What does it mean to fire bullets before cannonballs? Often leaders are too bold, or alternatively, too conservative. Instead of taking too much or too little risk, the concept of firing bullets before cannonballs asks leaders to validate an idea with a series of small, low-risk experiments. Once you have validated your idea, then you can concentrate your resources on a big bet idea.

From Jim Collins –

“The ability to turn small proven ideas (bullets) into huge hits (cannonballs) counts more than the sheer amount of pure innovation.”

No one is smart enough or experienced enough to know what will or won’t work. Only the market can tell us that. People intuitively say something will definitely succeed OR definitely fail. But we don’t know.

In this episode, Brad Giles and Kevin Lawrence talk about the fire bullets before cannonballs concept, why it matters and how you can use it in your business.

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EPISODE TRANSCRIPT

Please note that this episode was transcribed using an AI application and may not be 100% grammatically correct – but it will still allow you to scan the episode for key content.

Brad Giles  00:13

Hi, welcome to the Growth Whisperers where everything we talk about is building enduring great companies, companies that last, companies that people are proud to work for, companies that outperform. As always, today I’m joined by my co host, Kevin Lawrence. How are you doing today?

Kevin Lawrence  00:32

Doing great Brad. Enjoying summer, looking forward to a few weeks off.

Brad Giles  00:39

Good to hear good to hear. I am also going good, things are nice in this part of the world. We’ve had a busy period after the financial year, which is June 30, for us, and then we reset. So it’s been quite busy. And now we’ve just had a moment after that to recalibrate. We always like to start with a word of the day or phrase, what might be on your mind today, Kev?

Kevin Lawrence  01:05

It’s just sunshine. I was out at a farmers market this morning. And this woman had the shirt on that said sunshine and wine. That’s what it said – basically how sunshine just lifts your spirit. And it’s a metaphor in companies where there’s always sunshine, there’s always good news, there’s always good things, and we need to be reminded of it sometimes. So sunshine is the good news that warms us warms our souls makes us feel good. And that’s a wonderful thing to remember at work.

Brad Giles  01:49

Every good, very good. Well, mine is completely unrelated. And it’s a bit to do with this episode today. But it’s about interest rates. And some of the challenges that we’re seeing, like I’m just going from one meeting to the next meeting to the next. And it’s a the staff shortages, or it’s, you know, input costs, like cost of goods that are increasing a lot through trucking, all kinds of words. There’s all of that and so it’s just about making validating your ideas. It seems like with so many variables changing that you’ve got to make sure that what any of the changes that you’re making are going to be the right changes and we need to make changes in the business.

Kevin Lawrence  02:50

So tell us about the topic today.

Brad Giles  03:13

Yeah, this is a one of Jim Collins’ concepts – fire bullets before cannonballs. And this is how we validate our ideas. And it’s a phrase that you may have heard if you’re not familiar with Jim Collins work.It comes from his books. Yeah, yeah, in particular, Great by Choice. And so we’ve got a saying in Australia, and it’s don’t bet the farm and so what that means? We’ve got the same one here. Yeah. Okay. So it’s, it’s you need to not gamble everything. Because you may end up with nothing. You’ve got to make sure that you are validating your ideas that you’re testing, and that you’re only taking risks where you can afford to lose, or that you’re completely certain that it’s got a very high chance of success. So we’re talking about this concept fire bullets before cannonballs. And as a quick note, you can also refer to Episode 86. What is productive paranoia and why it’s a critical leadership tool of the growth whisperers. And then episode nine, electric bikes cheating versus innovation and entrepreneur to CEO we’ve got information about this concept. But the key point here is we’re often told that we’re too bold or we see people that are too bold or too conservative. If you raise an idea within a group, some people are going to be like, it’s definitely going to work. Yes, it’s going to save the company. This is going to set us up for success. Or on the other side, there are going to be people who are going to say it’s never gonna work. It’s a load of garbage.

