Wisdom Without Waiting: The Common Denominators of Success
© John L. Mariotti
Business is not that complicated, success is, and it is based on value.
As I read through the applications for the IndustryWeek Best Plants competition, I kept saying to myself there is a theme in here. As I reviewed the IW100 Best Managed Companies, I found myself muttering the same thing. But what are the themes--or more appropriately what are the common denominators.
Before attempting to answer that question, let's review what business is all about. Business is really pretty simple. Someone comes up with a product or service that people want and will pay for. Then they go about making or providing it, using material they buy and the efforts of people they hire, to produce and deliver it. Someone keeps track of how much it costs to provide the product or service and deliver it. Then the price is set high enough to cover all the costs, and leave some profit remaining. Nothing to it, right? Wrong!
You see, there is an elegance in this simplicity, and the elegance is in the details. I think it was architect Mies Van de Rohe who said, "God is in the details." The business scenario I outlined above was more often the case in the go-go, grow-grow 1960s and 1970s. These days, the customer sets the price more often than the producer/provider does. Often they do so in total disregard for the profit that might remain (or even for the possibility of creating that kind of good or service at that cost).
After considerable thought, I decided that there are two types of common
denominators for survival and success in this new world of competition.
These common denominators seem obvious to me, and I hope they are to you
(in case I miss some, I hope you will e-mail
or write to me with them!). They fall into two classes; "enablers",
and "attributes."
There are three basic enablers:
- People. This comes first on any list. I learned this one as a Little League baseball coach. Get the best players and winning is a lot easier. Keep them together while they really learn to operate as a collaborative team, and the advantage builds into what they call a dynasty (in sports) or a dominant market leader in business.
- Information. For those of you who want to play semantics and say knowledge, I contend that information (not data!) combined with human insight creates knowledge. Have more information than competitors and get it faster, and share it more broadly, and the competitive advantage swings in your favor assuming there is not a large people disadvantage!
- Technology. This alone can assure success temporarily, or in a limited number of situations (like with Polaroid's instant picture technology). Most often, the skill of people applying the technology is the real success creator. Like information, technology is powerful alone, but the people using it make the real difference because competition can buy technology pretty quickly.
Once the enablers are in place, the five attributes that comprise value become the "results:"
- Quality. If something will not perform the task for which it was intended and be durable and reliable for the time frame expected, what good is it. It is amazing how many people ignored this attribute until competition and the past two decades' quality movement woke them up.
- Service. Try to remember the last time you had a really great, "tell your friends about it, feel warm all over" service experience. When I ask that question of a live audience, there are few hands that go up. Really great service can be expensive, and it is necessary that the cost of providing it be paid, but service is a huge success factor, especially when parity in product performance and cost are increasingly prevalent.
- Speed (or timeliness). Everything these days happens faster. those who can deliver faster, have an advantage. Once again, speed costs money, but it even creates new markets. Who knew they needed FedEx until they found they could get packages delivered reliably on the next day.
- Cost (low cost, that is). The low cost producer has a tremendous advantage because they can choose which segments of the market they wish to compete in, and reap the profits accordingly. Many consumers and industrial purchasers choose first on low cost, and then on the other attributes. It may not be right, but it happens a lot.
- Innovation (or uniqueness). This one is the attacker's advantage. Find a new, better, more unique solution, and get a big jump on the competition--and usually collect a price premium as well! Find a way to keep it unique, protect the premium for a while and reinvest that in more innovation and the marketing to go with it.
Finally the one common denominator that sums it all up is:
- VALUE. Cost, efficiency and output were the mantras of the 1960's and 1970's, quality was the mantra of the 1980's and service/speed the mantra the early 1990's. Value is indisputably the mantra of success in the new millennia and for decades to come.
These are the common denominators of success--far easier to describe than to achieve. Strategies based on them are easily written, but "God is in the details" of execution. What is easy, how is hard. Figure it out and you win. That was the common theme of the winners of IW Best Plants and IW100 Best Managed Companies.
