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Tuesday, 15 December 2009

Self-stuffing Turkeys. New? No

BA cabin staff have announced that they will strike for 12 days over Christmas.

The public response has been overwhelmingly negative. The media is awash with puns on Turkeys and Christmas.

Is it that word “British”? Does this word in a company name cause its employees, like the tragic folk at the British Motor Corporation/British Leyland, to believe that they are entitled to unlimited public support and funding despite their employer being seriously uncompetitive and underperforming on every front?

30 years ago and nothing learned. BMC/BL and even its final incarnation Rover is long gone, and all its jobs with it.

BA has been at a very low level of Comparative Competitive Strength for far too long. Its management has shown few signs of understanding this, its shareholders and advisors certainly do not. So it is not too surprising that its cabin staff should be deluded too.

Over the last ten years BA has swanned along smug in the self belief of its own invulnerability and almost god given right to go on for ever whilst in fact sliding steadily down through the Comparative Competitive Strength level of Comfortable into now the lower levels of Constrained. The fact that 90% of the cabin staff have just demonstrated they do not understand how desperate the situation is reflects the poor quality of management and leadership. Mr Walsh’s dramatics have been too little and far too late to be believed, and too many of his management have remained in denial. It is no wonder communications have failed. Look again at BMC and then subsequent BL and Rover leaderships.

Are we about to witness the Longbridge tragedy all over again? Is BA off to join BMC in The Abyss? Is this perhaps a terrible insight into the psychology of large scale corporate failure? Is this yet another case where sheer size, market dominance and organisational inertia obscures the recognition of corporate death at the time of actual occurrence. The business appears to carry on but ultimately, much later, and as a “sudden surprise”, the sunlight hits the wrong bit and the whole zombified structure suddenly collapses in a heap of mouldy dust?

Might the more thoughtful BA cabin staff use this time away from work to find out what happened to the workers at BMC? Could they realise that there is no such thing as a Perpetual Money Machine, and team up with BALPA and other longer sighted employees to work together to win themselves the management leadership and business transformation that they all so desperately need? And get themselves a future?

This forthcoming tragedy is predictable and therefore potentially preventable. Indeed, as Louis Gerstner demonstrated at IBM, it might even be reversible. A key indicator is the Comparative Competitive Strength Report. If you would like to know more about this uniquely independent and objective assessment of the managerial and leadership potential competitive capability of an organisation, and the financial implications of that, please have a look at the introduction on our web site here.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog has a new article each month using a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs are "You're having a laugh ... Seriously?",Business Bloop of the Month Award", "Capitalism or ... Common Sense" .

Friday, 25 September 2009

Oh, What a Surprise! Get your Bacon with your Beauty?

There are companies who consistently exhibit both agility and inventiveness. They are more likely to “think outside the box”, to be “a bit of a maverick”, to do “something surprising”. Once the dust has settled and the consequences of the innovation can be seen clearly, the “surprise” is frequently downplayed by commentators with 20/20 hindsight as being “just common sense” and “obvious”. It wasn’t obvious then, it isn’t now and it won’t be in the future – agility and inventiveness has become part of the genetic structure of such companies. They will always surprise.

This ability to surprise is both a consequence, and a symptom, of the highest level of Comparative Competitive Strength, the condition we call Free. Robust research has proved that these companies produce financial results that massively outperform both their direct competitors and the general pattern of corporate returns. Their superior profitability endows them with a much greater freedom of strategic and tactical choice, and that in turn, allows them to consider greater risks to obtain larger returns. And, here is the elegant Catch 22, the vastly superior competence that enables them to deliver their high profitability can also underwrite their innovative enterprises so that, for them, the risks can be much lower than for others. Their true difference lies in the leadership, managerial and operational culture that pervades the whole of their business. Succinctly, they Act Different because they Think Different. So, unlike most of their competitors, they can afford to surprise.

Here is a wonderful example. In the news today, 25th September 2009 –

Waitrose is aiming to double the number of its grocery stores by making a push into the convenience market, the company revealed yesterday. Its food will go on sale in Boots as part of the plan.

The employee-owned retailer said there is potential to open up to 300 convenience stores. This would be boosted by the huge store portfolio of more than 2,000 outlets owned by Boots. In return, Boots’ health products will be sold by Waitrose.

