The Breakthrough Company

Key Thoughts:

I'm reading another strategy book, this was a gift by our Financial Management vendor during our signing ceremony. Strategy is a complex subject, having read at least a dozen books on strategy, I think I had only one tenth of it down.

I will list down some of the most profound questions raised in this book. An incredibly fitting book for our organization as it's a research based on small companies who had made the breakthrough to greatness. Here's the incredible numbers, 7,000 companies over 5 years, spoke to over 1,500 key executives, and reviewed & cataloged more than 5,600 articles, annual reports and studies. And from the list, they conducted 90 day in-depth studies with 52 firms. The author goal "was to conduct the most exhaustive research ever undertaken on the subject." As empirical as it gets.

Questions:

Keith started with 3 questions that started him on his journey (page 3).

1. Why do most companies start small and stay that way?

2. What is special about the handful of companies that successfully "break through" the entrepreneurial stage of development?

3. What can a leader do to ensure that his company maximizes its chances for breakthrough?

A Few Squirts from the Grapefruit:

Surprises uncovered from their research (p18-22).

1. The most interesting companies may not operate in the markets that Wall Street and the business press consider interesting or "cool".

There's 3 types of breakthrough companies, 1) in hot markets dominate those hot markets 2) in dud markets igniting their sector 3) in stalled/dead markets that figure out a way to transition into more attractive markets.

2. Sticking to the knitting won't always get you there. They ignore the experts and re-define their business.

3. Don't look for extraordinary people; build a place where ordinary people can do extraordinary things. While hiring talent is a must, they also 'creating systems that helped their people grow along with the business.'

4. It's not about where (or whether) you went to school. The leaders in the breakthrough companies ranges from PhDs to high school graduates. It has less to do with qualifications than to do with 'how they see the world, and what they do with those insights.'

5. You don't always need other people's money.

6. How employees feel about working in a place is a significant driver of success. Many of the 9 featured companies won awards for best workplace.

The rest of the book is illustration of what the above means and MORE!

My Comments:

There are many common sense insights in the book, each of them is worth a 'deep think' on. Chapter 10 sums up what to do after all the 'thinking'! A leader 'can influence a business via 1) crafting and adapting strategy, 2) getting the most out of people, and 3) driving execution. (p202)

Another 'take-away' for me was to ask these questions during our strategy review every quarter (p210):-

1. What have been our most important strategic accomplishments during the past ninety days?

2. What are the most important ways we fell short of our strategic potential during the past ninety days?

3. What are the most important things we have learned about our strategy during the past ninety days?

For PAH, strategic review always look forward, there's very little looking back and LEARN. The strategy learning cycle (p209) should be adopted.

Despite stating that this is not intended to be a recipe book, chapter 10 was like a prescription to me, we suckers certainly love that, and I certainly didn't mind having it. Seriously though, strategy making is as elusive and uncertain as ever, however, we can take heart from the book that if we learn from the best, there's a greater than even chance that we can breakthrough. As the subtitle of the book says, "how everyday companies become extraordinary performers", do we want to join the rank? Dare we dream?

For all the details in between the introduction and the conclusion, read the book! It's in the Finance Library.

Reference: The Breakthrough Company: How everyday companies become extraordinary performers, Keith R. McFarland, Crown Press: 2008.