9 Traits of Companies That Beat the Odds
BY Steve Tobak
What distinguishes perennially great companies from the pack? Innovative business strategies that work over the long haul.
Companies usually start out with nobel intent: An idea, a product, or a culture that its founders hope will be different--the one that stands out among the many. They hope to be the kind of company that others seek to emulate and the most talented people wants to work for.
And while every entrepreneur and business owner knows how important it is to focus on the job at hand, to take one step at a time, somewhere in the back of their minds, they can envision their venture becoming one of the great ones that stands the test of time.
Unfortunately, it doesn't usually turn out that way. What seem like brilliant concepts just don't pan out. Even viral successes often fizzle out in time. The truth is that markets are brutally competitive. We simply can't all win. And we certainly can't all be great.
Which begs that question: What distinguishes the few companies that make it over the long haul from the thousands that don't? What are the actions that entrepreneurs can take early on to set the stage for success down the road?
Here are nine fundamental blueprints for business success. These strategies enable companies to rise above.
Products that consistently provide a superior customer experience. Apple didn't build the first MP3 player, online music site, smartphone, or tablet computer. Amazon wasn't the first online retailer. Trader Joe's wasn't the first specialty grocer. But their products and services consistently delight customers by giving them what they want or need in ways that competitors can't even come close to.
Breakthrough intellectual property that competitors can't design around. We know that Qualcomm makes processors and software for smartphones. But this technology giant quietly built its company on breakthrough patents for CDMA and other core wireless technologies that, today, are used in most of the world's cell phones. It spent many years and big bucks developing its breakthrough technology, bringing it to market, and defending its intellectual property.
Insanely great marketing. You may think that marketing is all about Super Bowl ads and B2B email campaigns, but the kind of marketing that makes or breaks companies is a whole different ballgame. According to venture capitalist and former Intel executive Bill Davidow, "Marketing must invent complete products and drive them to commanding positions in defensible market segments." Indeed, Steve Jobs was a genius at market segmentation, product positioning, masterfully controlling the message, and most importantly, figuring out what people wanted before they even knew it themselves. That's marketing.
Becoming the de facto standard. If you can get customers addicted or locked into your proprietary software, interface, or applications, you can reach critical mass and become a de facto standard. At that point, the cost and pain for customers to switch is prohibitively high. That's how Cisco routers, Texas Instruments DSPs, and of course, Microsoft--Intel PCs became standards.
A unique concept executed so quickly and flawlessly that nobody can catch you. Google probably doesn't have better search algorithms than anyone else, but its unique combination of search and advertising was executed so well that it came to dominate the market and nobody can catch up. Apple did the same thing with iPod and iTunes. The same is true of Starbucks, Skype, Facebook, and Twitter.
A self-replicating culture that develops great managers and motivates employees to do great work. It's no coincidence that we find company names like Procter & Gamble, PepsiCo, and IBM on the resumes of hundreds of CEOs. Likewise, it isn't surprising that certain successful companies, from Intuit and Intel to Wegmans and Whole Foods, show up time and again on annual lists of best companies to work for.
A truly trouble-free sales and customer service experience. Some companies manage to consistently rise above the competition by offering customers what they really want most: a relatively care free, easy way to buy what they need that doesn't try their patience or waste their precious time. If you've ever shopped at Zappos, Trader Joe's, or Nordstrom, you know what I'm talking about.
A culture that fosters innovation. Some mistakenly define innovation as invention. It's not. Innovation can also be turning inventions into products people can use. That's a core competency at IBM and 3M, among others. It's almost criminal when companies known for invention never seem to be able to productize them. Xerox PARC is the most famous example--and it's still working to change that reputation.
Flawless operations, supply chain management, logistics. As markets and manufacturing have become more complex, so have supply chains and logistics. It's hard to win on just this capability alone, but when coupled with one of the other categories--consistently superior products, for example--it can amount to an unbeatable combination. That's certainly been the case with Toyota, Samsung, and once upon a time, Sony and Dell.
One more thing. Keep in mind that none of these strategies are popular fads. They're all fundamental and, therefore, resilient. Even as markets change, technology advances, and competitors rise, these fundamental strategies will stand the test of time.