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Friday, 30 March 2012

What Do They Know That Others Don’t?

Three cleans up as larger rivals flounder

Nic Fildes, The Times - Published at 12:01AM, March 30 2012

Britain’s smallest mobile phone network has racked up more than eight million customers after scooping up defectors from larger rivals in the second half of last year.

Three, which is owned by Hutchison Whampoa, Asia’s largest company, recorded an 18 per cent rise in customers to 8.2 million as larger networks reduced their previously unlimited data packages.

Other British parts of the Hutchison Whampoa empire have also thrived. Cheung Kong Infrastructure, which includes Northumbrian Water and EDF’s British energy distribution network, boosted revenue by 8 per cent to HK$30 billion (£2.4 billion) in the year, while its operating profit increased 26 per cent to HK$13 billion.

Meanwhile, its ports business, which owns Felixstowe, Britain’s biggest port, and Harwich and Thamesport on the Medway, improved revenue by 8 per cent to HK$33 billion with operating profit up 16 per cent at HK$8.2 billion.

Its retail arm, A. S. Watson, which owns the Superdrug chain, reported revenue growth of 37 per cent to HK$144 billion with operating profit up 18 per cent to HK$9.5 billion.

Three reported an operating profit of £30 million, which was 83 per cent lower than in 2010. However, Richard Woodward, the chief financial officer, said that the profit in the previous year was boosted by a significant one-off gain and the 2011 performance was effectively its first year of profitability.

“This growth is not a flash in the pan. We’re not a one-hit wonder,” he added.

This is a really interesting story. It opens up many issues about the sources of outstanding results and leadership mythologies.

Robust research, by Dr Vinod Singhal of Georgia State University, established that companies that achieved operational, managerial and organisational excellence delivered massive Comparative Competitive Strength that, in turn, produced outstanding financial results.

This point of view suggests that Hutchison Whampoa should be expected to be significantly more competent across a number of dimensions than their competition.

Financial experts might well look to see where else that competence is going to deliver outstanding results.

Competitors might seek to find out what there is in the behaviour, attitudes and beliefs of managements and people in Hutchison Whampoa's widely differing companies that delivers such a consistency of excellent performance?

The "flash in the pan" question depends on whether the leadership of Hutchison Whampoa are consciously competent in their Competitive Strength. Have they developed a really robust business culture? The fact that they are ahead in four such distinctly different business sectors suggest that they might have. On the other hand, the potential fragility of such winning cultures was well illustrated by Jim Collins in "Good to Great" where he examined the relationship between outstanding business performance and individual leadership; not every company continued to prosper after changes of CEO.

We know from our direct experience with clients that the behaviours, attitudes and beliefs that can deliver outstanding Competitive Strength can be built and sustained. Different thinking can enable different actions that deliver significantly different results – it is simple, but not easy. We have also seen that this outstanding Competitive Strength can be destroyed, even within a few months, by a different leadership that fails to understand the importance of the behaviours, attitudes and beliefs that have made such a difference. Such effects are not unusual in takeovers and mergers, as we have written in other blogs.

So there could be much to learn from Hutchison Whampoa. There could be much that they have to teach us all. There could be much for their future competitors in any new market they enter to worry about!

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?"and "Capitalism or ... Common Sense".

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