Kevin Lawrence  04:52

They’re all just opinions. They all have no freaking idea. They think they know and there’s this great thing is it, no idea or product ever survives first contact with the customer, the market, the customers vote with on our ideas. And unfortunately, people spend way too much time testing in the laboratory or the boardroom. And they don’t get out there and talk to the damn customer. So it’s even interesting. We had a team meeting recently or quarterly meeting. And we had a brilliant, what seemed like a brilliant idea that came out of the meeting, I was a very good idea. Well, I had a meeting that same night with the CEO. And I ran up by him. And he’s like, you know, your ideas really good. But it actually is more relevant here. For me, the pain here is for me, and I talked to another CEO the next day. And so as I’m calibrating the idea in the boardroom sounded perfect. You go and start talking to people about it. And they’re like, Well, maybe what about this? What about that, and that’s, you know, that’s, that’s a little bit of market research. And then there’s the actual test. The key is that people don’t know what works, you never know what works. Because often what works is counter intuitive. Often, you’ll get better sales by increasing your price than decreasing your price. Right? Very often. And but that’s not how people think. So the idea this is, it protects us from our egos. It protects us from thinking that we know and puts us back into scientist mode. Let’s test it. And see. And that’s the critical piece here is let’s test it in the market with a bullet a simple low risk test, versus thinking that we know and generally, especially in Hollywood has done a great job of portraying CEOs and successful people have been wild risk takers. They’re not – not the successful ones. It’s exciting to do great big moves, big, bold, risky moves, just doesn’t consistently work. It’s kind of like going to the casino and putting everything on black.

Brad Giles  07:07

And if you pick up a magazine, maybe or look online at any of the business, like the Fortune magazine, or any of those types, they’re going to be telling the stories about the big risky bets that paid us, right, because it’s interesting, because it’s interesting, but works. It’s the relentless focus on the boring basics. And within that context, if you if you’re going to take a risk, you want to validate that risk, you want to give it a good chance to work to prove itself and then take the big bet.

Kevin Lawrence  07:40

Yes, because as you get bigger, those bets are more impactful. And I’ve seen many kinds, and one of the big ones people do is acquisitions. There’s all this theory in the boardroom about the power of acquisitions, it’s quite fascinating, actually, oh, and we’re gonna get this, after doing this almost 30 years, you get to see decisions all the way through their lifecycle. It’s your execution. And you get to see all the theory in you know, in business books, most business books versus what actually happens. It’s very, very different. And you know, and so even in this we take acquisitions was very smart. I was in a company the other day, and we’re doing some long term planning. And we’re like, we should consider acquisitions. Have a certain point, every executive talks with access, we think the big kids do, right? And it may or may not be a good idea, it depends. But somebody in the room was smart. Hey, let’s try a little one and see how it goes. Right? If we’ve got 30 million of extra cash, let’s spend two and try it. How do we do with it? Can we integrate it? Can we get the theoretical value out of it? Let’s try small versus you know, we’re a company that does you know, 150 million in revenue and let’s go acquire someone that does 200 million. Yeah. Because that’d be and people do that and let’s just give it all for one one for all one shot at it hope it works.

Brad Giles  09:12

Because that’d be cool. And that it would be very stimulating.

Kevin Lawrence  09:15

Way more exciting than driving out efficiency of the per unit cost by 2.37 cents per unit. Like finding 2.37 per cents per unit of efficient or taking our labor rate from being 14% of sales down to or labor costs right from 14% to 12.5  or even better our SG and a s GNA is running at you know 14.5% And it should be 11 or, or how do we get more sales and do price increases to our customers like all this stuff?

Brad Giles  09:56

Which would you rather speak about at the barbecue?

Kevin Lawrence  09:59

Exactly do you want to tell your friend more than that? What do you want in your resume? Yeah, right. Yeah, no, I decreased SGMA from 14.42 to 12.1. Actually, I would be impressed by that. So that vs I came up with a because we know rent, let’s acquisitions, what pays, but you get these people doing acquisitions. And no, and doing this and working with private equity and doing all this wonderful stuff. It just as a side note, that’s why, you know, when I see it, leaders in companies start to get the awards from the software companies. I’m like, Okay, we’re in trouble now. Yeah. One, we may or may not be overpaying, but to the IT person is getting so excited about external validation, that either they’re pumping himself up for a career move, or they’re just loving all the accolades. I just because I have also seen a few of those. Sometimes they give you big awards, before the system breaks, because they know what’s coming. As long as I diverge.

Brad Giles  11:01

Let’s steer it back. I’m talking about bullets before cannonballs, that’s what is it? It’s a concept from Great buy a choice when a Jim Collins books attack. So first of all, you fire bullets, which is low cost, low risk, low distraction experiments, to figure out what will work so you can calibrate your line of sight by taking small shots. So that way, you know what will work or you validated your ideas, then, once you have validated your experiment, you can concentrate the resources into a big bid.

Kevin Lawrence  11:37

And to clarify these experiments are done with real paying customers, or real cash spent in your operations on costs or other things. These aren’t boardroom experiments. This is not market research. This is actually doing it in a small safe way.