This looks like one of the biggest “Win –Win” deals of all time in UK Retail. As its competitors race around fighting endless Planning battles to secure “Convenience Store” sites (making local newspaper headlines right across the UK) and then reaching deep into their pockets to build and outfit them, Waitrose sails serenely past with 2,000 ready to run new outlets at little cost. Talk about being the swan in the duck pond!

And, what’s in it for Boots? Two things, increased footfall in their current premises, and more volume for their healthcare products. Sounds like a bit of a moorhen moment?

Well, it is better than nothing – and to be brutally frank, nothing is what Boots has had to look forward to, for a long time. Boots is a classic example of a once great company that remained in the Comparative Competitive Strength frame of mind we call Comfortable until, one day, its leadership and its shareholders were shocked to find that it was on a road to nowhere with the real prospect of sliding into serious financial trouble. The world around it had changed, and it had not. They had fallen into the Comparative Competitive Strength condition we call Constrained. They were truly headed for The Abyss.

Over the last few years Boots has struggled to innovate. They have had apparently “good ideas”, such as the Dental Clinics that disappointed, and their Opticians that, at one time, was losing a fortune. However, they had become a Constrained culture – and that meant that they did not have the cultural leadership, managerial and operational competence to manage such innovations effectively. So they didn’t.

There have been significant changes in the leadership at Boots since the merger with Allianz and returning to private capital ownership. It is interesting to note that, seen only through the anecdotal “cultural thermometer” of Customer Service experience, there are signs that the long march back is under way. This deal with Waitrose looks like a comparatively low risk innovation for Boots which should not be outside the competence of an organisation that is now travelling from the Comparative Competitive Strength condition of Constrained, through Comfortable and is obviously aiming for Excellent.

From the Boots point of view, there is another benefit that is unlikely to be spotted by conventional business analysts. It has such a substantial potential value that it would make it worth them paying Waitrose rent to be in their sites. It is the opportunity to learn from this commercial partnership, to gain insight and understanding of the cultural realities of a Free organisation. But, are they ready and do they have the ability to listen, look and learn?

On the other hand, there is a potential threat to Waitrose which again, conventional analysis will not have highlighted. Have they spotted it and are they prepared for action?

This threat has been observed in a number of mergers and acquisitions where a company with a high level of Comparative Competitive Strength has deployed its financial muscle to scoop up a competitor with a much lower level of such strength. In many cases they have not taken into account, or have been blithely unaware of, the substantial cultural differences between the organisations. Generally, an Excellent level culture mixed into a Constrained level organisation has not produced, through some magic, an Excellent level outcome. Diagnosis can be muddy because, in many cases, such moves have been accompanied by financial engineering that, through excessive gearing, has had the effect of simultaneously moving the buyer, unconsciously, towards a Constrained condition. This has been a typical outcome of the lack of awareness of Comparative Competitive Strength cultural factors

As a general rule, in mergers and acquisitions, it appears that the lowest common denominator of Comparative Competitive Strength will prevail. There is the same risk in commercial partnership.

Waitrose must be on their guard. They will need to work out how much extra effort they will be prepared to put into managing the consequences of the lower levels of managerial and operational competence they are likely to meet in their Boots interactions. They should be prepared to be disappointed and to have strategies ready to manage this constructively. The overall economics are not likely to compare to those 100% within their own control. This is tangible stuff, necessary otherwise it could all end in tears.

Waitrose must be doubly on their guard. Much more important, they have “the Partnership”, a unique and spectacularly successful working culture. They will need to think about how to protect the cultural integrity of those partners they require to work with Boots. Their partners have acquired a complex mix of attitudes, habits and ways of thinking and working that, outside the Waitrose environment, may prove to be quite fragile. Waitrose have to make sure that they do not allow the lower common denominator, the Boots culture, in any way to contaminate and destroy their working way of life. This is intangible stuff, essential otherwise it could all end in tragedy.

So let’s hope that the operational leadership and management of Waitrose are as consciously competent in their understanding of their own culture as their strategic leaders in the John Lewis Group. The key to the future prosperity of UK plc lies in the whole economy striving to approach their level of Comparative Competitive Strength.

Our unique Competitive Strength Report is a rapid and inexpensive way for any organisation to compare itself with the very best in the world and to find out whether its prevailing culture is Free, Excellent, Comfortable or Constrained and to fully understand the financial and strategic implications of that result. We know that the insights from the Comparative Competitive Strength point of view will show you things you had not previously seen and illuminate unexpected opportunities.

