Sunday, June 9, 2013

80/20 Impact: A powerful new book: "The Three Rules" - How Exceptional Companies Think.

I was at a Nasdaq event a week ago where Michael Raynor and Mumtaz Ahmed, talked about their new book – the THREE RULES: How Exceptional Companies THINK

From an 80/20 perspective I like the simple memorable 3 rules, backed by compelling evidence, that can make increase the likelihood of long term sustainable success instead of just the “right place right time lucky one’s”.

Below is an excerpt from a HBR review of the book and the authors.
Much of the strategy and management advice that business leaders turn to is unreliable or impractical. That’s because those who would guide us underestimate the power of chance. Gurus draw pointed lessons from companies whose outstanding results may be nothing more than random fluctuations. Executives speak proudly of corporate achievements that may be only lucky coincidences. Unfortunately, almost no one provides scientifically credible answers to every business leader’s basic questions about superior performance: Which companies are worth studying? What sets them apart? How can we follow their examples?
Frustrated by the lack of rigorous research, we undertook a statistical study of thousands of companies, and eventually identified several hundred among them that have done well enough for a long enough period of time to qualify as truly exceptional. Then we discovered something startling: The many and diverse choices that made certain companies great were consistent with just three seemingly elementary rules:
1. Better before cheaper—in other words, compete on differentiators other than price.
2. Revenue before cost—that is, prioritize increasing revenue over reducing costs.
3. There are no other rules—so change anything you must to follow Rules 1 and 2.
The rules don’t dictate specific behaviors; nor are they even general strategies. They’re foundational concepts on which companies have built greatness over many years. How did these organizations’ leaders come to adopt them? We have no idea—nor do we know whether the executives even followed them consciously. Nevertheless, the rules can be used to help today’s and tomorrow’s leaders increase the chances that their companies, too, will deliver decades of exceptional performance.
Beyond Truisms
The impetus for our research was the increasing popularity over the past 30 years of “success study” business books and articles. Perhaps the most famous of these are Thomas Peters and Robert Waterman’s In Search of Excellence (1982) and Jim Collins’s Good to Great (2001), but there are many others. The problem with them is they don’t give us any way to judge whether the companies they hold up as examples are indeed exceptional. Randomness can crown an average company king for a year, two years, even a decade, before performance reverts to the mean. If we can’t be sure that the performance of companies mentioned in success studies was caused by more than just luck, we can’t know whether to imitate their behaviors.

We tackled the randomness problem head-on. Finding what we assumed would be weak signals in noisy environments required a lot of data, so we began with the largest database we could find—the more than 25,000 companies that have traded on U.S. exchanges at any time from 1966 to 2010. We measured performance using return on assets (ROA), a metric that reflects strong, stable performance—unlike, say, total shareholder return, which may reflect the vagaries of the stock market and changes in investor expectations rather than fundamental company performance. We defined two categories of superior results: Miracle Workers fell in the top 10% of ROA for all 25,000 companies often enough that their performance was highly unlikely to have been a fluke; Long Runners fell in the top 20% to 40% and, again, did so consistently enough that luck was highly unlikely to have been the reason. We call the companies in both these categories exceptional performers. For comparison purposes, we also identified companies that were Average Joes.

Monday, May 20, 2013

80/20 on Life: Live 80+ Years? Take 20 Seconds to Read Three Great Health Tips


I was at my doctor for a check-up today telling him all about my exiting new diet and exercise efforts.  He gave me two great tips and I gave him one:

1.    Too much good may be bad for you – people obsessed with major workouts and running miles and miles a week can actually damage themselves and don’t typically live as long as those that just do a lot of walking – think 10,000 Steps; people worried about salt often deprive themselves of a much needed nutrient; people who try to live on healthy diets they don’t actually like, often deprive themselves of a well balanced diet and, more important, pleasure.
2.    Western medicine is focused heavily on detection versus Eastern medicine on prevention – we should focus on both.  If more people took up yoga and meditation their state of mind, happiness, stress and overall health would likely be much better.
3.    My tip: take a look at this amazing video on the power of pure coconut oil in potentially mitigating Alzheimer’s plus other benefits.  See link at: http://www.cbn.com/cbnnews/healthscience/2012/January/Coconut-Oil-Touted-as-Alzheimers-Remedy/

Sunday, May 19, 2013

80/20 IMPACT!: 20,000 Days & Counting By Robert D Smith

Today I am 20,126 days old. 

I came across this book "20,000 Days & Counting" in a Wall Street Journal article.  It is one of the best books I've read in terms of life changing potential so imho qualifies for 80/20 Impact.  Less time thinking, and more time doing. 

I literally planned out what I really want to do with my life, in a weekend.  I love it.  I have recommended this book to just about everyone I know and meet. It is a quick read (a few hours max), has real purpose and MEANING TO THE READER; it has thought provoking questions and exercises.  Instead of thinking of my life in years, I now think in days. 

It helps you focus on the really great moments and key influencers in your life. It cuts out a lot of noise and helps you think about what you really want to do in the coming decades/years/months/days! It may sound "mid life crisis" but this is for anyone in their 30's and Up!

Saturday, January 26, 2013

80/20 Rule: Leading Indicators for Employment and Economic Recovery - Part 1

Interestingly, FOUR industries account for 45 million jobs (41% of total enterprise employment) in America; they also account for over 5 million unemployed workers or 42% of all unemployment!

They are Retail, Construction, Professional Services and Healthcare/Social Assistance.

This 80/20 Blog Part 1 of 4 focuses on Construction.  While this industry represents only 5% of total employment, in 2010 it had a 20% unemployment rate and represented over 10% of all unemployed workers with an estimated 1.4 million unemployed.

One key leading indicator is the number of permits issued for private housing per year. 


A dramatic drop in permits in 2008 and 2009 signaled a dramatic rise in the unemployment rate in this sector.  The good news is that 2012 stats are now showing a positive trend.  This will be a key indicator to watch during 2013.  If we see permits rise to the average level of the 1990's (approx 1.3 million per year), we could see the creation of 750,000 jobs, reducing the sector unemployment rate to below 10% and national unemployment rate down by over 0.5%.

Note: Statistics above based on 2010 and other US Census data





Monday, January 21, 2013

80/20 Rule - Why President Obama's Jobs Council Has the Wrong Membership

US Census data* shows that over 5 million firms (99% of all US Firms) had fewer than 500 employees and provided almost 50% of all US jobs.  

The majority of these firms actually employ fewer than 20 employees.  Yet when we look at the President's Jobs Council of 25 members, 14 come from big companies, 6 from private equity/pension funds, 2 from unions, 2 academics and only one from a small company

Statistically, at least half the future jobs will likely come from small companies.  If we are serious about putting America back to work and having an effective Council providing balanced advice to Washington and the President, then at least half the Council members should come from small businesses.

* 2010 Statistics of US Businesses - United States Census Bureau - US Department of Commerce