When Tom Hall began the research that culminated in Ruthless Focus, he thought that most fast-growing companies were started by sharp MBAs. He thought they used state-of-the-art tools to create sophisticated strategies. And, he suspected that they took their business plan to venture capitalists that funded their growth.
Then Tom sent a questionnaire to 586 CEOs of fast-growing companies. He asked two simple questions.
One was: “What do you believe is the single most important business strategy that influenced the rapid growth of your company?” The other was “Where did this idea come from?”
When he got the answers back from the CEOs, including luminaries like Michael Bloomberg, Tom discovered that most of what he had assumed was simply wrong. Fast-growing business used simple strategies that usually grew out of the founder’s experience. They chose a core strategy and focused ruthlessly on making it work.
The strategies the fast-growing businesses used were straightforward and easy to explain.
• Wal-Mart offers everyday low prices to customers by using savvy purchasing and rigorous cost-cutting to make a profit.
• For Ritz-Carlton, company strategy is embodied in the phrase: “Ladies and gentlemen serving ladies and gentlemen.
• Amazon uses technology to offer customers great prices and a great shopping experience.
The strategies of the fast-growing businesses usually grew out of someone’s experience.
• Tom Stemberg used his experience selling groceries through warehouse stores to define how Staples would succeed.
• John Ferolito and Don Vultaggio are self-described “beer guys.” When they launched Arizona Iced Tea, they used everything they’d learned from twenty years in the beer distribution business.
• The five founders of Catalina Marketing combined their experience from the supermarket, packaged goods, and scanning technology industries to come up with a better way of distributing the coupons shoppers
Fast-growing companies chose a core strategy and worked hard to implement it. Ruthless Focus describes five basic strategies.
Nucor and Zara’s are very different companies. But both use technology to gain competitive advantage. AAON, a manufacturer of a “semi-customized” roof air conditioning units, and Scott BBQ in Hemingway, SC both set themselves apart with unique offerings.
When fast-growing maintained a ruthless focus on strategy and the bottom line, they kept growing. When they focused on other things, they got into trouble.
Take Chico’s. When the company maintained a ruthless focus on offering unique clothing that baby boomer women wanted to wear, they thrived. When they shifted their focus to starting businesses in other market segments and chasing growth for its own sake, things got hard.
Home Depot is another great example. For years they grew by offering their customers great selection and great service, based on Bernie Marcus’ “love the customer” mantra. When the board and Bob Nardelli shifted focus to improving efficiency, Home Depot became a very different company.
They myth of the start-up with a proprietary idea, a sophisticated business plan, and venture funding is just that, a myth. Companies that maintain growth and profitability for decades focus ruthlessly on simple strategies and business basics.
Ruthless Focus: how to use key core strategies to grow your business includes details on more than twenty companies, including those mentioned here