You can find out more about Comparative Competitive Strength and The Abyss from our ChangeWORLD site or the Competitive Strength Report site. Why not meet us to explore the ideas further?

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog has a new article each month using a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs are "You're having a laugh ... Seriously?", Business Bloop of the Month Award", "Capitalism or ... Common Sense" .

Friday, 1 May 2009

Going, Going, Gone? – Auction of the Vanities?

From     May 1, 2009

Need to know: 

Motorola: The US mobile phone maker reported a first-quarter loss of $231 million (£156 million), an improvement on its $194 million loss for the same quarter last year. Sales were down by 28 per cent.

DSG International: The owner of Currys and PC World has raised £310.6 million to shore up its capital base after credit insurance fears contributed to a surprise rise in its net debt.

Chrysler: The American carmaker has gone into Chapter 11 bankruptcy protection, having won $8 billion (£5.4 billion) in US government funding to help it to restructure.

Smith & Nephew: The London-listed medical devices company reported an 18 per cent rise in first-quarter profits to £66.2 million, as the benefit of cost cuts outweighed a 5 per cent slump in revenues, caused by patients deferring non-essential orthopaedic surgery and by hospitals tightening their expenses.

From the Competitive Strength Point of View

GoingMotorola, a once great technological leader that loudly trumpeted its own excellence that has been struggling for years.  At best this is a company that is exhibiting the Comparative Competitive Strength symptoms of a Constrained condition.  There is much that it needs to do to recover its previous value to shareholders, customers and employees – market leadership, product innovation, quality and delivery are examples.  The fact that none of these are new factors over the last 18 months suggests that the only focus is now survival – that is a Constrained condition.

GoingDSG International, a large business that loudly claims market leadership but has been the subject of our adverse predictions over a number of years.  The list of operational quality failures is massive and widely documented, especially where there is interest in customer service experiences.  This report seems to indicate the next step in the inevitable death throes as this business slides from Constrained towards The Abyss.

Gone? – Chrysler, a motor company that has been so spectacularly uncompetitive for so long that the only wonder is that it has lasted so long.  However, it has never been immodest – the blowhard communication habits of the Motor Industry run through its veins. The various managements of this vast corporation have been ducking and diving over the decades with acquisitions such as Jeep, international misadventures such as the shambles that was Chrysler Talbot, mixed ventures such as the mutually disastrous tie up with Mercedes, and a new vehicles that remain firmly unmatched to market needs (just look at the current range!) – and last but not least, a quality and reliability reputation that almost any Third World vehicle builder can beat hands down.  This is a long Constrained business that has toppled into The Abyss.

The tragedy now is that their extensive  Supply Chain will suffer a massive financial blow that they are also ill equipped to withstand.  It is very probable that much of their Supply Chain is also in a Constrained condition and that The Abyss awaits them too.  And, meanwhile, the worthless Brand Name totters on in the name of job protection, is there any other logical reason?  This time about to be hitched to the paragon of automotive quality leadership that is FIAT – another Constrained organisation that exists only by governmental fiat – what a combination that promises to be..

A Lesson from Chrysler – the LCD Effect

The brutal reality of the Competitive Strength point of view is that, in the majority of cases,  in any interdependent business relationship the Lowest Common Denominator sets the pattern of values, thinking and behaviour for the whole.  So, because Chrysler has been for so long in a Constrained condition, tragically many of their suppliers may also have come to share the condition – and be therefore be doomed in turn.

 The Mercedes/Chrysler tie up illustrates this so well.  Mercedes, strong in the self belief that they were an example of Excellence in  Competitive Strength, entered a joint venture with Chrysler (a Constrained operation desperately seeking yet another silver bullet).  There were two unexpected outcomes – first, Mercedes’ reputation in the USA for quality and reliability with engineering excellence suffered nearly terminal damage from their first locally built vehicles – second, the world wide market spotlight fell across the quality and reliability of all Mercedes’ range and they too were seen to be found wanting.  Mercedes’ self perception of Excellence had been a myth – they were in fact, and had been for some time, merely in a Comfortable condition.  And that is why they slipped downhill with Chrysler without even realising that it was happening. 

However, although it has taken a few years, Mercedes’ leadership realised what was happening, distanced themselves from Chrysler as far as possible, and made a massive investment in restoring their internal culture towards Excellence.  The only question now is whether they have made enough progress to withstand the credit crunch?

