WHERE ARE THE GREAT COMPANIES?

Here is a guest post from Jim Champy, author of Outsmart: How to Do What Your Competitors Can't. The title poses a great question. I agree with Champy about the importance of focus and think many of us and our organizations have this tendency to chase shiny objects off our path. Sometimes a diversion is wonderful and puts us on a new path. But many times, diversions will pull us away from our core strengths. Enjoy.

WHERE ARE THE GREAT COMPANIES?

By Jim Champy

For years I have been searching for great companies. What I have found is that there are none. Greatness is an aspiration – a very honorable one. But no company is perfect, even if it performs well year after year.

Greatness, like, many objectives, is in the eye of the beholder. One simple test for greatness is how a company is experienced by its constituents – its customers, its associates, its owners, and business partners. In my most recent research, I looked at over a thousand high-growth companies and found many companies that are very good. They treat all of their constituents well and, in their own unique ways, aspire to greatness.

My search was driven by a desire to find companies that have new business models, delivering new products and services to customers and executing in new ways. I have written about my discoveries in OUTSMART!, my latest book. Although I could find no single formula for what creates a good – or great – company, I did find some shared characteristics.

Ambition: The leadership team of every good company has a great ambition for the company – usually one that addresses an unmet customer need. The ambition is not one of personal greed; it’s about building a company that delivers on its promise and does it with a unique quality. My experience over the years is that it takes a great ambition to create even a good company. I was inspired in my research by a company called Minute Clinic, whose ambition is to change how healthcare is delivered, for the benefit of everyone involved in the healthcare system.

Customer: Every good company begins by meeting a customer need. That need is often deeply understood by the company’s founder because they, themselves, experienced the need – and saw how that need was not being well met. Sometimes the founder hands off the leadership of the company to someone else who operationalizes the idea. But that wasn’t the case in the example of Sonicbids, a company that saw the unmet needs of thousands of independent musicians and performers and whose founder has led the company to a unique position in the music business. This music business for independent performers is a 13 billion dollar a year market, that no one saw or had the appetite to organize until Sonic bids came along.

Focus: Good companies stay focused on what they know and can do well. When companies search for new ideas, they often drift into unknown territory and get in trouble. Good companies just keep growing and expanding into familiar territory. Shutterfly is a wonderful example of a company that’s growing, but it grows by expanding within the social expressions business, helping communities of people share photographs in hundreds of ways. Niches can be very large markets.

Execution: Satisfying a customer requires relentless attention to execution. Building a company’s capability to deliver makes the difference between turning a great idea into a business or failure. But execution is not just about delivering a product. It’s also about service. Over the years, I have observed that technology companies are particularly bad at recognizing and responding to the service needs of their customers. Counter intuitively, high-tech requires a lot of high-touch. Partsearch is a company that knows what it’s doing with customer service, helping customers find what they need in an ocean of millions of parts and accessories for consumer electronic products. Partsearch has tamed chaos in its industry.   

Inspiration: Smart companies engage all of their associates in building the business, from idea creation though delivery. Ideas don’t just come tops-down; they also come bottoms-up and from every other direction. Everyone in the company feels that they own a piece of the action and are accountable for how the company performs. The inspiration for a company starts at the top, but good leadership drives that inspiration deep into the company by engaging people broadly in decision-making. People are more than mechanical parts of the enterprise, and the more they are allowed to see customers, the better their business sensibilities.

These are some of the behaviors that I have found in the good companies I have studied. My ultimate test of the quality of a company is whether I would like to work there. The good news: I see many high growth companies where I would work. They are smart companies, in multiple industries, that are operating quite brilliantly.

Author Bio
Jim Champy is one of the leading thinkers in business. His first book, Reengineering the Corporation: A Manifesto for Business Revolution, helped transform the corporate world. His global best sellers also include X-Engineering The Corporation: Reinventing Your Business in the Digital Age; Reengineering Management; and The Arc of Ambition. He is the Chairman of Perot Systems' consulting practice, and the company's head of strategy. For more information, please visit www.jimchampy.com

Comments

[Wally Bock]

Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2008/07/23/72308-a-midweek-look-at-the-business-blogs.aspx

Wally Bock

[John Hunter]

There are great companies. There, of course, are no companies you can look at and copy practices from and expect to be great. Dr. Deming explained decades ago the futility of such an approach.

Yes, lots of people what to find instant pudding solutions. And lots of people will buy books of those that claim instant copy and paste management works. So I understand why authors sell such books, but I don't understand how any serious management thinkers believe in such fantasy.

Some great organizations: Google, Toyota, 37signals, Stanford University and Grameen Bank.

[SFM]

I just heard from a colleague that you will are doing a webinar on Safari Books Online.
http://www.safaribooksonline.com/newsletter/webinar/jimchampy.html
I will be there.