… the Sustainable Right to Succeed
We now have undisputed evidence that more than two thirds of publicly listed companies do not create shareholder value. Moreover, a large number of those who succeed seem to derive their success from events or items over which they have very little control. There is also evidence that apart from a very select group of companies, it is hard to find companies that continue to perform well beyond a ten year span.
This leads us to ask whether high performing firms are the result of chance, or whether we can determine some systematic approaches to gain a sustainable right to succeed. And if so, what are the key ingredients for this success?
The Three Ingredients….
If you look around and identify companies that you deal with either in your business or as a consumer, you may notice that these “successful” companies have three key ingredients.
First, they have “uniqueness” – created through identifying, creating, and maintaining a competitive advantage. Second, they display “courage” by impacting the industry they work in and thereby changing the very nature of its structure. Third, they have what I call the “stickiness” factor. By combining these three ingredients, these firms create such a powerful value proposition that clients find it hard not to do business with them again and again. These three ingredients sound simple in theory but are quite difficult to achieve.
Let us start with the “uniqueness” factor. The immediate example that comes to mind is Apple. Every product Apple has created is unique, from Lisa through to iPod and now the highly successful iPhone. However, Apple did not invent Uniqueness – not long ago, we thought that the word belonged to Sony or to Xerox. Xerox is one of the saddest stories in this regard: it actually created a word – people use to say “could you please Xerox this page for me” – and now all we hear is “please photocopy this page for me”. The point is that uniqueness cannot be taken for granted – it is something the company must strive to create and then fight to maintain.
That brings me to the second point. Uniqueness does not come from companies that have no courage. Creating and maintaining uniqueness requires a very careful and systematic approach to risk-taking that not many enterprises can afford. It is also one of the hardest things to achieve since it is fraught with failure. Consider the Apple example again; how many of us know that Apple actually came close to not meeting its payroll. Courage also requires a clear focus; everyone must know the company vision and clarity on what needs to be achieved to create uniqueness. It also requires both financial resources and an acceptance of short term fluctuations in the proverbial “earnings per share” number – not something that comes easily to a typical publicly listed firm. For example, one could argue that Sony lost its uniqueness because it lacked the courage to maintain it. In hindsight, it is obvious that the Sony Walkman should have led to a Sony iPod; instead, Sony thought that the next big bet would be the “movie” industry. It lost focus of both what its best product brought to its customers and how to leverage the digital technology to further enhance that experience.
Now assume for a minute that your firm has a unique value proposition and has the courage to maintain and improve upon it; you have the first two ingredients for success but you may be still missing the third component – creation of “stickiness”. In essence stickiness implies that your customers now find it easier to do business with you than a competitor no matter how hard they try. This is the path taken by companies like FEDEX, which provided free tracking software to shipping clerks, to Tim Horton’s offering a cup of coffee blended with a dose of Canadian nostalgia.
So where does one go from here?
When you take your team to a strategic off-site, when you draft business plans, estimate financing requirements, assist others in valuing a business case, ask yourself some key questions:
- Are our plans for the coming year driving us to becoming unique?
- Is our focus on numbers preventing us from making courageous decisions
- Are we building capabilities that will take our customer relationships from a stickiness level of “Scotch Tape” to that of “Crazy Glue”?
- And if this is not what we are driving towards, then why would we expect our firm to have a sustainable right to succeed?
Originally published in CheckMark, Summer 2007
About Dr. Vijay Jog
Vijay Jog Ph.D. is the Founder and President of Corporate Renaissance Group (CRGroup) – a global firm that specializes in improving enterprise performance through innovative technology driven solutions. He is also a Chancellor Professor at Carleton University where he teaches at the Sprott School of Business. This article is based on his 25 years of experience in dealing with technology and his interactions with CEOs, CFOS, CIOs and CTOs.