs.

• Interest in Social Media was strong, particularly from the perspective of how social media works within a company.  CIOs raised questions and comments regarding issues of individual behavior, free speech, expression and how mass collaboration actually works in a company.  CIO questions reflected an understandable degree of guarded optimism skepticism as they wnat to know how it works before putting it into practice.  You can assess your organization’s attitudes toward social media by taking The Social Organization Book’s assessment gartner.com/socialreadiness

• Cloud computing and sourcing showed renewed interest with discussions centering on actions and plans more than concepts or ideas.   It seems that European firms that had previously thought about these issues, dipped their toes into them were looking to take action in 2012.

• CIOs are facing the need to drive transformation programs in order to meet externally defined requirements and regulations.  The level of transformation and structural change driven by EU legislation appeared to be more on CIOs minds this year than previously.  In some cases, EU legislation is requiring industry restructuring, redefining the boundaries of business in Utilities, Law Enforcement and other areas.

Change requires new answers and new actions.  This creates the impression that CIOs and their organizations are more or less the same as they share similar plans and priority.  Such a view is incomplete as the differences between CIOs in general and European CIOs in particular has never been greater.

Look to the questions that CIOs are answering and the differences emerge.  There appear to be three sets of questions facing CIOs all of which can be addressed with similar plans but to very different results.

New Questions / New Opportunities CIOs facing new questions about growth, channel expansion and overseas operations face a future similar to other multi-national companies.  There questions are new questions about to compete in growth markets primarily in Asia and Latin America. These questions revolve around using technology (including IT) to extend enterprise capabilities and raise the customer experience.

Old Questions / New Answers CIOs facie old questions about cost cutting, consolidation, expense reduction.  They plan to use new technologies such as internet-based services to lower their operational costs, mobility to get high value functionality in to the field, and improve operational efficiency.  Theses CIOs are establishing a new argument around IT as a source of productivity.

Old Questions / Old Answers These CIOs face having to dust off their cost cutting plans and repeating the actions they took in 2008 and 2009.  Organizations implementing plans that call for ATB (across the board) cuts of 10, or , 20, or even 40%  fall into this category.  Repeating the past in hope of a different outcome is a sign of weak management and ATB cuts is a potent indicator that leadership needs new questions.

Regardless of the questions you face, the time to act is now.

If your organization has been holding back on spending cuts by budgeting them for year 4 or 5 in hopes of better economic conditions, then you have lost that bet.  2012 is year 4 of that 2008 plan. It is time to make the changes you hoped you could avoid.

Action is required for the simple reason that financial crisis are particularly caustic to an economy.  THey create the illusion that things are temporary, they lead to band-aid approaches to bail-out players at risk, the stifle the need for deep reform.

Inaction leads to ‘muddling through’ which only turns a CRISIS into a CHRONIC CONDITION.  How CIOs re-imagine IT and lead from the front will determining the extent to which IT contributes to that condition.

Please share your thoughts and experiences from Barcelona.

In January Michael Porter and Mark Cramer published “Creating Shared Value” that looked at creating value beyond financial returns.  This month Rosabeth Moss Kanter published “How Great Companies Think Differently?”  Both articles discuss a view of the organization as more than an engine for generating financial returns to shareholders.

Both articles are recommended reading for considering the ways in which business can create value beyond profits and market value.    Creating value requires defining a broader set of values for organizations.  In April of this year, Jeff Cole and myself authored and EXP report entitled “A different theory of the Firm and IT: comprehensive value and capabilities.” In that report, we defined a collection of value that we called comprehensive value shown in the figure below.

Creating comprehensive value does not involve trading one form of value against another. Rather it is about how we design ways of working that achieve positive results in each of these areas. For example, firms creating jobs that build the local skill base and support development of other companies and opportunities. Firms need the capacity to generate these forms of value in order to retain public trust, confidence and support their own economic viability.

Expanding the definition of value has been done before. Consider Henry Ford who decided to pay the exorbitant wage of $5.00 per hour to his workers to attract the best workforce and give them the economic means to buy his cars. Other social-capitalism practitioners like, George F. Johnson created entire communities, provided free healthcare and education all to secure the best workforce. Firms in the future will be judged and judge their success by more than bottom line. The challenge is how?

The challenge facing organizations is not one of how we add a sustainability dimension to our company.  Creating a sustainability ombudsman is no solution to sustainability.  It only provides a paper response for a pervasive issue. Rather it is how we incorporate values that go beyond financial value into our strategies, plans, and recognition of value.  The debate of an organizations role in society is interesting, but the reality is organizations exist, they are real and they are part of the social fabric.  The assumption that organizational success and societal success go hand in hand is true, but that relationship cannot be the only definition.  Creating financial returns for shareholders is not the only societal impact.  An organization’s impact is more than financial.  It is comprehensive and hence the need for comprehensive value.

