Just 3 Rules for Success - Dream or Reality?
April 09, 2013
The cover page of the current edition of the Harvard Business Review certainly draw my attention the other day.
Its lead article, which is very prominently featured on the cover, is called “3 rules for success.” The authors Michael Raynor and Mumtaz Ahmed promise to have studied 25,453 companies over 44 years.
Well, the two gentlemen – since they were not so happy about the lack of scientifically credible data about what factors lead to superior business performance – decided to go ahead and to undertake a statistical study of thousands of companies, and eventually identified several hundred among them which they qualified as truly exceptional.
Since the ground-breaking book of “Built to last – Successful Habits of visionary Companies - by Jim Collins and Jerry Porras not many books and articles came close to their findings and the respective title of their study and book. Drawing upon a six-year research project at the Stanford University Graduate School of Business, Collins and Porras took eighteen outstanding and long-lasting companies and studied each in direct comparison to one of its top competitors. By the way, I would call that scientific and high-quality data.
Raynor and Ahmed, after their monumental quest for reliable data on organizational excellence, finally discovered that great companies were consistent with just three seemingly elementary rules:
1. Better before cheaper – in other words, compete on differentiators other than price.
2. Revenue before cost – that is, prioritize increasing revenue over reducing costs.
3. There are no other rules – so change anything you must to follow rules 1 and 2.
They further noted that with few exceptions, the best companies behave as though these principles guide them through all their important decisions, from acquisitions to diversification to resource allocation to pricing.
Questions: Do we really believe that the success of exceptional companies can be distilled down to 3 factors only? In this case, and being precise, even to only 2. Or, is the outcome, conclusion, and – most importantly – the communication of their study just the result of the latest aspiration of almost every management author to put findings, learning, and recommendations in expressions and titles which foremost draw interest and sound simple? On the other side, do we think that it might be possible? That we have this tendency to make things too complicated, and that in reality, however, it could be so easy and straight-forward?
What do you think? In your opinion which are the factors which ultimately define the success of truly outstanding companies? Can you limit and rank those?
Looking forward to hearing from you soon!
Best regards,
Andreas von der Heydt
http://www.consumergoodsclub.com
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