However, the News is not all doom and gloom today -

Staying – Smith & Nephew, is a company with a quiet reputation for excellence in everything that they do.  It has demonstrated a high degree of agility in both market shaping and leadership through an adept and innovative mixture of  product leadership and flexibility in distribution channel development.  In fact, it exhibits several symptoms of the Competitive Strength condition beyond Excellence that we call Free.  So it is no surprise to see, as reported, that they have been able to respond rapidly and productively to a sudden shift in market conditions.

So, does your company think it is the greatest? 

Do you shout your superiority from the rooftops?  Are you one of the business leaders fooling your customers, your suppliers, your shareholders and, worst of all, yourself that You Are The Best?  

Times are tough – and in Warren Buffet’s memorable phrase - the tide is going right out.

In terms of Competitive Strength levels -

·       If your business is in the condition of Excellence – you are in for some nasty surprises

·       If your business is in the condition of Comfortable – you are in for a terrible time – you will very probably slide into a Constrained condition without knowing it has happened until it is too late.

·       If your business is in the Constrained condition – you are unlikely to survive

·       If your business is in the Free  condition – you don’t need us to tell you what to do, you will already have done it.

Whether you are a business leader, proprietor, investor, financier, supplier, banker, manager or employee – you would be wise to look hard at the Competitive Strength condition of the companies with which you are closely associated.   If they are going down, they may take you with them without you even realising that it is happening.

If you want to find out more about the Competitive Strength Report, the true financial value of exceeding expectations and the importance of changeability for survival and prosperity, please look at our ChangeWORLD web site here.  If you have the courage to wake up and face reality – contact us before it is too late. 

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog has a new article each month using a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs are "You're having a laugh ... Seriously?", Business Bloop of the Month Award""Capitalism or ... Common Sense" .

Monday, 16 March 2009

The Fallacy of Market Share

In our last Exceeding Expectations article we demonstrated how being in a high growth market sector and/or having a temporary market advantage are not reliable indicators of long term performance for a business. In this article we explain why “market share” is misunderstood and misused as an indicator of future performance – and so often also as a strategic goal. Given that the ONLY rationale offered to persuade Lloyds TSB shareholders to support the merger with HBOS was the “largest-market-share-in-UK-retail-banking-Gordon-has-given-us-the-nod” argument , this is a highly relevant subject to address.

The argument in favour of achieving high market share is that this creates many advantages that lead to superior financial performance. This fallacy has a corollary– the conclusion that high market share requires a very large organisation. Frequently this prompts boards to “shortcut” their way to increased market share through merger and acquisition. However as the record shows, M&A has a chance of between 50 and 80% of failing to produce value; what does this say about the advantages of high market share?

The research on this subject appears superficially to back the notion that high market share leads to superior financial performance. However one piece of research identified a crucial element needed if this superior performance is to be sustainable. The research, carried out at Harvard and still ongoing is titled Profit Impact of Market Strategies (PIMS). This research involved gathering performance data over many years from many thousands of business units to identify the business strategies most likely to lead to success in a range of contexts. In their book (“The PIMs Principles”) Robert Buzzell and Bradley Gale showed how their PIMS research discovered that only market share growth based on relative perceived superior quality will result in market share growth that delivers sustainable superior financial performance.

For an example of how the lack of relative perceived superior quality results in poor financial performance in spite of high market share we need look no further than DSG, the owners of Currys and PC World. This company built itself into the market leading electricals retailer and showed all the characteristics of a high market share operator, e.g. using its buying power to offer low prices and occupying prime retail sites throughout the UK. Three years ago, after one of our clients suffered one of the worst customer experiences we have witnessed from PC World’s so called Business Division, we looked at DSG from our Competitive Strength perspective and warned that all was not well. Since then other commentators began to voice concerns and in due course DSG’s profits began to slide along with its share price.

Then came the recession and of course this has meant a tough period in retail. In spite of this a few retailers have been able to report results that exceeded expectations whereas DSG announced trading results that were every bit as bad as expected. The media’s financial and business pundits once again cited market conditions, the credit crunch, shifts in demand for one technology or another, and so on. DSG attempted to cushion the bad news by reporting that trials of new store formats had delivered increased sales and margins. On the strength of this news one analyst actually changed his recommendation from sell to hold – obviously he has never heard of the Hawthorne Effect (research that showed the refurbishing of working environments can improve performance – but only for an extremely short time). The thinking (or is it a Prayer?) goes that if the market leader upgrades all their stores, the improved performance seen in the trial will replicate across the business to restore the high market share and once again deliver high profits.

