Understanding the Real Drivers of Corporate Success

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Understanding the Real Drivers of Corporate Success

The goal of every senior manager is to lead a company that outperforms its peers.  Similarly, every investor wants to buy shares in a business that will perform better than its competition.  This quest for the secrets of high performance explains the enduring popularity of such classic business best sellers as In Search of Excellence and Built to Last.

In the 1982 book In Search of Excellence,1 McKinsey consultants Tom Peters and Robert H. Waterman, Jr. presented the eight attributes of what they called America's "best-run companies."  Those eight characteristics are as follows:

  1. A bias for action
  2. Close to the customer
  3. Autonomy and entrepreneurship
  4. Productivity through people
  5. Hands-on, value-driven
  6. Stick to the knitting, (focus on the core business)
  7. Simple form, lean staff
  8. Simultaneous "loose / tight" properties

In Built to Last,2,3 Jim Collins and Jerry Porras analyzed the results of a six-year research project at the Stanford University Graduate School of Business and compared 18 "truly exceptional and long-lasting companies" to close competitors that outperformed the market but were not nearly as successful.  What set those 18 "built to last" firms apart, according to Collins and Porras, were as follows:

  1. Clock building, not time telling (creating a lasting company rather than being guided by a single idea or leader)
  2. More than profits (focusing on core ideologies)
  3. Preserve the core/stimulate progress
  4. Big hairy audacious goals
  5. Cult-like cultures
  6. Try a lot of stuff and keep what works
  7. Home grown management
  8. Good enough never is

However, while those books were widely influential, several of the companies the authors based their formulas upon have not fared as well. 

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