The Three Rules by Michael E. Raynor
How Exceptional Companies Think

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The dry writing and repetitive message make this book a tough sell for any but the most devoted success-seeker.
-Publishers Weekly

Synopsis

Finally, an answer to the ultimate business question: How do some companies achieve exceptional performance over the long term?
 
In every sector, there’s an outlier. In the phar­maceutical industry, it’s Merck. In discount retail, it’s Family Dollar. It used to be Wrig­ley in candy and Maytag in appliances. Other superstars have been hidden in plain sight, like Heartland Express in trucking or Linear Technology in semiconductors. How do these exceptional companies deliver superior perfor­mance over the long run despite facing the same constraints as competitors? What are they doing differently? What can we learn from them?
 
Michael E. Raynor and Mumtaz Ahmed have analyzed data on more than 25,000 com­panies spanning forty-five years. Their five-year study began with a sophisticated statistical analysis to identify which companies have truly exceptional performance, 344 in all.
 
In collaboration with teams of researchers, Raynor and Ahmed then put a carefully chosen representative sample of twenty-seven com­panies under the microscope to uncover what made the stand-out performers different. They found that exceptional companies, when faced with difficult decisions, follow three rules:
Better before cheaper. They rarely compete on price.Revenue before cost. They drive profits through price and volume, not thrift.There are no other rules. Everything else is up for grabs, and they are willing to change anything to remain true to the first two rules. 
The rules provide an indispensable compass that any company can use to chart its own path to greatness. Is it better to keep price down or invest in creating value that commands a higher price? Should you focus on talent and develop­ing the abilities of your people or build processes to extend the capabilities of your organization? How about acquiring a sizable competitor to secure economies of scale—or a small start-up to gain access to new technology? According to Raynor and Ahmed, the right answers to these and just about every other question are the ones most closely aligned with the rules.
 
The Three Rules is built on a powerful combina­tion of large-scale data analysis and in-depth case studies. Its guidance will increase the chance that your organization can become truly exceptional.
 

About Michael E. Raynor

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Michael E. Raynor is a director at Deloitte Services LLP, where he explores corporate strategy, innovation, and growth with clients in a variety of industries. He is the coauthor, with Clayton Christensen, of The Innovator’s Solution, and the author of the critically acclaimed The Strategy Paradox and The Innovator’s Manifesto. Mumtaz Ahmed is a strategy practitioner in Deloitte Consulting LLP and the chief strategy officer of Deloitte LLP, responsible for the firm’s strategy, corporate development, innovation, eminence, and brand.
 
Published May 30, 2013 by Portfolio. 381 pages
Genres: Business & Economics. Non-fiction
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Critic reviews for The Three Rules
All: 3 | Positive: 1 | Negative: 2

Publishers Weekly

Below average
on Apr 29 2013

The dry writing and repetitive message make this book a tough sell for any but the most devoted success-seeker.

Read Full Review of The Three Rules: How Exceptio... | See more reviews from Publishers Weekly

Blog Critics

Above average
Reviewed by Dr Joseph S Maresca on May 05 2013

The rule structures may not have a universal applicability to every industry like financial services or real estate.

Read Full Review of The Three Rules: How Exceptio... | See more reviews from Blog Critics

Kirkus

Good
on May 02 2013

Raynor and Ahmed provide a way to separate exceptional performance from the noise of day-to-day statistical variation. A major contribution to the literature of business success.

Read Full Review of The Three Rules: How Exceptio... | See more reviews from Kirkus

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80%

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