It’s all about good business

Successful companies are that way because they do things differently

By R. Keith Mobley

Business success involves far more than merely the science of managing scale and cutting costs. It’s the art of leading people, nurturing them and challenging their creativity so they will figure out what customers really need and want. Keeping a close eye on costs is important, but that alone won’t improve plant performance. When an organization’s single-minded focus is cutting corners, minimizing production costs through scale and doing the same things more cheaply, new ideas become distracting diversions that are often ignored.

Successful corporations have rediscovered the old tradition that used to be known as “good old American business sense” and put it back to work. Executives at these firms see the company’s role as one of taking note of customer needs and satisfying them in a distinctive way by innovating on the customer’s behalf. Successful companies realize that consumers know they get what they pay for. They also realize that customers are smart enough to realize there are no free lunches. That’s why virtually every winning company competes on the basis of value, not price. It’s why some can command premium prices, even in price-sensitive markets. Innovation requires champions, unconventional thinking and willingness to risk failure. A few keys to success follow.

Employee owners
No one is more likely to think like an owner than an owner. Instead of imposing systems on employees, winners let workers earn a piece of the action. Managers and other employees at successful corporations own about 30 percent of their company. This is about six times the employee ownership among the country’s largest corporations.

Dump the overhead
Successful companies develop some of the most creative and practical business strategies. About 40% of them don’t have corporate planning departments. Those that do have only a small staff whose job it is to coordinate and perform devil’s advocacy, not to design or approve final plans. Similarly, these companies achieved 40% annual compound growth in market value during the five-year period that my company tracked them.

Winning performers know that planning, personnel, communications and similar staff tasks are too important to delegate to staff specialists. Instead, these companies frequently regard such functions as an explicit responsibility of every line manager. The winners let general managers be general managers.

No bureaucrats
Only senior management can impose limits on corporate bureaucracy. Successful companies have strong leaders who won’t tolerate bureaucracy or bureaucratic behavior. Corporate politicians don’t survive long in this environment, leaving these companies much more effective when they finally go elsewhere to build their empires.

Net is more than profit
Everybody, except for truly successful companies, believes that making a lot of money is the sole measure of success. When asked about corporate credos and philosophies, most business leaders can parrot literate, concise statements of their corporate values. In each case, these credos vividly set forth the company’s guiding principles. They define the ways value is to be generated for customers, employees’ rights and responsibilities, and an overall affirmation of “what we stand for.”

A statement of beliefs alone won’t make a successful enterprise. Credos are an articulation of culture, not a substitute for it. The concept of corporate culture that has enthralled business writers, academics, consultants and executives has taken on the trappings of a fad.

But committees and consultants can’t install or revise culture overnight. Culture is the articulation of well-thought-out, passionately felt values that give meaning to institutions. Among the winning companies we studied, cultures are deeply rooted and widely shared.

R. Keith Mobley is principal consultant at Life Cycle Engineering in Charleston, S.C. and contributing editor for Plant Services magazine. E-mail him at kmobley@LCE.com.

 

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