Brad Giles  11:55

Yeah, yeah. So why does it matter? Because when we were preparing for this episode, you said this, Kevin, I thought it was just brilliant. No one is smart enough or experienced enough to know what will or won’t work. Despite what they say no matter how good a salesperson they are, or how excellent at presenting they are, no one actually knows what will not work. Only the market can tell us that.

Kevin Lawrence  12:24

And the more I know, the more experienced I get, the more you’ll hear that come out of my mouth. In meetings, I have the most experience of almost anybody in the room of scaling businesses in any room that I’m in, and more. And as I get in over time, I say that more and more often say, I don’t know what’s going to work here. The more I know, the less I know.

Brad Giles  12:46

That’s the scientists mantra, right? The more that I learn, the more I understand, the less I realized that no, yep. And so once you’ve and so where were we? Oh, we are at once you validated your experiment, you can concentrate the resources into a big bet. Thank you. So the big bet is Alright, now let’s spend the $30 million rather than the $2 million, and yes, go after that, or whatever it might be. So the ability to turn small, proven ideas or bullets into huge hits are cannonballs counts more than the sheer amount of innovation that’s so important. Because innovation is such a catch word today or catchy word. We’ve got to have an innovation department the more ideas the better. But it’s actually not true. It’s the ability to validate ideas effectively, that matters the most.

Kevin Lawrence  13:42

Yes, because people get excited about all those new ideas. And truly, we want to validate the thinking. So we don’t waste time and resources, chasing something that’s not going to pay. It’s interesting, as you’re talking about pure innovation. For those of you watching a video, you can see behind me, there’s a model behind my shoulder of a Porsche 911 engine that allege that Porsche 911 engine has not changed that much over the entire time. And I think the first Porsche was in the 60s that I’m aware of, might be similar. As in the 60s, I’m pretty sure they started. The shape of the car hasn’t changed much. The engine hasn’t changed much in in design, the quality of the components, the performance, all that stuff has improved year on year on year, but they’ve innovated on the same platform again and again and again and again and again. And again, making it better. And that’s lots of little tests and lots of little experiments versus doing something wildly crazy that we can do and should do.

Brad Giles  14:45

Okay, so I want to read this from this quick excerpt from Jim Collins website because it explains why it’s called fire bullets before cannonballs. Picture yourself at sea, a hostile ship bearing down on you. If you have a limited amount of gunpowder, you take all your gunpowder and use it to fire a big cannonball. The Cannonball flies out over the ocean and misses the target off by 40 degrees, you turn to your stockpile and discover that you’re out of gunpowder, you die. But suppose instead that when you see the ship bearing down, you take a little bit of gunpowder and fire a bullet, it misses by 40 degrees, you make another bullet and fire, it misses by 30 degrees, you make a third bullet and fire missing by only 10 degrees. The next bullet hits ping, the whole of the oncoming ship. Now you take all the remaining gunpowder and fire a big cannonball along the same line of sight, which syncs the enemy ship and you live. And so, so that’s where the phrase come from. And this is obviously an analogy to what he observed in these companies that he analyzed in the great buyer choice study that these companies were deciding to take these small bits before they took the big bits. So let’s move on to the problem. The problem here is pure innovation. Okay, people get excited when you come up with a new idea. It’s exciting. And especially if you’re an entrepreneur, or working in an entrepreneurial company, some people are just like idea factories, right? They pumping out ideas all the time every week, almost. But there’s no validation. There’s surrounded by all of these great ideas, but they never validate them. And sometimes they bet on them because of their emotion. Okay, so creativity is the great thing about entrepreneurship. But it’s also the problem with entrepreneurship, is that creativity, the brain loves it. But the discipline is hard. The brain loves creativity and hates the discipline. That’s really why business is about a relentless focus on the boring basics.

Kevin Lawrence  17:21

Ideas are easy, ideas are everywhere. They are high value creative solutions to problems for sure. And ideally, customer problems. But it’s the relentless execution that pays. But when you get too caught up in the creativity, it’s chaotic. And it’s actually really dangerous for business.

Brad Giles  17:39

And I’ll tell you one thing, a bullet is not calling something low hanging fruit. Low hanging fruit is. You know, that’s one of the words one of the phrases that I just hate because it’s anecdotal. It just says to people, this is the easy way.

Kevin Lawrence  18:09

It’s almost it’s an indication of being easy and lazy versus strategic and discipline.

