We typically focus our blogs on something to do directly with customer service. This week, and in selected weeks in the future, we will change it up a bit and talk about books that offer useful insights into business and are truly worth reading. For this post, I want to offer one that I consider truly worth reading. The book is The Three Rules: How Exceptional Companies Think. It is by Michael Raynor and Mumtaz Ahmed. Raynor is a coauthor of The Innovator’s Solution (Clayton Christensen is the author). Ahmed is the chief strategy officer for Deloitte.
I will not go into all the statistics the authors present as the blog post would become too long. Suffice it to say that there are an adequate number and they are exceptionally convincing. The authors posit that there are three rules that separate Miracle Worker, Long Runner and Average Joe companies. These rules are:
- Better before cheaper: A strategy built around low price seldom results in superior long term financial performance. Those companies that focus on adding value and charging for it provide superior financial returns.
- Revenue before cost: This confirms the old axiom that you can never “save yourself to prosperity.” The authors present compelling evidence that it is far better to focus on building revenue first and then work on reducing costs. Focusing first on costs does not produce exceptional performance over the long run.
- There are no other rules: This is most interesting. The authors did a lot of statistical analyses to identify other rules that would explain the differences in financial performance among companies. They could not find them, which leads to their third rule.
There are plenty of reasons to read this book and few reasons to not. It is written in a very readable, understandable manner. The statistics are convincing and presented clearly. Lastly, there have been several books that are similar in nature (Good to Great is one example). This one is different. The arguments the authors make are backed up by strong analyses and compelling real world example. The arguments for following their rules are very compelling. I urge you to pick up a copy.