The Three Rules: How Exceptional Companies Think - Rilegato

Michael E. Raynor is a Director at Deloitte Consulting LLP, where he explores the challenges of corporate strategy, innovation and growth with clients in a number of different industries. He is the coauthor, with Clayton Christensen, of the bestselling book The Innovator's Solution, and the author of the critically acclaimed The Strategy Paradox and The Innovator's Manifesto.

Mumtaz Ahmed is an engineer and accountant who works in the Strategy & Operations service department of Deloitte Consulting LLP.

Finally, an answer to the ultimate business question: how do some companies achieve exceptional performance over the long term?

In every sector there's an outlier. In the pharmaceutical industry, it's Merck. In discount retail, it's Family Dollar. It used to be Wrigley in candy and Maytag in appliances. How do these exceptional companies deliver superior performance over the long run, despite facing the same constraints as competitors? What are they doing differently? What can we learn from them?

Michael E. Raynor and Mumtaz Ahmed have analyzed data on more than 25,000 companies spanning forty-five years. In collaboration with teams of researchers they then put a carefully chosen sample of twenty-seven companies under the microscope to uncover what made the standout performers different.

They found that exceptional companies, when faced with difficult decisions, follow three rules:

1) Better before cheaper. They rarely compete on price.
2) Revenue before cost. They drive profits through price and volume, not thrift.
3) There are no other rules. Everything else is up for grabs, and they are willing to change anything to remain true to the first two rules.

The Three Rules is built on a powerful combination of large-scale data analysis and indepth case studies. Reading it will increase the chance that your organization becomes truly exceptional.