Brad Giles  18:15

Correct. And, and so if you look at an idea and saying, oh, that’s the low hanging fruit, we should do that. That is not firing a bullet. That is not validating the idea.

Kevin Lawrence  18:32

I got it. It’s just doing something sloppy and easy versus a bullet is meant to test a highly valuable hypothesis, an idea we have that can be notably beneficial to our customer, ourselves, whatever it is, it’s testing something of great importance, but with small little chunks to prove it first.

Brad Giles  18:53

Yeah. So rather than saying that’s the low hanging fruit, you could say, alright, well, let’s test that by firing a bullet. We’ll just do a very small trial.

Kevin Lawrence  19:01

The other thing with pure innovation is that usually companies benefit more from relentless execution and discipline than they do innovation. Yeah, people often over innovate. And when we’re starting with companies, they got all this exciting stuff they’re doing. And for some companies, that’s great. But usually the value creation is disciplined execution of stuff they’re already doing that’s already good. And taking that goodness and making it great.

Brad Giles  19:27

Yeah, you look at the second, or you look at a company like Apple, and we think they’re great leaders at innovation. But most of the time, they’re just building on other people’s ideas.

Kevin Lawrence  19:39

And executing with great rigor. The innovation is easy, generally, unless you’re in deep, deep, deep scientific realms. The innovation is the easy part. It’s the execution. So that’s why the bullets and ideally, your bullets are aimed at things that could be innovation and also We’ll just better execution, from the perspective of the customer, it’s all about benefiting the customer. The second thing I want you to do so the first thing is, is the problem is with pure innovation. Second is it forces you to follow a process. And that’s the idea, rather than randomness and chaos and doing what you want, and how excited it’s a process that brings rigor and discipline, to your new ideas. And we’ll call it innovation, you know, and basically, I like to think about it as it forces you to prove it in the marketplace, rather than proving it in the boardroom. And that’s different. Right? And it’s almost like, you know, your child could be your kid, my son, he could be a great, you know, at simulated video games versus some stuff in the real world, it’s a different skill. And so to take it from theory to practice, yeah, it’s just it’s a discipline way to make that happen.

Brad Giles  20:56

Imagine if you’ve got a leadership team in a room, and there’s one person who’s really for the idea, and someone who’s really against the idea, then it by following a process and forcing everyone to get to a point where are we prepared to fire a bullet? It takes the personalities out, and then we will, we will let the science decide, we will let the process decide.

Kevin Lawrence  21:22

And if you do it, right, because these are small tests, you can often do both, okay. There’s two different people have two different ideas. And if we think those are our top two ideas, we can’t decide, well, let’s test both. It’s called A/B testing in the software world and marketing, you test to see which produces a better result. The key is you got to give it a fair test. And this is the key thing with bullets. In order to test a bullet successfully, which is a discipline, you also need a disciplined approach. So for example, I was with someone that was doing a new test recently. And they were using the discipline of kindergarten kids trying to do a very high value test. Well, that’s not you don’t get good data back, if you don’t have tight controls and discipline around the test. So bullets are tests, discipline tests, but you need disciplined execution of those discipline tests to actually give it a fair shake, and to truly be able to validate it. And often, if someone’s doing off the corner of the desk, sometimes we don’t truly give it our all and it’s hard to judge whether it was failed execution of the idea or failed idea. So that’s why you got to set them up real good.

Brad Giles  22:41

So that point is it reduces the financial risk of a big bid. It’s exciting to take a big bet and right, there’s no doubt about it. But it is exciting, because it comes with the risk that it’s going to fail us and it reduces the risk and therefore helps us to endure the Great by Choice companies compel comparison companies also fired cannonballs, but they were uncalibrated. That’s the important point that Jim makes now untested in the market to validate that they would actually work comparison companies had uncalibrated cannon balls flying all over the place.

Kevin Lawrence  23:18

Right. And now the comparison is the underperforming companies just to ground people back and Jim’s work in. We see it all the time. Yeah, we see people make these big bold, because I just had one today, came into my email over the weekend, I was looking at it. And this client worked with us firm to say what could our product be like in the future, they came back with a most impressive deck. Man, this stuff looks sexy. It looks slick. It looks smart. And let me read you my exact words I wrote to the CEO. I said, beautiful work. Let’s be very sure to debate this in a small strategic group before deciding on this direction. It looks beautiful and compelling, and could be a very bad strategic move for the business. Not saying that it is a bad move, but that it could be I only know enough to be cautious and concerned and need more information. Because it’s beautiful, sexy stuff that appeals to the ego. It looks like it was developed by Apple. My God in my mind. I don’t even know if we should develop the product. Never mind how amazing it looks. So because it’s an absolute freaking cannon ball. Yeah, like when you go down this road. It’s, there’s it’s not a little move. point of it being is that but But I look at that presentation I’m going so many people would choose it because it looks so sexy and it’s so appealing. But under the surface, it could be horrible. We need to find a safe way to test it.

