GREAT BY CHOICE CHAPTER 3 20 MILE MARCH

GREAT BY CHOICE CHAPTER 3 – 20 MILE MARCH Paige Adams, Laura Freeman, Hayley Jacobs, Daniel Lawson, Gage Mitchell, Haley Smith

OUTLINE • Definition • Parameters • 10 X Companies • Elements • Financial vs. Non-Financial Marches • Beat the Odds

20 MILE MARCH (20 MM) - “Required hitting specified performance markers with great consistency over a long period of time. ” - Distinguishing factor - Tortoise and the Hare - “ 20 MM operates as a practical, powerful strategic mechanism. It works only if you achieve your march from year to year. ”

PARAMETERS • A hurdle to jump over AND a ceiling that you will not rise above. • 20 MM performance mechanisms are: - Concrete - Clear - Intelligent - Rigorous - You must: 1. Commit to high performance in difficult conditions 2. Hold back in good conditions

10 X COMPANIES • Every 10 x company used the 20 MM during the time period studied • Each company embraced 20 Mile March strategy before they became big companies • Southwest Airlines: - Consistency: profitable 30 consecutive years - Patience: expanded at a slow, steady rate - Clarity: simplified solutions for passenger seating

COMPARISONS • Compared companies failed to successfully use 20 MM strategy to the extent of 10 X companies. -Some didn’t use 20 MM -Some implemented 20 MM during their best years -Some started with 20 MM but didn’t maintain it “If a 10 X company missed the mark even once, they obsessed over how to get back on track: there’s no excuse, and it’s up to us to correct our failures. ”

ELEMENTS OF A GOOD 20 MILE MARCH 1. Clear performance markers 2. Self-imposed constraints 3. Tailored to the enterprise and its environment 4. Largely within the company’s control 5. “Goldilocks” timeframe 6. Designed and self-imposed by the enterprise 7. Achieved with great consistency

NIKE: A 20 MM COMPANY? Performance marker: Self-imposed constraint: Appropriate to the enterprise: Largely within its own control: Goldilocks time frame: Designed and self-imposed by the enterprise: Achieved with high consistency:

PROGRESSIVE INSURANCE EXAMPLE • Profitable combined ratio averaging 96% - “We have to be disciplined in every segment of our business. We’d rather be consistently growing than be hot for one year and gone the next. ” • Doesn’t go into a pricing war with competitors • Progressive meets all elements of a good 20 MM company • Progressive vs. Safeco

FINANCIAL VS. NON-FINANCIAL • Financial 20 Mile Marches - Southwest’s profits every year - Progressive’s 96% combined ratio • Non-Financial 20 Mile Marches - Schools: student-performance march - Hospitals: patient-safety march - Corporations -Intel: Moore’s law

WHY 20 MILE MARCHERS WIN Turn the odds in favor for three reasons: 1. Builds confidence to perform well in adverse circumstances 2. Reduces the likelihood of catastrophe when hit by turbulent disruption 3. Helps exert self-control in an out-of-control environment

BEATING THE ODDS • Arizona schools example -Take action -Pick a good program -Instill fanatic discipline to make relentless, iterative progress -Stay with the program long enough to generate sustained results “If you beat the odds, you then gain confidence that you can beat the odds again, which then builds confidence that you can beat the odds again, and again. ”

CONCLUSION • Failure to use 20 MM can lead to catastrophe -29 events using 20 MM: 100% good outcomes -23 events not using 20 MM: only 3 good outcomes • “You can get away with failing to 20 Mile March in stable times for a while, but doing so leaves you weak and undisciplined, and therefore exposed when unstable times come. And they will come. ” • 20 MM focuses forward motion, despite “confusion, uncertainty, and even chaos. ”