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  "Simplicity is the ultimate sophistication."
- Leonardo da Vinci
The older I get the more I appreciate simplicity. Michael E. Raynor and Mumtaz Ahmed, long time contributors to the Harvard Business Review, produced an article in the April 2013 Issue,

"Three Rules for Making a Company Truly Great"  
  1. Better before cheaper - in other words, compete on differentiators other than price.  
  2. Revenue before cost - that is, prioritize increasing revenue over reducing costs.
  3. There are no other rules - so change anything you must to follow Rules 1 and 2. 
Rule 1: Better Before Cheaper
"Every company faces a choice: It can compete mainly by offering superior nonprice benefits such as a great brand, an exciting style, or excellent functionality, durability or convenience; or it can meet some minimal acceptable standard along these dimensions and try to attract customers with lower prices."  Well said.  In every market we can pick out the low cost provider fixated on price only and know their model has historical limitations to growth.
Rule 2: Revenue Before Cost

"Very rarely is cost leadership a driver of superior profitability."  I find this rule to be very challenging to companies today in a few different ways:

  • Compensation:  Those owners and leaders that survived the downturn by cutting costs are having difficulty switching their strategic thinking from cost-cutting to calculate investing in the 2013 growth phase. Top companies have recognized the need for talent and its limited supply by adjusting compensation programs to be proactive to the environment. Adversely many companies are losing top talent with compensation models based on irrelevant 2009 projections.

  • Training: There is a learning curve to remembering how much tougher it is intellectually and creatively to grow. Companies that recognize the importance of training to be successful are investing to prepare for the 2014 year, while those that under estimate the "ramp-up" time will inevitably lose market share.
  • Time:  Investing in your company strategy:  We hear leaders make the statements like "I'm too busy to make certain my strategy is accurate and my team is aligned" or "There isn't time to make certain we are working as smart as possible."  Time is a finite resource - Respect it.  Be committed to a triage prioritization and know what singular action will bring the greatest impact.  The best leaders understand how to step out of the suffocating day to day operating clutter to set goals and build the right strategy. 

Rule 3: There are No Other Rules
This is my favorite... everything is on the table, other than Rules 1 and 2. The depth of focus and commitment this strategy puts forth is awesome. Accepting the pressures it puts on the companies creativity and innovating abilities, calculating, aggressive and efficient growth is the assured outcome.
We have long held the following criteria for companies to qualify as clients: Aggressive Growth, People before Profit, and Entrepreneurial over Centralization. After reading the article, our simple client criteria formula has been tweaked to: Committed Growth - defined by Better before Cheaper and Revenue before Cost, People before Profits, Entrepreneurial over Centralization, and the toughest - there are No Other Rules.

 

To your success,
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Tony Misura  
In This Issue
Better Before Cheaper
Revenue Before Cost
There are No Other Rules
Featured Article
"Three Rules for Making a Company Truly Great"
~by Micheal E. Raynor & Mumtaz Ahmed
 

 

  
  
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