What Are Australia’s Best Enterprises Doing Right?
Focussing on single industries, not diversifying.
Jim Collins in his work “Good to Great” observed that the best of companies choose to focus on what they are passionate about, then identify what they can be world’s best at – then don’t do anything that doesn’t fill that bill.
Positioning to dominate a niche, major niche or ultra-niche.
From a previous eNews article you may remember the rules for niche dominance:
Four strategically-sound key positions were identified:
- Major: 25-75% of industry revenue
- Niche: 5% of industry, but more than 50% of a segment
- Ultra Niche: 1% of industry but “owning” a product category
- Exotic: 0.1% of industry but “owning” a product group
Pursuing uniqueness through intellectual property or licence.
The easiest routes to uniqueness are through the development or purchase of unique branding and systems, which are the very foundations of franchising, and which is a business approach in which Australia leads the world on a per-capita basis; or through licenses that provide a virtual monopoly or oligopoly as in the case of the banks, media, gaming, airlines, and more.
Outsourcing non-core activities and functions.
This has lead to a boom in multi-purpose contracted call centres; after sales care; virtual assistants; offshore virtual marketing departments and more. There are many tasks within a large enterprise that don’t lend themselves well to mass production or systemisation and many of those centre around client care and relationship management. Those tasks create opportunities for smaller, more nimble and personalised styles of operation to fulfil roles more effectively (even if more expensively) than massive companies, and the trend is bound to continue, creating opportunities for SMBs who seek to seize a niche lower down the food chain.
Converting capital intensive, inert hard assets into liquid current assets.
Many larger companies, and an increasing number of mid-range and smaller businesses, are realising that tying up cash in premises or other large primary assets such as capital equipment provides a lower rate of return or saving than they could generate if that cash were put to work as additional stock, or points of presence, or delivery systems.
Creating virtual corporations & strategic alliances.
Many businesses are realising that they don’t necessarily have to own their process from end to end, and that they can forge relationships with related businesses to create the equivalent of a large (virtual) organisation with which they can compete successfully for large-scale work on a national or global scale.
Planning from the outside-in not the inside-out.
This is a case of “working backwards” for many smaller businesses that start by doing something they are good at and growing outwards. Larger businesses tend to plan the end result then build the structures required to support its delivery.
Another interesting aspect of the approach taken to profit: Smaller businesses tend to work really hard and look back to see what profit they have made from all of their activities; bigger businesses tend to start with the desired end result in mind (if you’re a bank, let’s say $4bn in profits) and then work their way back through their fees, pricing and costs to achieve the profit. The little guys could learn a thing or two from this approach!
Emulating world best practice and aggressively globalising their businesses.
BHP, News Limited, Qantas, TNT, Lendlease – all well-known names in the Australian market have gone global and done so with success. ABC Learning could have been another global success story but for the fact that they were operating in the global market and fell foul of the US-led sub-prime mortgage debacle. So, there are rich pickings when you swim with the sharks, but then again, there are the sharks!
Developing unique organisational cultures.
It’s about attracting and keeping “the right people on the bus” and then investing time, training, care and resources in them so that they routinely achieve extraordinary things.
It is equally important to get the “wrong people off the bus” – a wrong body in a seat does not create a vacuum that the Universe is likely to fill with a great new team member any time soon.
Leading first and managing second.
Ross Perot said, “You can manage inventory, you can manage things, but you must lead people if you want to tap their full potential.”
Leadership is rare because many believe it is a god-given talent rather than a skill. Sure, you can be born with certain attributes that may make it easier for you to lead, but true leadership is a skill and, as such, it can and must be learned!
If you’re in a leadership position, and are missing a Job Description, please email me and I’ll provide you with a “ Job Description for a Leader ”!
(Acknowledgement: The ruminations in this article were inspired by a presentation by Phil Ruthven, chairman and economist of IBISWorld, forwarded to me by a good Client.)
