Great By Choice
Chapter 4:
Fire Bullets, Then Cannonballs
QUINTEN KRZYSKO
GARRETT MIZE
JONATHAN SCHNEIDER
ALLISON SCOTT
ALEX STEAKLEY
“Fire Bullet, Then Cannonballs” Approach
Explains the success of 10X companies than big-leap
innovations and predictive genius

Pacific Southwest Airlines (innovator)

Southwest Airlines (10X company)
“Anticipated that innovations might be a primary distinguishing
factor for 10X success in unstable environments characterized by
rapid change.”
The Big Surprise
 66 wide-ranging markets, from chewing gum to the
Internet
 Only 9% of pioneers end up as the final winners in
the market
 64% of Pioneers failed outright
 Pioneering Innovation:
 Good for society
 Statistically lethal for the individual pioneer
Pioneer?
 Saftey Razor
 Star
 Gillette
 Instant Camera
 Dubroni
 Polaroid
 Personal Computer
Spreasheet
 VisiCorp
 Microsoft
10X were innovative enough to be successful but generally not the
most innovative
Industry
Primary Innovation
Dimension
Innovation
Threshold
Threshold
Innovation
Semiconductors
New devices, products, High
&technologies
Biotechnology
New drugs
High
development, scientific
discoveries,
breakthroughs
Computer/ Software
New Products,
enhancements, &
technologies
High
Medical Devices
New medical devices,
application
breakthroughs
Medium
Airlines
New service features,
new business models
and practices
Low
Insurance
New insurance
products, new services
features
Low
Creativity and Discipline
 Advanced Memory System created the 1000-bit-
memory-chip barrier a few months before Intel
 By 1973 had taken over the market place
 The motto “Intel Delivers” is what set them apart
from their competitors
 With their ability to deliver on their innovations is
why they are a 10x company
Creativity and Discipline
 Innovation without discipline leads to disaster. “This
business lives on the brink of Disaster”

Gordon Moore
 After 1103’s success Intel rearticulated its core values
placing discipline #1

However you must have both discipline and creativity to truly
be great
 Obsessive focus on innovation by itself does not
make for great success might even lead to demise
Bullets, Then Cannonballs
 William K. Bowes and a group of scientist started a
biotechnology company with no direction (Amgen)
 This team fired many bullets on many different
experiments from Hepatitis- B vaccine to
Bioengineered indigo to dye jeans
 After these many bullets finally fired a cannon ball
with EPO the first super blockbuster bioengineered
product in history.
What Makes a Bullet?
 Low Cost- Size of bullet grows as the enterprise
grows
 Low Risk- minimal consequences if the bullet goes
awry or hits nothing
 Low Distraction- for the company as a whole but
very distraction for a few employees
Uncalibrated Cannonballs
 Embracing the “fire bullets, then cannonballs”
principle requires





Fire bullets
Assess: Did your bullets hit anything?
Consider: Successful bullets to cannonballs?
Don’t fire uncalibrated cannonballs
Terminate bullets that show no evidence of eventual success
 10xers (69% calibration rate)
 fired cannonballs
 Had an intended target
 Comparison companies (22% calibration rate)
 Fired uncalibrated cannonballs
 Cannonballs flying all over the place
 Calibrated cannonballs have an 83% success rate
over the 23% success rate of uncalibrated
cannonballs
PSA
 Cannonball: “Fly-Drive-Sleep”
 Fail
 Generated losses every year
 Then fired another to by big jets
 Bought big jets and then plane fuel went up
 Fail again
 Economy fell into recession
 Calibrated Cannonballs
 Higher rate of success
 Uncalibrated Cannonballs
 Can be successful, but that can be more dangerous

Ex: Tell your friend to go gamble and they win
10Xers learn from their Follies
 When 10Xers fire un-calibrated cannonballs, they
quickly learn from mistakes
 Progressive: limit any new business to 5% of total
corporate revenue until fine-tuned for sustained
profitability
 Broke this rule in mid 80s when they moved into
selling insurance to trucking companies and transit
bus systems
10Xers learn from their Follies
 They took a huge loss on the venture, but learned
from their mistake
 Later moved into standard insurance, first by firing
bullets then firing a cannonball
 Then wanted to move into homeowner’s insurance,
but found bullets hit nothing
Empirical Validation not Predictive Genius
 Be creative but validate your ideas with empirical




experience, figure out what works
1987 Bill Gates had to choose between
DOS/Windows or OS/2
Gates worked on OS/2 but kept firing bullets on
DOS/Windows development
Gates was smart enough to know he could not
predict the future
DOS/Windows controlled the market by 1989
Discipline
 Increased discipline resulted in improved liability
ratios
 All the major improvements came before any major
break through product
 Must be efficient within to afford creativity and
innovation
Apple’s Bullets Fired
 Initial product success came with a revamp of
Apple’s first success; Macintosh Computer

Made the most of what Apple already had
 I Pod
 MP3 players already existed, but not with large data storage
capabilities
 All the parts necessary existed, just needed to be pieced
together
 Small leap forward; Extension of MP3 player
Apple’s Bullets Fired
 iTunes
 People would rather buy music at ease and a reasonable price
than steal (i.e. Napster, Limewire)
 iTunes created easy access to a music store with cheap prices
for the music
Apple’s Cannonball
 Once iPods, and iTunes had proven to be successful,
owner’s of PCs wanted in


Apple infiltrated 20 times the market they were previously
selling to by making iPod and iTunes software compatible with
PC computers
Took over the music market
Chapter 4 Key Points
 A"fire bullets, then cannonballs" approach better
explains the success of 10X companies as opposed to
big-leap innovations and predictive genius
 A bullet is a low-cost, low-risk, and low-distraction
test or experiment
 10X cases fired a significant number of bullets that
never hit anything
Chapter 4 Key Points
 Two types of cannonballs, calibrated and
uncalibrated


Calibrated cannonballs have confirmation based on actual
experience
uncalibrated cannonballs place big bets without empirical
validation
Unexpected Findings
 In some matched pairs, the 10X cases proved to be
less innovative than their comparison cases
 10Xers have no better ability to predict changes and
events than the comparisons
 The combination of creativity and discipline,
translates to the ability to scale innovation with great
consistency