How can you make your business successful?

How can you make your business successful?
Published: 10 May 2017 - noon
By: Namitha Madhu

What makes Apple more successful than NCR? Why did NCR go bankrupt while Apple became the most valuable company on the planet?

These are important questions for any business person. As a consultant and academic, Colin Price has always been interested in understanding what makes some companies more successful than others. According to him, though, “Everyone had a lot of opinions, but there were not enough facts” on these success factors.

His search for the facts ultimately led to the publication of Accelerating Performance, which was launched at the World Economic Forum Annual Meeting at Davos, Switzerland, in January 2017. The book, co-written by Colin Price and Sharon Toye, is a practical, data-driven action plan to help companies pick up the pace in the competitive market. It gives leaders a step-by-step framework for taking action and transforming their organizations, teams, and even themselves.

The book lauched in the GCC last month.

Here is what Colin Price, a visiting professor at Oxford and the Executive Vice President and Global Managing Partner of the Leadership Consulting Practice at Heidrick & Struggles, had to say about his new book in an exclusive interview with Arabian Industry.

Can you tell us about the book, Accelerating Performance?

We did four years of research for the book. We were interested in knowing why some companies win and some lose, and what the differences between them are. So we studied half of the biggest companies in the world – around 239 of them – and uncovered the characteristics of winning organizations. The book lists what those characteristics are and how any company can develop these traits.

What did you find during your research?

We found what we call ‘drag’ and ‘drive’ factors. Drive factors are the things that winning companies do, and drag factors are what losing companies do that hold them back. There are 13 factors, which we categorized into four areas that we call META: mobilize, execute, transform and agility.

The best companies that we studied are outstanding at ‘mobilizing’. They know where they are going, have a clear direction, have invested in getting their senior people to own that direction, and are united in their aspirations.

‘Execute’ refers to creating a kind of replicable or saleable approach to winning in the marketplace, such as investing in technology and having simple organizational structures that allow them to move easily.

To ‘transform’, companies must aim to change at the same rate as the marketplace. Some marketplaces such as insurance change quite slowly, and others like pharmaceuticals or software change incredibly quickly. Therefore, companies need not change at the same pace, but if an organization fails to change at the same rate as its marketplace, some other business might beat it.

‘Agility’ for winning companies refers to their ability to transform their way of doing business quickly. Companies have to do different things every week or month. Some organizations can struggle to make those decisions, while others are really good at it.

These four aspects differentiate the winners from the losers, and any company can become better at them.

Is the book helpful for all employees in an organization?

Although I would love all employees to read it, it is really a managerial book. The more senior you are, the more valuable you will find this book.

How long did it take you to write it?

Forever [laughs]! We did four years of long and rigorous research, after which it was peer reviewed at Oxford, MIT, Harvard and Stanford. The writing itself took about 15 months, and it took roughly six months for the book to be published.

How did the plan to make such a book come about?

I think it’s flattering to call it a plan. I didn’t know I was going to write a book. I am a consultant more than an author, but all my clients were asking me, “What makes the difference in our very competitive marketplace?” So I read everything I could about the topic, and it turns out there are a lot of opinions but not many facts. There has not been much high-quality research done on the topic, which I found surprising. Given that almost all economic activity on the planet is done by companies, you would think that we should know everything there is to know about them – but we don’t. That kind of inspired me to start my research.

Although I spend most of my time at Heidrick, I am also a visiting professor at Oxford. The academic in me thought, “This is really important and nobody knows the answer, so let’s do a year’s study.” One year turned into four years because it was more difficult than I thought to do the analytical work. However, the research was well-received in the academic community and we decided to write a book.

So there wasn’t really a plan. There was only a question: ‘What makes Apple more successful than NCR? Why did NCR go bankrupt and Apple become the most valuable company on the planet?’ It’s a really important question and that’s why we wanted to find the answer. I think we have.

What is the ‘acceleration trap’ the book talks about?

We found that companies that move quicker than their competitors are the ones that win. However, that doesn’t mean they should try to do everything quickly.

For example, a big oil and gas company should move quickly to commercialize their resources and improve their structures, but when it comes to safety, they should move slowly and get it absolutely right.

I am working with the world’s biggest legal firm at the moment, and there are a lot of things we need to do quickly. However, selecting new partners, for example, needs to be done slowly. The idea of the acceleration trap is to be careful that you don’t fall into the trap by trying to do everything quickly. If you do, you often achieve nothing; you become a frenzied organization rather than a purposeful organization.

The real trick is working out which things should be done quickly to bring you competitive advantage, and doing the rest at the right pace.

What are ‘super accelerators’ and how do they differ from other companies?

We found that there are 23 super accelerators worldwide. We found them by looking at the world’s biggest 500 companies and asking ourselves, “Which are the ones growing the quickest?” We found the top 100. Then we were interested in knowing which among those 100 were growing the quickest over a course of seven years – those companies doing it organically, which are not dependent on their home state government, and which are profitable.

When we applied those conditions, the top 100 shrank to 23. 

Those are the best companies in the world today – they might not be the same companies in a few years’ time. Their average growth rate is 14 percent, while the average growth rate of the rest of the 500 companies is about 4 percent.

These organizations have also managed to maintain this level of growth over a sustained period of time. Some of those on the list won’t surprise you, such as Google or Apple. Yet, there are other companies that are a bit unexpected, such as TATA Consultancy Services, HDFC Bank, Visa and Danaher.

Although you might not expect industrial players to be in the top 23, they are. We came across a range of industries and companies, yet there is only one European and one UK company – there are no German, French or Italian companies on the list. That came as a bit of a surprise. The majority on the list were Asian and US companies.

Were there any companies from the Middle East?

No, there were no Middle Eastern companies that met all the criteria. Five Middle Eastern companies, or about 1 percent, featured in our top 500 companies.

What two quick pieces of advice would you give a manager today?

When we did all the analysis, two things were found to make a difference statistically. One is putting customers first. That seems like an incredibly obvious thing to say, but most companies don’t do it. There are four questions I ask companies to judge whether they are prioritizing customers.

Firstly, ‘Who are your top 20 customers?’ This is a reasonable question every Chief Executive should know the answer to, yet most don’t. Secondly, ‘How satisfied are your most profitable customers, compared to your least profitable customers? How happy are they?’ Thirdly, ‘Is your customer service getting better or worse?’ Lastly, ‘Do your mangers get a fair amount of compensation for achieving customer satisfaction?’ So when I say ‘put customers first’, I mean all of these aspects – finding a way to really put your customers first and understand them.

My second piece of advice is to focus on simplicity rather than complexity. The problem with growth is that companies become more complex, adding more layers to the organizational structure and more committees, amongst others. All of that is understandable, but as you get more and more complex, it gets increasingly difficult to get things done. We have found that our clients get a lot of value out of radically simplifying their organizations. It’s not always an easy thing to do; it can actually be quite painful. In the super accelerators, between the CEO and the front-line manager there is an average of four layers of management. In slow growth companies, there is an average of seven layers. One thing we help with is removing layers of management. It’s not a nice thing to do and it should be done in a respectful way, but it must be done.

Also, keep it simple when it comes to expansion. Companies need to ask themselves if they really need to operate in 35 countries, when it should ideally be 25. Companies must therefore try remove the complexity so they can focus on their core mandate of being successful in their chosen area.


Click here to add your comment

Please add your comment below
Name
Country
Email
Your email address will not be published
Captcha