Great by Choice OverviewWhole Foods Market

Rebecca EggermanAlexander Johnson

Miguel LopezHannah StephensCarissa Tarnowski

Thriving in Uncertainty

Why do some companies thrive in uncertainty, even chaos, and others do not?

• Some leader not only react, but create.• Some not only survive, but prevail.• Some not only succeed, but thrive.

What did the great companies share in common that distinguished them from their direct comparisons?

myth

• Leaders are bold, risk-seeking visionaries.

• Innovation distinguished 10x.

• A threat-filled world favors the speedy.

• Radical change in the outside requires radical change in the inside.

finding

• They figured what worked, why it work, and build on it.

• No, they are no more innovated then others.

• They know when to go fast and not.

• They change less.

10Xers

• Companies that beat the industry average by at least 10 times

• Amundsen and Scott race to south pole.

• 10Xers accept that they face forces beyond their control, nothing is certain, reject that luck or external factors decide success or failure.

10Xers

• Core behaviors of 10Xers

• Fanatic Discipline• Empirical creativity • Productive Paranoia

20 Mile March

• Performance Markers• Self-imposed constraints• Tailored to the Enterprise• Within Control to Achieve• Goldilocks Time Frame• Designed and Self-imposed by the Enterprise• Achieved with Great Consistency

WFM

• Growth Strategy– New Locations– 30% From Acquisitions

• Company’s Increasing Ability to:– Stay Ahead of the Curve– Build Profitable Stores– Grow Incremental Revenue While Building

Incremental Profit Projections

Return on Luck

• Not What Luck You Have• What You Do With the Luck

WFM

• Higher Purpose– Good Outcomes

• Hartford, Connecticut – Snowstorm

Chapter 4: “Fire Bullets, Then Cannonballs”

• Chapter focuses on empirical creativity– The second behavior that allows 10x companies to

thrive during chaotic and uncertain environments

• The “Fire bullets, then cannonballs” approach better explains the success of 10X companies than big-leap innovations and predictive genius

“Fire bullets, then cannonballs” approach

1. The idea is to fire small bullets – Test new products, technologies, services, and

processes to see what works and what doesn’t.

2. Only after new ideas have been tested and proven should the organization fire a cannonball. – Put large amounts of organizational resources and

energy into ideas– Bullets don’t sink the ship, but a cannonball can.

What makes a bullet

• A bullet is an empirical test aimed at learning what works and that meets three criteria:

1. A bullet is low cost– the size of the bullet grows as the enterprise grows

2. A bullet is low risk– low risk doesn’t mean high probability of success

3. A bullet is a low distraction– this means low distraction for the overall enterprise

Embracing the “fire bullets, then cannonballs” principle requires:

• Fire bullets• Assess: Did your bullets hit anything?• Consider: Do any of your successful bullets merit

conversion to a big cannonball?• Covert: Concentrate resources and fire a cannonball once

calibrated.• Don’t fire uncalibrated cannonballs.• Terminate bullets that show no evidence of eventual

success.

Calibrated vs. Uncalibrated cannonballs

• Calibrated cannonballs:– Has confirmation based on actual experience– Empirical validation– A big bet will likely prove successful

• Uncalibrated cannonballs:– Means placing a big bet without empirical validation– Can lead to calamity– Pay a huge price when disruptive events occur

Firing Cannonballs with Empirical Validation

• Sometimes this means simply learning from others so you don’t have to fire a single bullet.

• Other times you’ll fire bullets, testing a new idea, product, service, or process.

• Fire more and more bullets?

• Only after validating your creativity do you fire a cannonball.

Even 10Xers make mistakes

• “..even sometimes the big mistake of firing an uncalibrated cannonball. But they view mistakes as expensive tuition: better get something out of it, learn everything you can, apply the learning, and don’t repeat.”

• Comparison cases had a much greater tendency to fire uncalibrated cannonballs than the 10X cases

10Xers do not have any particular genius for visionary prediction

• Bill Gates example– one of the greatest business men of the 20th

century– couldn’t accurately predict what was going to

happen in his environment • There’s little reason to expect that anyone can

succeed with a “predict the future then position yourself for what’s coming” strategy

Unexpected findings

• The 10X winners were not always more innovative than the comparison case

• 10Xers appear to have no better ability to predict impending changes and events than the comparisons

• The combinations of creativity and discipline translates into the ability to scale with great consistency

Whole Foods Market

• America’s first national certified organic grocer• The leading natural and organic good retailer• Niche market• Plans to have 1,000 stores in the U.S. (tripling

them in size now)• Locate them in higher income areas • Build smaller stores per-square footage in

smaller areas

Take away thought

What looks like an overnight success is often a long, empirical process of try, fail, try, fail, try succeed.

“You may not find what you were looking for, but you may find something else equally important.” –Robert Noyce

SMaC

• Specific• Methodical • Consistent

More uncertain and unchanging, more SMaC you need to be

Developing SMaC

• Creating SMaC• Abiding by it• Changing it as necessary

Leads to 10X success

Success Formula

• Strong operating practices• Promotes unity in organization• Understandable as to why it works

Howard Putnam’s 10 points-Southwest