What It Takes to Break Through

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2) Sticking to the knitting won't always get you there. Just as the breakthrough companies ignored the so-called experts when it came to the prospects for their industry, they also kept redefining their businesses. While the textbooks -- and the consultants -- might have suggested that Polaris should remain focused on its core snowmobile business, the company hopped the fence into the far more competitive and profitable ATV market, facing off against some of Japan's most powerful keiretsu at a time when most believed Japanese industry would take over the world. ADTRAN had recently left the relative safety of its telecom niche to do battle over corporate clients with Cisco, the multibillion-dollar tech company in San Jose, California. When Intuit squared off against Microsoft in the small-business accounting market, after having just bested Bill Gates to gain control of the market for personal financial management software, there were many who questioned Scott Cook's sanity. Cook's decision, however, like the ones made by the other breakthrough company leaders, was critical to creating the kind of performance that put these companies on our distinctive list.

3) Don't look for extraordinary people; build a place where ordinary people can do extraordinary things. While they certainly obsessed about each individual hiring decision, breakthrough companies also focused on creating systems that helped their people grow along with the business. "We built this company hiring who we could afford to hire," said Lee Hein, a regional vice president at Fastenal. "What we found was that the average company today doesn't have a clue what people are capable of if you believe in them."

4) It's not about where (or even whether) you went to school. The diversity of the people who established and/or are running the nine breakthrough companies is simply astounding. The group includes: a former college professor and Ph.D in mathematics (Jim Goodnight at SAS); two Harvard MBAs (Intuit's Scott Cook, who is also a Bain Consulting alum, and Tom Tiller, once one of General Electric's rising stars); a guy who finished his associate degree (Tom Golisano at Paychex); and Scott Edmonds, who hit the bricks right out of high school in Virginia and rose to become CEO of Wall Street darling, Chico's. Not only is Bob Funk, the CEO of Express, an ordained minister and cattle rancher, he's also the elected chairman of the Federal Reserve's Conference of Chairmen, which advises the Board of Governors of the Federal Reserve System.

5) You don't always need other people's money. We've all heard the professional investor's elevator pitch, "Sure, you can grow your business, but you can grow it faster with our money." We were shocked by the fact that not one of nine breakthrough companies was funded by venture capital in their start-up years. Scott Cook tried to raise venture money for Intuit and was turned down by more than twenty firms (he accepted a small amount of private money just before Intuit went public in 1993, mainly to tap the genius of Silicon Valley legendary VCs John Doerr and Burt McMurtry).

6) How employees feel about working in a place is a significant driver of success. A key discovery, driven home in our visits to one breakthrough company after another, was that the task of building a great place to work wasn't delegated to the human resources department alone. The top people in the company thought about it every day.

Another concept that emerged early during our five years of field work is the concept of "crowning the company," where leaders serve their company rather than have the company serve them. We found that companies tended to fall into two broad categories: companies that were organized around the leader and companies that were organized around a vision that was bigger than any one person.

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