We have to ask - has this analyst or any of the other commentators actually tried to buy anything recently from a DSG store? If they had, they might just understand why even an infinite number of expensive store refits will not stop DSG plunging further and crashing – why there is no sign of a competent pilot and no River Hudson nearby.

Recently, my wife and I popped into our local (large) branch of Currys. She wanted to buy a new electric iron. There was a reasonable choice of items lined up along a display shelf. The chief decision maker examined them and finally decided which one she wanted to buy. We looked at the lower shelves for the boxed item. It was not there – in fact, there were boxed examples of fewer than half the items “on sale”. After a search, I found two assistants busy chatting and asked for help. Visibly irritated at being interrupted, one of them came to the shelf, removed the label, disappeared to a computer terminal and then returned. “We don’t have one, but you can order it”. We asked when, if we were to order, would it be available? He did not know. He asked another lady assistant who said that a delivery would be in 4 days. Would it include that item? “Probably – if you order it”.

My wife asked if we could buy the display item? Could we have the box and instructions? “Oh no, we throw those away. We would be full of cardboard boxes, wouldn’t we?” My wife then asked how much reduction they would offer for the item as incomplete. “Oh no, we can’t reduce it because it is a current stock item. You can order it”. She walked out, fuming. We went straight to Sainsburys – a whole 300 yards. Within 10 minutes she found what she wanted and bought it.

This is why DSG are doomed. Disastrous Customer Service experiences and the inability to deliver the basic function of a “shop” (somewhere that sells things you can buy there and then) demonstrates DSG’s relative perceived inferior quality. Disposing of the packaging and thereby devaluing all their display stock is simply one of many inevitable, stupid consequences of the core problem. This core problem is low Comparative Competitive Strength for which no amount of “bigness”, whether in market share or anything else, can compensate.

Their new chief executive is promising change “but it will take time”. With rapidly diminishing Competitive Strength, my friend, you don’t have the time. This is a business behaving in a way that spells disaster even in good times. What hope does it have in a time of economic crisis? The Abyss looms – and a great deal faster than you may wish to believe. Size matters, a bit – the Titanic took much longer to slide under the waves than a rowing boat, but the only variable was the time, not the sinking. And, as a very large organisation, when DSG crashes, the tsunami will drown many others that do not deserve to die. If, as they have announced, DSG think they need redundancies – it is not in the stores – it is in their leadership.

If you own DSG shares, forget them, write them off. If you are a DSG employee, sorry, look for another job now. If you are a DSG Supplier – get ready for massive contractions at any minute. If you are a DSG Creditor – take protective action now. If you are a Financial Analyst, ask yourself if you are saying the right things but for the wrong reasons and consequently at risk now of giving wrong advice? If you are an Institutional Investor (on behalf of my pension fund perhaps?) and if you still hold a stake, you should be sacked, now.

If you think we are just picking on DSG, what about Lloyds TSB and HBOS? Sorry, Lloyds shareholders, it is probably too late, get ready to sue your Board members and the government.

The only hope the UK has in these troubled times is for every business to raise its game NOW. There is no longer time to pussy foot around. Every enterprise that fails, as DSG seems determined to do, will be an avoidable burden on the few survivors. Don’t expect the Government to help – they haven’t a clue about Comparative Competitive Strength or its importance to saving the British economy – just a few stalwart pursuers of Excellence will, if the banks don’t stop them, provide the only solid base for our future economic survival.

Frankly it makes us want to cry. But if you are of stouter heart, and want to know more about how you can raise your game – NOW – please have look at our website here and at the Comparative Strength Report page here.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog has a new article each month using a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs are "You're having a laugh ... Seriously?", Business Bloop of the Month Award", "Capitalism or ... Common Sense" .

Thursday, 22 January 2009

The Fallacy of the "Market"

As we move into the early part of 2009 one of the business names shortly to be added to the casualty list is Foxtons estate agents.

Foxtons grew rapidly on the back of the London property boom and became famous for the Minis in Foxtons livery darting around the streets of London. Jon Hunt, the founder, sold the business to BC Partners for £360m just before the credit crunch. Now comes the news that Foxtons have breached their banking covenants and BC Partners have conceded that its decision to buy the business was a mistake. “As housing markets fall, so do estate agents, so we got that wrong. In hindsight, we made the wrong assessment of the market,” said a spokesman.

