Great By Choice 20 Mile March

1. Great By Choice20 Mile March Miguel A. Lopez Alexander Johnson Carissa Tarnowski Rebecca Eggerman Hannah Stephens

2. Preview • Walk Across the U.S. • 20 Mile March • The Alternative • The Strategy • Characteristics of 20 Mile March • 20 Mile March Comparisons • Unexpected Findings • Performance Mechanisms • Results of Success • Self-Imposed Discomfort • Good 20 Mile Marches • 10X and the 20 Mile March • Whole Foods • Cause and Effects • Summary

3. Walk across the U.S. How long will it take you? How much supplies will you need? Where will you find shelter? How much will it cost you? How will you communicate to the outside world? How far is 3,000 miles?

4. How far is 3,000 miles??? Maine San Diego 3,000 Miles

5. 20 Mile March • Walk 20 miles • Don’t walk more than 20 miles • Don’t walk less than 20 miles • Don’t think about weather

6. Alternative • Walk in only good weather • If you can, walk more than 20 miles • If the weather is bad, rest

7. The Strategy 20 Mile March Alternative Walk 20 Miles Don’t walk more than 20 Miles Don’t walk less than 20 Miles Don’t think about the weather Walk in only good weather If you can, walk more then 20 miles If the weather is bad, rest

8. Characteristics of a 20 Mile March • Clear Performance markers • John Brown 20% marker • Self-imposed restraints • Not move past a given point in a year • Appropriate for specific enterprise • No such thing as an all purpose 20 mile march it must be tailored to the industry.

9. 20 mile march • Largely within the company’s control to achieve • No need for luck in the market to achieve your goal. • A proper timeframe • Not too short and no too long

10. 20 mile march • Imposed by the company on itself • Imposed by the enterprise not copied from somewhere else (no outside pressure) • Achieved with high consistency. • Intention to achieve benchmarks not good enough.

11. 20 Mile March Comparisons Stryker USSC 20% annual earnings 20 Mile March consistently Successful from 1992-1994 Erratic growth and earnings Breakthrough innovation Overextended and sold out in 1998

12. Southwest Airlines PSA Profitable for 30 years Maintained profit even after 29/11 Constrained growth to ensure profitability Began with 20 Mile March philosophy Abandoned philosophy in 1970s Taken over in 1986 by US Air

13. Progressive Insurance Safeco Insurance Averaged combined ratio 96% Limited growth to ensure maintained ratio Profitable 27 of 30 years Focused on combined ratio early on Went for growth acquisition of American States in 1980 Profitable 10 of 27 years

14. Intel AMD Upheld Moore’s Law Doubled complexity at minimum cost Kept consistent over entire course Pursued big growth Unprepared for bad times No steady growth marker

15. Microsoft Apple Practiced 20 Mile March innovation Products improved over time Never strayed from 20 Mile March Didn’t use 20 Mile March initially Inconsistent profit and growth Introduced 20 Mile March with return of Steve Jobs

16. Amgen Genentech Used 20 Mile March in incremental innovation Continuously developed existing drugs Strong revenue growth Bet-big and over overpromising mentality Began 20 Mile March in 1995 after downfall Broke 5 year goals into 1 year goals

17. Biomet Kirschner Consistent profit growth 20 of 21 years 20 Mile March innovation Never overextended Didn’t use 20 Mile March “Grew fast through acquisition” Resulted in crisis and sold out in 1997

18. Unexpected Findings Expectations Reality Pursuing aggressive growth Making radical, big leaps Catching the Next Big Wave Hit stepwise performance markers Great consistency Long term

19. Performance Mechanisms • Concrete • Clear • Intelligent • Rigorously Pursued

20. A Result of Success? • 10X Companies • Embraced long before they were big companies • Comparison Companies • Some had shown no signs of 20 Mile March • Some only did well when they also 20 Mile Marched

21. Creates Self-Imposed Discomfort • Unwavering Commitment • High performance in difficult times • Holding Back • In good conditions

22. A Good 20 Mile March • Performance Markers • Lower Bound • Self-imposed Constraints • Upper Bound • Tailored to the Enterprise • Applies to Company • Lies Largely Within Control to Achieve

23. A Good 20 Mile March • Goldilocks Time Frame • Not Too Long/Short • Designed and Self-imposed by the Enterprise • Not Imposed from the Outside • Achieved with Great Consistency • Good Intentions Not Enough

24. 10X Companies 20 Mile March • Strategic Mechanism • Near-perfect Record • Missing a march is not seen as OK There’s no excuse, and it’s up to us to correct for our failures, period.

25. Whole Foods Market • Intends to Grow • at such a pace that financial health continues to prosper • Salary Cap • limits the maximum cash compensation paid to any Team Member

26. Whole Foods Market "The pace of new store openings and lease signings continues to increase, and our accelerated growth plans are on track. We expect healthy comparable store sales growth and continuing operating margin improvement in fiscal year 2013.“ - John Mackey, co-founder and co-chief executive

27. Whole Foods Market • For the quarter ended Sept. 30, • Profit of $112.7 million • Sales grew 24% to $2.91 billion. • Latest quarter • same-store sales rose 8.5% • 14th consecutive quarter of growth.

28. Cause and effects of the 20 Mile March • Builds confidence • Failure to complete leaves an organization exposed to turbulent events • Helps exert self-control

29. The 20 Mile March Summary • A distinguishing factor to 10x companies and comparison companies • Requires hitting specific performance markers with great consistency over a long time period • Does not have to relate to financials • It is never too late to adopt • 10Xers set their own 20 Mile March

30. What is your 20 Mile March? What is something that you want to commit to achieving for 15 to 30 years with as much consistency as the 10X companies we have discussed today?