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Bain & Co. Partner Chris Zook on why greater complexity in a corporate organization is a disadvantage.
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Exchange for her.
-- my next guest is the -- there.
Repeats ability which is an in depth look at how the most successful companies are finding finding growth while others just aren't delivering -- -- results.
He is here with me in a box bit explicit -- tell you know what companies.
You should trust Chris look at the co head of worldwide strategy of -- company by the way and now an author.
This was really interesting because you looked at companies.
And 90% of the companies that you profiled.
Which -- the liberal growth and then they didn't there was a theme that you sell signal that.
Yes -- -- certainly didn't set out to write another book but the the results from our three years of research at saying we're so stunning that we felt we had to us on the alarm.
We have a database of 8000 companies in the world -- what we found is that in the last ten years.
Now only 9%.
Of companies achieved even a modest level of sustainable profitable growth and when we probed into the recent.
We found the complexity.
Internal reasons self induced errors.
What we're showing our viewers simply say simplicity collapse in the distance from CEO of the plot -- front line like the operator she male looks like what the company does.
As -- the CEO and does very action that that everyone that simple onboard with a company should be able to say this is what we do this is what we're about.
-- -- -- clue what we find is that from the very first day that a founder begins a company with one product and one customer.
-- -- -- -- And the more successful you are the more -- -- -- go into new areas of organization becomes more complex in the CEO -- farther and farther and farther from the front line in the information.
Based on.
What he gets in the front line is often distorted almost like fun house mirrors.
What -- your case studies -- Sony who just cut 101000 workers globally has happened to completely restructure.
What Sony do you wrong in your opinions.
You know Sony is particularly -- -- in contrast apple we took away the music business -- Sunday when someone from.
From apple you know if you look at it.
We identified the three design principles of the great repeat of -- models companies that could have.
Nine lives verses being essentially one hit wonders and Sony vs apple -- -- interest and an all dimensions you see the comparison for example.
-- through organizational complexity is legendary grapple with only -- the sixty S to use could -- -- Monday morning meeting -- all the people in the company and talk about every single product.
-- so you didn't you do your member of the walkman mean a lot of our viewers probably give -- a lot of them don't and that's because the walk when they think they would -- music company and then they got away -- that you like vanguard.
You say vanguard is a great example that that action allotment of look exactly like that's -- -- -- other big as the winner in your opinion of what is safeguard doing right at Sony is mess it up.
What is and are doing right here and.
Vanguard is the largest mutual fund company the world's one point five trillion dollars 40% of the free money and in the financial crisis went to vanguard.
What's so interesting it's when you talked to CEO.
Bill -- or you talk to Frontline operators both of which I've done.
What you discover is actually described the six or seven core principles that fuel vanguard make -- unique and drive their behaviors in this very powerful when you can do that.
Because it means you can trust more people in the front line to make decisions.
Faster and in learning happens much more rapidly and we're in a world where learning -- the ability to adapt is becoming the ultimate competitive advantage.
You also look at a company another -- case it is the book was -- -- man a massive multimillion dollar.
Investments.
That what pick Mike picked that name and what do they do right -- you think -- while.
-- -- the best performing multi core cause conglomerate -- slowly cannot be in the world.
So when you talked to -- Larry called the CEO of Danaher about what allows him to manage this much complexity he says it is a dinner her repeat of all business system.
Which they talk about -- the most unique thing to do and that they apply to every single business they buy including -- 600 million dollar acquisition of today.
-- -- The book is called repeat ability very interesting title great but from -- -- company is Bob thank you very much for coming and thanks very much alright very substantially concepts and.
