What makes companies successful?
What makes companies successful?
Business leaders who would like to know what differentiates successful companies – in the long run – from unsuccessful ones, may find it difficult to discern a ‘magic formula’ for corporate success, given that there is very little in the way of actual research in this field.
So what makes companies successful, exactly? Before we get stuck into the topic, let’s summarise where we are at with the research to date…
What makes companies successful – the research
There are two landmark studies into long-range corporate success. Built to Last by Jim Collins and Jerry Porras (you can read a neat summary of the book here if you don’t have time to wade through the full version). And the HBR study 4+2 by Roberson and Joyce here.
Put the two together and you get the following themes:
1. Have a shared and compelling vision, and then a laser-like focus on strategy.
2. Execution needs to happen at the front line. To be visionary you need to execute and focus on the source of execution – a compelling meaning and vision for the future. But you also need to empower everyone in your organisation to be able to understand and then deliver the strategy.
3. Get the structure right. ‘Right’ = simple and effective. Structure should serve strategy, not strategy serve structure.
4. Build a cult-like culture. Here’s why the compelling vision is important. Without a shared, compelling vision, then can be no cult-like culture. Think Apple, Disney, Walmart and Nordstrom. Culture includes empowerment and employee engagement. ‘Build the clock, don’t tell the time’. It’s an ongoing process.
5. Nurture the best talent – and do so from within. This is why employee engagement is so crucial.
6. Innovate. This includes trying a lot of stuff and keeping what works and being prepared to make mistakes. Be constantly looking to improve your products and services – ‘good enough never is’.
7. Leadership. The company culture should produce the leaders from within. Put purpose before profits. Profits will always follow.
How to implement the ‘magic formula’ in your company…
To many, trying to implement the above may seem daunting. Here’s a ‘recipe’ to show how you can simplify it:
1. Articulate your strategy, then test it. Most companies’ strategies are composed by the senior management (or worse, management consultants) and are quite simply impossible for front-liner and even middle managers to understand.
If that is the case, how can you expect these people to execute the strategy? How can you expect them to ‘buy in’ to your ‘shared, compelling vision‘?
This is why you need to test your strategy in small bite-sized chunks with customers and your employees until it is so simple everyone can understand it in a sentence. Think of Steve Jobs’ slogan for the Ipad – ‘It’s like holding the internet in the palm of your hand’. Vision and strategy should come together. Testing your strategy will boost sales, too.
2. Get the best talent you can find. This may also be the first step of this recipe – Talent and strategy often come together. What you’re looking for are talent and skills – check our post ‘First Who then What’ for more on this.
3. Focus on execution. Get the processes down to a minimum. Set the structure up around the talent and strategy. Iterate. Try new ways. Encourage a pursuit of excellence. Remove waste. Innovate.
4. Focus on engagement. This is by far the simplest way to build your culture – to ‘build the clock not tell the time’. We have distilled employee engagement down to 9 engagement factors that make this so easy to achieve. You can check them out here. You will also want to link these factors to customer engagement.
5. Leadership = build your tomorrows. If management is about getting the best out of what you have in hand today, leadership is about building your tomorrows. Successful companies do both. Jack Welch called this ‘eating today and dreaming about tomorrow at the same time’.
6. Wash, rinse, repeat. That’s it! Simply wash, rinse and repeat – keep turning it over, from here and you should have a visionary company!
If you would like to put the key building block in place for a successful company, then have a look at our breakthrough programme Engagement Factor. This two-day programme trains you in all you need to know about creating and sustaining an engaging workplace.
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