Barcelona is the site for this year’s gathering of IT leaders as the G20 meetings last week in Cannes made that location untenable.  Unfortunately Cannes’ weather, wet blustery and cloudy has taken over sunny Barcelona.

Technology plays a major role in how organizations will move forward regardless of the resolution of geo-political-financial futures.  Could geopolitinancial become a new word, probably not, but it was worth a try.

European CIOs responding so far to this year’s CIO survey indicate increased caution in terms of business priorities, IT strategies and projected CIO IT budgets for 2012.  Add your voice by following the link to Gartner EXP’s 2012 CIO Survey.

Caution does not mean capitulation. In an earlier post I mentioned that business executives are not financial traders who can simply sell their positions and sit on the sidelines.

Traders call that ‘capitulation’ and it happens when the safest thing to do is to do nothing.

Executives who do nothing are known as ‘retired’. In the near future, doing your job may be the best way to losing your job.

The drive to do more than survive surrounds the major decisions and themes of this year’s Symposium – Re-imagine IT: Lead from the Front.  The term re-imagination comes from the 2011 CIO survey and the subject of several posts on this blog. Follow the re-imagine link to see a listing.

Re-imagination exists when leaders change their situation just enough to open new opportunities.  Re-imagination recognizes that these differences create value at speed with a knowable and managed risk.  Over the past two years new lighter weight technologies have created the opportunity for CIOs to re-imagine IT by changing IT just enough to tell a new story.

• Extending their organizations reach into new markets, geographies and lines of business to find new sources of growth.
• Moving beyond cloud experimentation to cloud implementation in order to change IT economics and redefine the balance between cost, capacity and capability.
• Demonstrating continued leadership in the creation of mobile commerce and mobile business models that attract and retain customers through providing deeper context information and support.
• Continued refinement of IT organizational, governance and skill models to meet a changing set of business requirements and face the reality of choice in the IT marketplace.
• Amplifying their business models and marketing through deeper adoption of social media and mass collaboration that enable it to tap into the collective genus and energy of its customers and employees.
• Delivering on a new IT value proposition and production function based on executing strategy at speed and driving operations to greater scale efficiencies.

Collectively these actions lead to a plan for transforming IT by finding new answers to new questions related to growth, efficacy, cost, innovation, etc.  We can no longer rely on find new answers to old questions – its time to re-imagine IT and lead from the front.

Nowhere is that more important than hear in Europe and no time has it been required than now.

See related posts from the Orlando Symposium:

Re-imagining IT: the 2012 Gartner Symposium

What I learned for CIOs and IT Executives at Orlando Symposium

While the market has accurately predicted every major recession, it has also predicted many more recessions that failed to materialize.  What happened the other times, when the ‘market’ said there would be a recession, but that recession never materialized?  There are market corrections, oversold markets, runs on particular companies, extraordinary events like the European debt crisis, etc.

The markets are so volatile now and move based on perceptions that even CNBC has postulated that it has lost its reliability as a predictor of future economic conditions.  J.J. Kinahan, the chief derivatives strategist at TD Ameritrade commented in a recent CNBC article“as long as you have that continuing story (Greek Debt), the whole premise with Dow Theory is thrown off.”

One thing to keep in mind is …

Traders are not business executives, nor investors, nor customers of the company.

They are traders and the difference matters, particularly when they get all the attention.

In these situations its easy to be blinded and driven deaf with the torrent of market movements that will tell you what is going to happen. Take all of that with a grain of sand and recognize that you, the business executive and investor are not the primary audience for news about the market.

Why is this important?

Because, traders can capitulate by cashing in their investments and sit on the sidelines until things clear up. Executives have to stick with it no matter how bad it gets. Capitulation for an executive is called retirement.

Executive plans need more than information intended for traders.  They need more to find real opportunities.

Make plans based on customer needs, investor expectations and your business conditions because those are the realities that drive your earnings and cash flows.  These are the signals that should shape your plans and investments as earnings and Cash flow eventually drive your market value once all the dust settles and the markets return to ‘normal’ whatever that is.

I am not saying ignore the market, but recognize that right now the market is not talking to you, it is yelling at itself.

