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-- Roloson company sponsor -- exception not.
Fully aware that easy well clearly it is our next guest narrowed it down to just thirty.
Joining us now strategy expert Michael -- -- services director and co author of the new book -- three rolls how exceptional companies think.
We got to get right to the payrolls that's it there's just very only through a packed.
Your first -- Better before cheaper so if companies are trying to figure out how we're going to create value for their customers.
We've concluded that companies that deliver exceptional performance over the long run do it by focusing on what we -- non price dimensions of value so make a better -- not a cheaper widget that's rule one.
The better people don't want the -- heartless and pretty much -- Your next one interest -- number two.
Revenue before costs so that answers the question how does a great company capture value for itself from if you -- about entry customers but they get to keep it all this was -- -- that.
So profits are important obviously and what what we found is that.
Great companies exceptional performing companies they drive superior profitability through higher revenue not through lower cost -- that was a bit of surprise endings -- sound more stuff basically selling either higher prices or higher -- -- combination of both.
What's your thought though on the trend lately that companies are missing revenue.
But beating on the bottom line -- their cost cutting.
Well it's a bit of a pathology I think it's it's tempting to make the numbers I think it's more important to make the plan -- the plan is to is it to deliver value for customers over the long -- And if you succumb to the short term temptations I think you're actually undermine what it is you're trying to achieve its a good lesson -- because I think we're so much happened these days just to make those Wall Street and the numbers right.
And finally your third -- well a third rule is there are no other rules.
And we think that's actually kind of important because -- a lot of rules of thumb.
A lot of about myths if you will the people used to run their business is frequently they'll say things like innovation is absolutely crucial.
Well sometimes innovation is absolutely crucial and they knew what sometimes it's not.
Mergers acquisitions some people tell you they're indispensable leather -- is their poison.
What we found is that we've yes to both -- and so really the third rule is do anything you have to do in order to adhere to those first two rules.
To be very flexible than.
Okay let's talk about who's doing it right what companies are following your rules.
Well three of the company and there's 47.
In depth case studies in the book that are drawn from a population of over 344.
That we look at and to a lesser degree of detail.
And three of them that that kind of catch people -- You've heard of Merck obviously -- -- company Merck is that what we call a miracle worker.
Abercrombie & -- the retailer another organ company -- a lot of people are familiar with but some of the smaller companies that you might not be so.
The top of -- so -- express.
Which is a a truckload trucking company based on the enough in the heartland.
Now take an Abercrombie & -- there are best stuff could be arguably been pretty expensive.
Absolutely and they they're able to earn those prices from their customers because they have.
The the customer experience the brand the fashions that that -- not in the eyes of their customers.
Whereas apple -- and a -- so apple has been.
Up and down over its lifetime and so we take a very long view we look the entire corporate lifetime.
But over the last ten years they just won't come as -- to anyone that follows the company.
And -- there are real fair and I would suggest that the reason -- their performance has been so remarkable.
Is that indeed we look at what they've done and it really has adhered to those rules better before cheaper and people don't buy apple products because they're cheap they -- has a better.
And and they enjoyed both higher unit prices and remarkably higher volumes than many of the better idea apply these rules to start -- -- -- a little business at home whenever making brownies -- what how -- Well through the good news about focusing on public companies in the US is that there are lots of data and second public companies in the US don't have to be billion dollar renovations.
We see a lot of companies in our database that are 101520 million years.
Twenty million a year in revenue that's not your corner dry cleaners not confused there but it's not you don't have to be in the fortune 500 for these rules to apply.
It's -- like keep it simple stupid and need.
Michael -- an -- of Deloitte services thank you of the --
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