With rare exception, the best business books are research/evidence-driven and that is certainly true of this one. Michael Raynor and Mumtaz Ahmed rigorously examined a database of more than 25,000 companies from hundreds of industries throughout a period of more than four decades and eventually identified 344 companies that qualified as statistically "exceptional." That is, 174 "Miracle Workers" (the best of the best) and 170 "Long Runners" (exceptional but at a lower level). But after five years of research, they failed to identify a consistent pattern of behavior that separated the exceptional companies from all the others.
Eventually, they shifted their attention from what people in these companies did to series of hypotheses about how people in these companies [begin italics] thought [end italics]. Their conclusion is that exceptional companies have people who consistently make the best decisions about (a) what to do, (b) how to do it, (c) what not to do, and (d) why. For example, which questions to ask? Which problems to solve? When and where to compete?
In this context, I am reminded of a passage in the first chapter of a book co-authored by Noel Tichy and Warren Bennis, Judgment: How Winning Leaders Make Great Calls, in which they assert that what really matters "is not how many calls a leader gets right, or even what percentage of calls a leader gets right. Rather it is important how many of the [begin italics] important [end italics] ones he or she gets right." They go on to suggest that effective leaders "not only make better calls, but they are able to discern the really important ones and get a higher percentage of them right. They are better at a whole process that runs from seeing the need for a call, to framing issues, to figuring out what is critical, to mobilizing and energizing the troops."
This is precisely what Raynor and Ahmed have in mind when observing, "By seeking the decision-making criteria in the many and varied choices our exceptional companies made, we were able to reduce an overwhelming complexity to a mu h more manageable set of rules that applied regardless of the circumstances." Check out Chapter 1, "More Than a Fortune Cookie" and appendices A-J, Pages 241-351, for complete details about the research, evaluation, and selection processes.
The title of the book refers to three rules that, according the Raynor and Ahmed, have guided and informed the decisions made by leaders of exceptional companies and can also do so for decisions made by leaders in all other organizations, whatever their size and nature may be. "Better before cheaper" does not mean price competition is irrelevant; it means that when you have a choice to make, and when the data are unclear, go with "better." Next, "revenue before cost" does not mean increasing revenue is more important. As for "there are no other rules," it does not mean you can blindly follow the rules; it means you must apply all your creativity and insight to follow them in the face of all manner of other changes. "Hewing to the two rules means that everything else is on the table, and this imposes a heavy burden of active search to determine how best to adhere to the two rules in the face of sometimes wrenching competition and environmental change. It takes a great deal of flexibility to be persistent."
Raynor and Ahmed are convinced that the path to exceptional performance lives in the pursuit of the first two rules "and regardless of the choices you face there are no other rules. The quest for greatness finally has more to sustain it than a fortune cookie."
These are among the dozens of passages of special interest and value to me, also listed to indicate the scope of Raynor and Ahmed's coverage.
o Better Before Cheaper, Revenue Before Cost, and There Are no Other Rules (Pages 10-29)
o Deciding to Be Exceptional (29-33)
o Measuring Performance (41-56)
o The Relativity of Position (63-69)
o Execution: Kinetic Energy (86-96)
o The Structure of Differences in Profitability (111-117)
o Same Recipe, Different Ingredients (158-161)
o Change to Stay the Same (162-179)
o Reactive Change: Only if Necessary (183-192)
o Playing the Odds (204-209)
o Three Dimensions of a Generalized Case Study Analysis (220-229)
o Defying Gravity (229-231)
In addition to the Miracle Workers and Long Runners, Raynor and Ahmed also studied companies they characterize as "Average Joes." As their name suggests, they are merely average. Two of several questions addressed in this book are: "What does it take to pull away from the pack, that is, how do Miracle Workers and long Runners separate themselves from Average Joes?" and "How do Miracle Workers - the very best - pull away from the Long Runners - the very good?" They suggest that their reader think in terms of gold and silver medals, analogous to International Olympic competition. No medals for unexceptional athletes. They don't even qualify for competition.
Michael Raynor and Mumtaz Ahmed are convinced that the path to exceptional performance lies in the pursuit of the first two rules "and regardless of the choices you face there are no other rules. The quest for greatness finally has more to sustain it than a fortune cookie." When concluding their book, they observe, "Every glider lands eventually. How long it stays up, how far it flies, and the heights it reaches are all profoundly affected by the pilot's choices. It is our belief that by consciously adopting the three rules - better before chapter, revenue before cost, and there are no other rules - you can reasonably hope to deny gravity its due for just that much more longer."
on 3 June 2015
An excellent, data driven piece of work that tries and succeeds to establish how businesses at the top of their game think and act compared to their peers. With a statistical rigour that could be overwhelming, their text explains with a generous helping of tables and graphs, their simple conclusions. In following those companies over extended periods of time they also explore those companies that found the secret, lost the secret and in some cases managed to keep it.
While you examine the graphs and look at some of the companies selected you may challenge some of the "Miracle worker" tags, such as Abercrombie & Fitch, for example. However the analysis and your own involvement in the work is an education.
This is a fascinating book. It boils down to three rules. There are three rules that predict high performance in companies that can be sustained over time:-
1. Better before cheaper
2. Revenue before cost
3. There are no other rules.
The bulk of the book is devoted to showing the evidence that the authors have examined thoroughly to justify these strong conclusions. The data is well and fairly presented, and is convincing. The authors have done us all a great service by doing this research and documenting it thoroughly for us as readers.
The three rules lead to some sharp implications for many companies and organisations. How many companies are still trying to squeeze out extra profit per pound? How many government institutions are unable or unwilling to raise cash to stop a long term revenue drain? The race to be faster, better, cheaper and so on is actually a competitive race to the bottom. Innovation, keeping up service quality, looking beyond an upfront cost are what actually keep businesses developing and growing.
This book is a great help in simplifying the outline of high performance and service delivery. I can recommend reading it for those of you who want to check its validity. If you are happy to accept a summary then you can start using the three rules immediately.