How Can My Business Survive & Thrive in Tough Times? (Part 2 of 3)

By Samuel Kniseley Ballesteros on May 6, 2020

Many companies feel that, if their products or services are to remain relevant and in demand, they must constantly innovate. During times of economic upheaval, that innovation can become even more important. Some find that they can’t proceed with “business as usual,” and that they’ve got to pivot their business to survive. One Michigan company, that sews covers for the automotive industry, had to shut down their plants during the Coronavirus Pandemic and innovate. Within one week, they restarted by sewing and marketing Personal Protective Equipment for hospitals, clinics, first responders, etc. Companies like this innovate to survive, but the successful ones combine discipline with innovation to stay focused on their niche.

In my last article, I wrote about the first of three behaviors that Jim Collins and Morton Hansen discuss in their book, Great by Choice, as essential for a company to survive and thrive even in the midst of uncertainty and economic turmoil. That first behavior was the Fanatic Discipline that 10xers employ to focus on their priorities and really get what they want from their businesses. These Great by Choice companies employed the 20-Mile March discipline I discussed in my last article, pacing themselves to conserve their resources during the good times and to push hard through the bad times, 20 “miles” at a time.

The next essential behavior Collins and Hansen identified was Empirical Creativity which mixes creativity with discipline to propel successful entrepreneurs to thrive even in the midst of chaos and an uncertain future for businesses. I often hear how important innovation is to certain industries, such as manufacturing, technology, etc. Some even equate innovation with success. In other words, the perception is that the more innovative you are, the more successful you will be. However, Collins and Hansen’s discovery in their book, Great by Choice, showed that an increase in innovation was not necessarily proportional with an increase in success:

“The evidence from our research does not support the premise that 10x companies will necessarily be more innovative than their less successful comparisons. And in some cases, such as Southwest Airlines versus PSA and Amgen versus Genentech, the 10x companies were less innovative than the comparison….we’re not saying that innovation is unimportant…We concluded that each environment has a level of ‘threshold innovation’ that you need to meet to be a contender in the game; some industries such as airlines, have a low threshold, whereas other industries, such as biotechnology, command a high threshold. Companies that fail even to meet the innovation threshold cannot win. But–and this surprised us–once you’re above the threshold, especially in a highly turbulent environment, being more innovative doesn’t seem to matter very much.” (p. 65, 67)

Of the companies that were high innovators, but never became 10xers, many encountered disastrous results because of their unbridled creativity. Innovating blindly, they spent unlimited amounts of money, time and energy on new ideas before they were proven.

In contrast, 10xers consistently exhibited the restraint of Empirical Creativity by shooting “Bullets first, then Cannonballs” to innovate. In this concept, innovators would shoot small bullets first (testing new products, technologies, services or processes) to see what would hit the target (and stick)! Once a new idea was tested and proven, then the wise entrepreneurs would fire their cannonballs. The idea is that a few small bullets will probably not sink a ship, but a misfired cannonball can sink a business! Entrepreneurial organizations should not fire a cannonball (spend large amounts of resources on ideas) before first firing small bullets (testing those ideas to see if they will even work, or that the product or service will be in demand).

Collins and Hansen said that a bullet is, “An empirical test aimed at learning what works and that meets three criteria”:

1. A bullet must be low cost (low impact on the bottom line)
2. A bullet must have low risk (minimal effect if it ricochets)
3. A bullet must have a low distraction factor (not pull the organization away from its Core Focus).

What I’m stressing here is that you must be creative, but then you need to validate your creativity with empirical evidence. One way is to learn by studying research performed by others in your industry so you don’t have to fire any bullets. The other is to fire a first round of small bullets (testing your new idea, product, service or process). Then keep firing bullets until you get validation that you’re hitting the target and that those bullets are making an impact (testing it in a small segment of your customer base, etc.). Only then, do you load the cannonball into your cannon. The way you do that is by turning the new idea that works into a core process and making it part of your 20-Mile March.