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

Last week we discussed the overview of Chapter 3 from the book Great by Choice.  This week I would like to move onto Chapter 4: Fire Bullets, Then Cannonballs.

Imagine yourself at sea with an enemy ship approaching.  You have two choices on how to attack; 1) Fire one giant cannonball in the general direction of the enemy ship and hope it hits (using up  all of your gunpowder in the process) , or 2) fire a few bullets to align your target first, and then follow up with a cannonball for a perfect shot.   Although the first option may seem enticing, the second allows you to adjust accordingly for a more accurate and successful blast.

Before Amgen made their success in Erythropoietin (EPO), they fired lots of bullets (an empirical test aimed at learning what works and that meets three criteria: low cost, low risk, and low distraction) to figure out what would work.  Once they saw some promise in EPO, they added more gunpowder (more specific testing) and eventually shot a cannonball to execute it.   EPO became the first super-blockbuster bioengineered product in history.  If Amgen had not tested multiple avenues prior to launching, they would not be the name we know today.  Amgen could have easily fired a cannonball with the first idea they had resulting in time and money blown to pieces.

The challenge is not getting ahead of oneself.  Problems arise when companies start firing cannonballs to soon.  PSA launched a cannonball called “Fly-Drive-Sleep” which sounds like a great concept, and it could have been if PSA had fired a series of bullets in a few areas by buying one hotel and partnering with a local rental car company.  Instead, they bought and leased 25 hotels and bought a rental company.   The program went too big too fast generating losses for years to come.  The problem was there was no test; no way to work out the kinks and try other models.  PSA had one shot to win it all or lose it and they lost it.

Of course even 10Xers make mistakes firing cannonballs before they’re ready for it.  The difference is instead of trying to recover by firing another cannonball which can make things worse; they take it as a learning opportunity and start over, only firing another cannonball when it has been calibrated.  A calibrated cannonball has confirmation based on actual experience.  The other option would be an uncalibrated cannonball which would mean placing a big bet without empirical validation.

What is the point of all of this?  Well, no one can predict the future.  If we knew which bullets would stick, we would just execute those.  This is why firing multiple bullets is so important.  It gives more validation of an idea allowing us to move forward with a more educated and formulated concept ultimately resulting in more success.

I have experienced this process first hand through the development of our insurance partner, Cause Insurance, a full service, “cause driven” insurance brokerage firm with a philanthropic focus. They provide the best insurance at competitive pricing while giving up to 20% of their commissions earned to the charity of the clients’ choice.  Just think, if all 2,000 Intero agents were set up with Cause Insurance they would not only be likely  to save money and get better insurance coverage, they could potentially raise up to $200,000 for The Intero Foundation just this year and every year after that on renewal.  Of course, Cause Insurance couldn’t just pop up and be successful; they have fired many bullets, realigned, and shot again.  These bullets will continue to be shot until they are ready to shoot a calibrated cannonball with the firm evidence of success.

The following are the key points found at the end of Chapter 4 to help you better understand the effectiveness and importance of firing bullets, then cannonballs:

• A “Fire bullet, then cannonballs” approach better explains the success of 10X companies than big-leap innovations and predictive genius.
• A bullet is a low-cost, low-risk, and low-distraction test or experiment.  10Xers use bullets to empirically validate what will actually work.  Based on that empirical validation, they then concentrate their resources to fire a cannonball, enabling large returns from concentrated bets.
• Our 10X cases fired a significant number of bullets that never hit anything.  They didn’t know ahead of time which bullets would hit or be successful.
• 10Xers periodically made the mistake of firing an uncalibrated cannonball, but they tended to self-correct quickly.  The comparison cases were more likely to try to fix their mistakes by firing yet another uncalibrated cannonball, compounding their problems.
• The idea is not to choose between bullets or cannonballs but to fire bullets first, then fire cannonballs.

Which of the following behaviors do you most need to increase?

• Firing enough bullets
• Resisting the temptation to fire uncalibrated cannonballs
• Committing, by converting bullets into cannonballs once you have empirical validation

Reference: Great by Choice by Jim Collins