If I could take all of the “smartest guys in the room” I’ve met in my life, and put them all together in a room, I’m pretty sure that a guy named Michael Raynor would turn out to be the smartest of the lot. With co-author Mumtaz Ahmed, Michael has documented research and analysis with a surprising tell … that companies who look first to deliver superior benefits to their customers are more profitable over time than companies that look first to compete on price. So much for the mad dash of major companies to shift their back office support overseas in the interest of increasing profits. Now we have proof that it’s not necessarily the prudent to do.
In their new book The Three Rules: How Exceptional Companies Think, (PORTFOLIO/PENGUIN, 2013) Messrs. Raynor and Ahmed take pains to prove this point starting with financial performance data covering 25,000 companies over a period of 45 years. Along the way to supporting their own arguments, the authors examine some 25 other “success studies” to ascertain just how positive a role model the companies selected for these studies were in the first place. The surprising answer is a big fat NOT SO MUCH. Which means, unfortunately, that the prescriptions for business success coming from bestseller books such as Good To Great and In Search of Excellence are based on research about companies that themselves are not exceptionally profitable. The authors are quiet about it, but they obviously enjoy serving up some very humble pie.
In addition to the fun reading about how these brilliant guys from Deloitte Consulting set the record straight with respect to much better known big-shot authors and consultants, I have my own reasons for loving this book. That’s because their prescriptions for practice are 100% aligned with the business strategy themes and practices that I learned 25 years ago at Gemini Consulting, and that I continue to share with clients today.