Golden rules to a great company

By Mumtaz Ahmed

Much of the strategy and management advice that business leaders turn to is unreliable or impractical. That’s because those who would guide us underestimate the power of chance. Gurus draw pointed lessons from companies whose outstanding results may be nothing more than random fluctuations.

Executives speak proudly of corporate achievements that may be only lucky coincidences. Unfortunately, almost no one provides scientifically-credible answers to every business leader’s basic questions about superior performance: which companies are worth studying? What sets them apart?

How can we follow their examples? Frustrated by the lack of rigorous research, we undertook a statistical study of thousands of companies, and eventually identified several hundred among them that have done well enough for a long enough period of time to qualify as truly exceptional.

Then we discovered something startling: the many and diverse choices that made certain companies great were consistent with just three seemingly elementary rules: better before cheaper — in other words, compete on differentiators other than price; revenue before cost — that is, prioritise increasing revenue over reducing costs; there are no other rules — so change anything you must to follow rules 1 and 2.

From “Three Rules for Making aCompany Truly Great”