Executives admire the ability of social media to garner the attention of millions of people.  They see the market potential of those millions share their ideas, interests, opinions about themselves and your products or services.  They fear what will happen to them if someone else turns all of that potential into reality.  Those fears are well founded as the network of people; the information in the network and the dynamics of their interactions represents a potent force.

Social media and social networks have been around since 2003/2004 but have yet to play a significant role in the way in which enterprises work.  How can a technology that has more than a half billion users fail to gain deeper adoption in most organization?

Organizations do not need social media.   They need the abilities effective social media creates which are the abilities of a Social Organization.

As a social organization they use social media to tap into the energy, information and value inherent in social networks.  This requires executives confront two challenges:

• Thinking beyond about social media as technology and evolving new ways of thinking about how their organization works.
• Resolving the inherent and fundamental management dilemma of social media between accountability and control.

The path to becoming a Social Organization starts with overcoming these challenges to transform social media from a technology you implement, into the basis for new capabilities that amplify your organization’s performance and capacity to innovate.

• Does your organization consider social media to be a technology?
• Does it treat social media like any other technology?
• Have executives curtailed social media and emerging social networks because they challenge organizational authority?
• Does your leadership team have a way to view greater participation in a sustainable and repeatable way?  Or does leadership see participation as episodic rather than part of an ongoing way of working across boundaries?

If not and you are using social media to do things differently, then you are on the path to becoming a social organization.

More on each of these challenges will be discussed in subsequent posts.

We welcome your thoughts, comments and contribution.

Anthony Bradley and Mark McDonald are the co-authors of Fall 2011 book, The Social Organization: How to Use Social Media to Tap the Collective Genius of Your Customers and Employees.

Assess your organization’s social aptitude by followiing this LINK (information only registration involved)

The Social Organization Book’s Facebook Page

This book is highly recommended to anyone who wants to understand why we can have a recession, a jobless recovery and growing income distribution inequities all at the same time.  This book does a tremendous job steering its explanation based on facts, insights from other economists and thought leaders.

Brynjolfsson and McAfee’s basic argument is that we are just beginning to see the long-term impact of technology on the economy. The authors highlight this using the analogy of Chinese story where the emperor agrees to pay a servant a grain of rice and then doubling that amount for each square on the chessboard.  That doubling is the foundation of technology’s driving forces embodied in the laws of Moore, Metcalfe and others.

The authors believe that we are just getting to the back half of the chessboard where a doubling of technology creates gigantic leaps in capability at an unprecedented pace.  These leaps are beginning to displace human work as technologies like IBM’s Watson and others demonstrate the ability to handle complex work.

The book is divided into five chapters:

Chapter 1. Technology’s influence on the employment and the economy.  The first chapter provides an overview of the book and its chapters.  Here the authors do a good job supporting their argument based on the observation and ideas of others.  The chapter could have been a dry recitation of prior research, but Brynjolfsson and McAfee have described the issue in ways that are broadly accessible.

Chapter 2.  Humanity and technology on the second half of the chessboard — discusses the impact of technology on the economy, productivity and employment.  This chapter focuses on things that are emerging as the capability of technology has crossed a threshold.  The most interesting part of this discussion concentrated on General Purpose Technology (GPT) and how these technologies drive further investment in technology.

Chapter 3.  Creative destruction: the economic of accelerating technology and disappearing jobs.  This chapter is the most informative as it explains the impact of technology on employment and income.  Here the discussion of highly-skilled vs. skilled workers, Superstars vs. Everyone else, and Capital vs. Labor all explain different aspects of the economy we all live in.

Chapter 4: What is to be done?  Prescriptions and Recommendations — contains a list of 13 recommendations for fostering organizational innovation and investing in human capital.  These are two areas where investments can lead to creating new employment opportunities and growth.  I will not go over the recommendations, many are ones that you may have heard of in the past, but the authors put these recommendations into a new context.

5. Conclusion: the Digital Frontier — provides a discussion of the new economy emerging and the impact of digitalization in terms of creating new sources of value and disruption.  It is an apt conclusion to the book.

Each chapter focuses on a different aspect technology, the economy, employment etc. in a concise and informative way.  The authors take full advantage of the book’s electronic form by providing active links to referenced research and opinion.  While not accessible when you are disconnected, the ability to quickly jump into some original source material adds to the value of the book.

The book can be easily read in under 4 hours and would be the best use of your time on a long plane ride where you can read and think through the author’s ideas and their implications.

Brynjolfsson and McAfee have created a readily accessible, influential and provocative book that should be read by business executives, policy makers and technologist to give them a better understanding of the deep forces at work in the global economy.  Some will disagree with the author’s recommendations, particularly given that it would be easy to associate some of their recommendations and moderately to the right.  That would be a mistake, as I believe Brynjolfsson and McAfee have been able to take a relatively neutral view of an economist to these issues.

