Just 3 Rules for Success - Dream or Reality?
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!
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Andreas von der Heydt is the Country Manager of Amazon BuyVIP in Germany. Before that he hold senior management positions at L'Oréal. He´s a leadership expert, management coach and NLP master. He also founded Consumer Goods Club. Andreas worked and lived in Europe, the U.S. and Asia.
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Other recent posts by Andreas von der Heydt:
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🏆 Director of Sales | Revenue Growth Strategist 🌟
10yWhat a great article.
An agile professional in mentoring and life coaching
10yIt is very difficult to pin down to a few.I feel 3C's; Customer,Culture,Confidence can always improve and sustain companies.
Feeding People and Livestock with Minimal Water
11yThese rules ring true to me. Whereas there may be dozens of ancillary principles attached to them, these two rules really are the differentiators. Better not cheaper. Revenue before cost. Yes.
President & Chief Operating Officer at Cantrex Nationwide; the largest buying & marketing group in Canada
11yThese are important rules but they are far from being the only rules for success. Making a good decision is only half of the process and of course a successful implementation is the other half in the same simplified way!
Senior Global Brand Licensing Manager @ PVH Corp. | Marketing Strategy, Brand Management
11yThanks for sharing it. Personally I believe that there is no such thing as "3 rules of seccess), we all know that life is more than that. 1. The rules change from a decade to a decade(or even from year to year) because companies are changing and technology also changes rapidly. SO rule number 1 is to stay UP TO DATE to the everlasting changes in the market and to listen to your customers! (engagement in all aspects) 2. Creativity and innovation- which goes together, in my opinion, because one leads to the other. always be creative and renew your products/services. 3. Leaders and Managers are the ones who will eventually lead the company to a better place(or worse) last thing- YES definitely people have the tendency to make things much more complicated than they are!!! the simple things always work the best. KISS-keep it smart & simple. It is always complicated but It is only complicated if you think it is. cheers