Well yes you did, but the really wrong assessment was not “of the market” – it was of the company itself. Jon Hunt had done a great marketing job, the company Minis were just one example. He rode the boom astutely, opening more offices, taking on more staff, positioning the business as THE estate agent in London and timing his exit impeccably – good luck to him! Yet many who had attempted to buy or sell a house with Foxtons had perceived the company as inefficient, its staff incompetent and unprofessional (remember the Put-A-Sign-on-Anybody’s scandal?) and putting its own interests before those of its clients. A bit of research amongst Foxtons’ clients and London house owners who had had anything to do with them would have revealed a business that was likely to be unsustainable other than in a booming market.

There is a mindset amongst many investment analysts and managers that leads them to believe that investing in businesses in so called “high growth” market sectors and/or with apparently unassailable market advantage in their products/services is the Holy Grail that will produce the stellar returns they seek. This leads them all too often in to over-valuing the “biggest” – because, “obviously it must have grown more”. The same immature logic has driven company directors to pursue Top Line growth regardless of expense, because it will impress these analysts who will then recommend their shares.

This is just rubbish thinking because all “high growth” sectors and any market advantage are at best temporary and frequently illusory as BC Partners experience with Foxtons illustrates. There is no substitute for being a good, well run business that has developed a high level of Competitive Strength that ensures it stays that way.

In 2003 Irish Drinks Group C&C, launched Magners Cider. Described as “a triumph of marketing” the new concept of “Cider Over Ice” swept all before it. Sales grew strongly during three successive summers and into 2007’s early Spring heat wave. Over the same period C&C’s share price grew strongly too, from €2 to €14. However in reality this was based on just two assumptions – that no competitor would enter the market and that it wouldn’t rain.

Well, S&N launched Bulmers Over Ice in 2006 and recaptured 20% of the market - and it started to rain. In two months C&C shares dropped to €6 as sales and profits collapsed. The business simply did not have the Competitive Strength to maintain and build on the advantage it had gained with its new product. Their share price is now around €1.45, their Chief Exec has gone to be replaced by John Dunsmore former Chief Exec at, guess where, S&N!
For the most spectacular example of a booming market masking fundamental weaknesses in the business, look no further than the banks!

However an example of how this works in reverse is Sainsbury’s. For some time their market share, sales and profits wilted as competition from Tesco, Asda and Morrison’s hotted up. Financial and investment analysts were forever claiming that Sainsbury’s must reposition up market, down market, sideways, anywhere where there was less competition if they were to have a future. Successive managements arrived, tried, failed and went.

Then along came Justin King, with the novel strategy of making Sainsbury’s a “better business”. The result has been growing market share, sales, profits and the resilience that will see it through the downturn, all of which had nothing to do with the market. Can you imagine the previous state of the company enabling it to introduce its expanded non-food offer and its new value lines as effectively as they have done now? As a “better business” Sainsbury’s are not only spotting changes in the needs of their customers but are actually now capable of responding.

We are not saying that the market and/or market advantage from a break through product or process will not have an effect on the performance of a business, it is just that on its own it is not as crucial as many think it is and certainly not as significant as Competitive Strength. Businesses with high Competitive Strength conditions, what we call Excellent or Free, can not only respond faster to market changes but are frequently the instigators of those changes. They can profit from high growth and continuously create and renew their market advantage.

Experience and rock solid research has proven that how an organisation thinks and behaves, the deep seated managerial and behavioural values and competences of a business, are the main differentiator of whether over time they will substantially outperform their competitors and successfully withstand unpleasant surprises.

This manifests itself in the form of Competitive Strength, a new measure of business performance.

Yes, you can actually measure Competitive Strength, either in your own business or in any businesses you are considering investing in. The Competitive Strength Report Process is the only tool available from anyone, anywhere that provides an objective measure of Competitive Strength compared to the very best in the world. The Competitive Strength Report enables a business leadership to understand where they are positioned, in comparison to the very best, where their main threats lie, what the implications are and helps them decide very clearly, collectively and speedily what they need to do. There is nothing else as fast, as accessible or as affordable.

Find out more about it on our Competitive Strength web site page – or at the Competitive Strength Report website.

Exceeding Expectations is brought to you by Steve Goodman & Tony Ericson of ChangeWORLD. For more lighthearted comment with a serious point on current business related topics go to our You’re having a laugh … seriously? and Business Bloop of the Month Award