At $3.99 on Amazon, this book is more than well worth the cost and most importantly your time and attention.

If you found this review helpful could you please follow this LINK to vote for it on Amazon.  Thanks.

Jim Collins extends and deepens the body of knowledge around the fundamentals of success. Great by Choice represents the second half of Collin’s earlier book on company failure – How the Mighty Fall. While that earlier book concentrated on factors that drive failure, this describes the characteristics of sustained success.

This book is classic Collins. Well researched, clearly describes and expertly packaged for executives to incorporate these concepts into their lexicon and thoughts. This book is recommended as the capstone of the study of the fundamentals of great companies.

Great by Choice is a lot like How the Mighty Fall as it’s a short, concise and focused book. About half of it is content and half is appendices, FAQs and methodology – just like HtMF. Put the two together and you get a comprehensive look at modern corporate success.

This is a book for understanding and admiring the factors Collin’s points out as driving superior performance.

The book describes these factors,
but description is not prescription.

This book is not a ‘how to’ book, nor one that provides much action oriented help. It relies on the reader understanding Collins points and then tailoring them to their situation. That places the burden of value on the reader, which is where it should be as greatness is less a recipe than a recommitment to hard work.

Great by Choice contains a set of core concepts that define the major chapters in the book. Here is a short description of each to provide an idea of what is in Great by Choice and how Collins describes the characteristics of companies that have exceptional performance, what Collins calls 10x.

20 Mile March describes the fanatic discipline that leads you to manage for the long term rather than chasing short-term results or the fade. Essentially this is the business version of the classical Greek axiom of balance and discipline.

Fire Bullets, Then Cannonballs by being empirically creative by experimenting intelligently everywhere and exploit where you know you are having success. This is more than the idea of ‘failing fast’. It is a definition of innovation based on the combination of creativity, discipline and data.

Leading above the death line describes the productive paranoia that was captured by Andy Grove’s management mantra. This is a business version of the Boy Scout’s principle of ‘Be Prepared.’ This chapter concentrates on the success and practices of preparation and having reserves that enable you to achieve more.

SMaC describes the company’s principles that are Specific, Methodolical and Consistent. This chapter in essence describes the power of common vision, direction and culture. Collins points out that SMaC is one of the more powerful ways to exert control in a dynamic world.

Return on Luck discusses how leaders and laggards face unpredictable positive and negative events. This is perhaps one of the best chapters as it describes how Collins and his team investigated the phenomenon of luck. As expected the conclusion is that luck does not play a guiding factor, rather its how you take advantage of good luck and are prepared (death line) for bad luck.

These concepts are all interrelated and go beyond the book’ s triangle graphic. You cannot do a 20 mile march well without SMAC and both are worth lest without the preparation associated with leading above the death line.

Overall, I recommend Great by Choice for both fan’s of Collins’ work and for people who are new to this discussion. Yes this book is a continuation the prior books, but it does a great job of providing new insight without overly repeating prior points.

Great By Choice to be a good place for people to start. You do not need to read Collin’s other books, but logically this book is the second half of How the Mighty Fall. I would suggest that if you are going to read both that you read HtMF first as you need to fix that first before the ideas in this book will have and effect.

Strengths

The book contains strong ideas that are simple to communicate and easy to mentally think about how they fit with your organization. Its easy to see how they would may your company a 10X performer.

The case descriptions are informative, insightful and illustrative. The cases are well worn: Southwest Airlines, Microsoft, Apple, Progressive Insurance and Intel, but well applied.

The use of mountaineering and explorers as non-business based examples will give you the stories to tell around the water cooler.

Challenges

The book provides powerful description of concepts that we already know. Rewriting Collins’ points boil down to the following: have along term vision (20 miles), experiment to innovate (bullets and canon), ‘Be Prepared’ (death line), follow your core (SMaC) and take advantage when possible (Return on Luck)

The companies featured are studied from 1977 to 2002 which was a period of significant change: the internet, oil crisis, stagflation, etc. However, historically economists have dubbed this period part of what they call the great moderation. So while these principles are timeless, they do not account for what has happened and happening now.

There is no treatment of technology in the book. Given that much of the global, collaborative and social world is driven by technology, this is a big omission. It csn also give executives the impression that they do not need to change the way they operate or the elements of the operations to choose to be great.

Personal note: if you found this review helpful, I would appreciate it if you could go to the book’s page on Amazon and vote for it. Thanks.