Executives of market-leading companies consistently do three things better than their competition, according to the results of a new survey.
The survey by the management consulting firm Bain & Co. found that the best executives:
- Focus on a highly differentiated core business whose capabilities can be reapplied over and over.
- Simplify communications between the boardroom and the "front lines."
- Constantly adapt their business model to meet key challenges and turn continuous improvement into a powerful strategic weapon.
"The findings show a fundamental shift in the nature of strategy and competitive advantage," concluded James Allen, senior partner and fellow co-head of Bain's global strategy practice.
"Nearly three-quarters of executives say that strategy is now more about their ability to sense and adapt and more than half expect to have a different key competitor in five years. Today's speed of change, and the necessary responsive actions, is remarkable."
Among the key findings from the survey of 377 executives:
- Twice as many executives at top-performing companies strongly agreed that nearly three-quarters of the time "we have strong consensus in our management team around a clear and simple strategy" compared with bottom-performing companies.
- Top performers strongly agreed more than 80% of the time with the statement, "Our strategy is built around a repeatable model that we constantly apply with a high success rate to new markets and segments." Bottom performers strongly agreed about 30% of the time.
- Top performers strongly agreed roughly 60% of the time with the statement, "Our front line understands our strategy and they are fully in line with top management." Bottom performers agreed 35% of the time.
- Top-performing executives agreed more than two-thirds of the time with the statement, "We are able to replicate successes and best practices from one part of our organization to other parts (i.e., geographies, segments, product lines, etc.)." Top performers strongly agreed twice as often as those from the bottom tier of performance.
- Executives at top-performing companies strongly agreed six times more often than bottom performers with the statement, "We are the best in our industry at capturing learning and driving continuous improvement in all key functions. This is a competitive advantage."
- Top performers agreed 71% of the time that "we are good at taking decisions and executing them fast," nearly three times more often than bottom performers.
- Top-performing executives strongly agreed more than twice as often as bottom performers with the statement, "We innovate and experiment in the field a lot. This drives our learning and is a competitive advantage."
- Top performers strongly disagreed nearly four times as often as bottom performers with the statement, "We do not highlight and confront the biggest challenges to our business model fast enough."
- Top-performing executives strongly disagreed two and a half times more often than bottom performers with the statement, "We are too busy fighting the daily battle to step back."
"Our research shows that the odds for achieving sustainable growth increase dramatically when companies build and deploy repeatable models," said Chris Zook, co-head of Bain's global strategy practice.
Survey Included Execs From the U.S., Europe and Asia
Bain, with the Economist Intelligence Unit, surveyed 377 executives from the United States, Europe and Asia from a cross-section of industries.
More than two-thirds of respondents held either board seats or C-level positions in companies that ranged in size from less than $100 million in sales to more than $10 billion, according to Bain.
Bain analyzed the revenue growth and profitability of companies represented and categorized them as either top, average or bottom business performers.
Responses from the survey were correlated to the company clusters and studied to identify key principles for top business performers.