If there is a single framework that can be applied, and if pursued will guarantee a chance of success for your business, will you do it? What is the secret sauce that separates the successful from the rest?
The Makings of Highly Successful Companies
Revised on August 17, 2020, by Gauge Team
Learning from the Best
If a single framework can be applied, and if pursued, will guarantee a chance of greater success for your business, will you do it? What is the secret sauce that separates the successful from the rest?
A Frame of Mind to Set You Apart
Having the opportunity to review hundreds of companies, we concluded and decided upon the Good to Great framework by Jim Collins, a time-tested model built upon data sets of over 15 years and over thousands of companies. Jim also had a hand in guiding Jeff Bezos at the point of time when Amazon was on the brink of bankruptcy in 2002 to being one of the largest companies in the world and the richest man in the world.
We have synthesised and extracted the key components of his research and presented it into 5 simple steps on what it takes to build a great company.
1) Getting the Right People on the Right Seats on the Bus
People are the most important assets in any successful organisation. Searching for the right people is an ongoing process, and only by having skin in the game will you learn and improve. Two great questions start with, to know if the person is the right fit for your business:
- If I were to hire the same person again, will I do so?
- If the person leaves, do I have a feeling of relief rather than a loss?
These are guiding questions to determine the criteria for having the right people and placing them in the right places. Businesses will benefit immensely once the core team is in place. This also acts as a magnet for talented individuals, like the top-performing track and field team; everyone wants to be part of it.
2) Face up to reality on your current situation and have an unwavering belief that it will work out eventually
Should businesses be led by an optimist or a realist? The answer to that question is a good balance between the two. An optimist is usually deeply rooted in positivity regardless of the situation, and a realist is a highly pragmatic person, which in many cases has a reduced appetite for risk.
According to the research, a common trait inherent in transformative leaders is taking the realist approach in the short term and placing all bets on the belief that success will eventually prevail. This means being willing to face up to the brutal facts of reality, being diligent in addressing the issues and have the long term positive outlook that it will eventually work out.
A great indicator of reality is the data coming from customers and sales. Listen to the facts and gather insights using available technological tools to assess consumer/market preferences. (avoid being the case of “it has always worked for us in the past and should work in the future”.)
3) Finding the Sweet Spot
Any existing or new products or service, this is the key process principles that need to be considered before pursuing it.
A) What deeply drives you and what you care about
B) What can you be the best in the world in
C) What drives your economic engine (a unit of measure to quantify)
Case studies of Great companies that stayed true to these 3 principles (Sweet Spot)
Abbott is a global leading nutrition company, offering science-based nutrition products for consumers with a variety of health conditions, supporting them with the nutrients they need to thrive. Their line of products includes Similac, Ensure, Glucerna, PediaSure, EAS and ZonePerfect.
Identifying their Sweet Spot
A) Passionate: To Improve Human Health
B) Best at: Best in Products that lowers the cost of Healthcare
C) Economic Engine: Profit per Employee (which translated to cost-effective healthcare)
The bottom quartile of the market that depended on its cash cow erythromycin, Nepotism(family run)
Outperformed the market growth by an average of 4 times for 15 years and 30 Billion in revenue in 2018
Kimberly-Clark is a global consumer brand mainly offering paper-based products accross more than 175 countries. Their line of brands includes Andrex, Cottonelle, Depend, Huggies, Kleenex, Plenitude, Poise and Scott. Their market brand share holds the No. 1 or No. 2 positions accross 80 countries.
Identifying their Sweet Spot
A) Passionate: Providing the Essentials for a Better Life
B) Best at: Best in Paper-Based Consumer Products
C) Economic Engine: Profit per Consumer Brand (lesser reliance on cyclical seasons)
A fledging paper mill company
One of the largest paper-based consumer products producer in the world. Outperformed the market growth by an average of 3 times for 15 years
Started as a single drugstore, Walgreens today is a provider of trusted over the counter Pharmacy with over 9,560 stores. Through constant innovation, Walgreens has a history of breaking new ground to meet its customers’ needs and improve their health, from offering self-service stores.
Identifying their Sweet Spot
A) Passionate: Understanding, Meeting and Exceeding the needs of Outpatient Care
B) Best at: Most Convenient Drug Store
C) Economic Engine: From Profit per Store to Profit per Customer Visit (having sustainable economics and increasing profitability across its entire system)
A small food front store
The second largest pharmacy store, Outperformed the market growth by an average of 7 times for 15 years
Like surgery, everyone prefers a specialist rather than a generalist. It may be tempting to take on every opportunity that comes by, but staying focused and being really good at something tends to provide consistency and upside potential in achieving superior gains for you and your business.
4) The Culture of Discipline
According to George Rathmann, formerly an employee in Abbott, a multi-billion dollar health care company, he started his own firm, Amgen. He applied a key lesson learnt from Abbott to his business which then grew his firm to a USD128 billion size company and is ranked as the 7th largest biotech company in the world. The lesson he learnt from Abbott was to instil a highly disciplined culture, one that is accountable and measurable.
According to George, “when you set your objectives for the year, it’s something decided and can’t be changed. The next step is taking the plan and measuring yourself against it. Don’t readjust to make yourself look good or no matter how tough the measure, keep to it and look at what you have achieved against your goals.”
Dave Scott, a world-class athlete six times champion of the Hawaii Ironman Triathlon. He would ride his bike for 120km in training, swim a distance of 20km, and run for 30km on average every day. And to further demonstrate the level of disciple and mental strength that sets him apart, he would adhere strictly to a low-fat, high carbohydrate diet that gives him the extra edge. With the training regime that Dave has, he could easily lose 5,000 calories a day, but it is having that commitment to stay disciplined and not leaving anything to chance. The principle of disciple here is the most crucial step, as it acts as the foundation of holding everything together.
5) Riding on the Momentum
Like rotating a stone mill, you will be faced with extreme resistance at first, but as you keep going at it, the resistance becomes more manageable, and in due time, the rotational motion becomes a lot easier. This can be said to the framework mentioned above, tapping onto the momentum to reap the benefits of efficiency gains and consistency in performance. By constantly applying the concepts above and taking action, you will then be able to reel in new exciting opportunities and prime your business towards success.
In a nutshell, practice and constantly review the following steps;
1) Getting the right people in the right places,
2) Face the facts and believing,
3) Locating the sweet spot for your business,
4) Set a plan and have the disciple to follow through, and
5) Consistently repeat the process
Finally, the part on implementation and taking action
Start by evaluating and see how you can begin selecting the right people, address the realities of the business with a positive frame of mind, specialise in a sweet spot, be highly discipline to create/follow a plan, take action and repeat the entire process.
Rather than doing the minimum, we should focus on pushing the maximum. Only then, will we realise that there are no limits
The framework above is an adaption from the research done by Jim Collins and his team over thousands of companies with data sets of over 15 years to determine the framework that works and for the manual on Good to Great. He also had a hand in guiding Jeff Bezos during the time that Amazon was on the brink of bankruptcy in 2002 to being one of the largest companies in the world and the richest man in the world.
Jeff Bezos reveals the story of building the Amazon empire and becoming one of the richest man in the world. 19 Feb 2019
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