Brad Giles  24:58

And people might be listening, thinking Yeah, but sometimes opportunities just pop up like, we didn’t know that the opportunity was going to arise to acquire our largest competitor, or that we would come up with this great idea. But it’s even when it’s not expected, it is even more important to fire a bullet.

Kevin Lawrence  25:22

So one of my most successful clients said, Look, I’m never going to make a decision on the spot, a big decision, I’m always going to sleep on every decision and think it through thoroughly. Now, if someone caught wants to sell me their Rolex store, he was in retail, I am going to decide within about seven minutes, we’re just going to work out the price. But if he’s selling a Rolex store, I’m his buyer. Let’s go. Right. So there’s certain things that are no brainers. And then there’s other things that are not but this person is already in retail understands retail understands luxury, all of those other he’s fired bullets in that direction, and he knows the space like the back of his hand or the back of his wrist in the case of watches. But the point of is, there’s some things that are no brainers. It’s just a matter of banging out the price, but it’s not a venture into a new space.

Brad Giles  26:21

Let’s move on to the next one. It keeps teams focused on business as usual. And it helps avoid distractions that can be damaging, when you get a big opportunity come in, it can suddenly distract many people in the business. And then the business’s current strategy or financials will be hit this and not it’s it can, it can not only cost money in that direction, but it can also be cost.

Kevin Lawrence  26:49

Yeah, that’s why I’m very careful with companies when they want to expand into new countries and new markets. It’s um, it’s exciting. And it’s, it’s like acquisitions, exciting, and very distracting. It better be worth it.

Brad Giles  27:02

It better be worth it. And then finally, sometimes bullets work. Sometimes you go from the 40, 30, 10 degrees, and then you get that pin. And then when that happens, that’s when you’ve got to go for it.

Kevin Lawrence  27:18

You’ve de risked it. Yes. Because you know, it works. You’ve proven it works. It’s no longer a risky, bold move. It’s now almost silly not to do it. Because, you know, it’s it’s like printing money. We’re going to invest single dollar bills and $10 bills come back.

Brad Giles  27:40

And why does that matter?

Kevin Lawrence  27:43

Because it’s proven. It’s an it’s gone from an idea to commercial success. It’s proven it’s got the seeds of commercial success. And if you’re trying to build an enduring, great business, you want to getting be getting a return on your capital. It’s like if you are able to count cards, and if it were legal, if you’re able to count cards, and you know, statistically, there’s a 90% probability that you’re going to get that you’re going to be able to win the next hand. It’s you should take every dollar you have and do it, or most of the dollars you have and some people still won’t. So it’s, but listen, cannibals is being more conservative until it’s proven generally than the average population. And then more aggressive than typical ones. You know, it works. So it’s both.

Brad Giles  28:43

Very good. So let’s have a quick summary. And then we’ll move to wrap up. So fire bullets before cannonballs. So what is it? It’s a concept from Great by Choice. We do small, low risk, low cost low distraction experiments to figure out what will work and then we go for it. Why does it matter? It matters because this is risky. And this is distracting. And it takes us away from a relentless focus on the boring basics. No one is smart enough or experienced enough to know what will or won’t work. So the problem with pure innovation is that people get excited. And then people are like idea factories, pumping out ideas, but there’s no validation and it’s all about the execution.

Kevin Lawrence  29:33

Yeah, what number were on there, but number two, okay. And finally, it reduces the risk of a big bet, which is Brad already talked about waste money and more importantly, distracts the organization. Number four, keeps the team focused on the core business, not pulling them away by the exciting stuff that may not go anywhere. And finally, when it works, then you gotta backup the trucker cash and fire that cannonball. Go for it. And then because you know you’re gonna win.

Brad Giles  30:00

Awesome, awesome a good chat. Well, I hope you’ve enjoyed today’s episode about firing bullets before cannonballs. You may want to check us out on YouTube. If you just search the growth whisperers Kevin has an interesting newsletter that he pumps out every week. And you’ll find Kevin at Lawrence and co.com and I have the same newsletter that I produce every week and you’ll find me Brad at evolution partners.com.au Hope you’ve enjoyed the episode.