20 Mile Marching vs The Undisciplined Pursuit of More

• “If you want to be more successful, double your rate of failure.” - Thomas Watson

My brother has a sign in his office that reads “make more mistakes.” The principle is simple; you can’t do anything worthwhile unless you proactively go for it. But going for it can lead to mistakes. Thereby the key is not to fear making mistakes, but simply to accept them as the price of climbing up the ladder of success.

This is an extremely important principle and nowhere is it more applicable than real estate. However, too many mistakes in a row can be fatal. Indeed, some mistakes by themselves are fatal, so what’s the best way to find a balance between fearful inactivity and reckless abandon?

I believe the key lies in two books from Jim Collins; How the Mighty Fall and Great by Choice. In Great by Choice, Collins demonstrates that companies that were consistent in their approach did substantially better than those that took an erratic approach, either trying to jump ahead quickly or hunker down. He calls it 20 mile marching after Joe Brown’s philosophy when marching to the South Pole,

• “The 20 Mile March is more than a philosophy. It’s about having concrete, clear, intelligent and rigorously pursued performance mechanisms that keep you on track. The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions. (P. 45)

So instead of going from buying five houses a year to 50, go from five to maybe seven or eight. And when a recession comes, don’t simply give up or simply hunker down because it’s gotten harder. Try to grow in a controlled, consistent manner, always leaning out just a little past your comfort zone. It may not be sexy, but it’s effective.

In How the Mighty Fall, Collins illustrates that it’s not lethargy that usually sinks great companies, but recklessness. He outlines the five phases of decline:

1. Hubris born of success

2. Undisciplined pursuit of more

3. Denial of risk and peril

4. Grasping for salvation

5. Capitulation to irrelevance or death

In other words, generally these formerly great companies will skimp on their due diligence or get overconfident in some manner. Then, after making a key mistake, they try to make up for it and get back their losses. But that money is gone, it’s what they call in business a “sunk cost”. By trying to get it back they usually just make the same mistake again and the decline has become inevitable.

So what’s the lesson in this? Make mistakes, because they’re inevitable, but make them in a framework. Don’t try to become rich overnight, but instead try to grow at a consistent rate. Be thorough in your due diligence and when you do make a mistake do not try to make up for it by hitting a home run with the next big deal. Big risks after mistakes should generally be avoided. Instead, simply get back on your horse and start 20 mile marching.

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