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The world’s most productive companies may not necessarily be the best-known ones. These include: * World Savings — It has operating costs that are half of its competitors’ and receives twice as many deposits per branch.
Yellow Roadway Corporation— This Kansas City trucking company went from near bankruptcy to being one of the most admired companies in seven years. Nucor Corporation— Nucor has paid dividends for 123 successive quarters and increases revenue and profits by double-digit rates even during recessions.
Ryanair — This discount airline beat Southwest Airlines on important operating metrics.
The Warehouse Group, Ltd. — This New Zealand-based company has higher profits than Wal-Mart. IKEA — Although this retailer is known for its Scandinavian roots, it’s more successful internationally. SRC Holdings — This diversified manufacturer makes sure that every worker is business literate and increases sales by double digits each year while doubling its profits compared to total sales in the preceding year.
Lantech, Inc. is a privately-owned packaging company located in Louisville, Kentucky. The company should be vulnerable to business cycles because it’s private-owned and not publicly traded on the stock market; however, even during the depths of recession they still managed single-digit sales growth and double-digit profitability growth.
There are several things that the world’s most productive companies have in common. First, they keep it simple. They focus on one clear purpose and do not try to do too many different things at once. Second, they build a good culture where everyone embodies and practices their company values every day. Third, they tolerate no hypocrites in management positions because those people will drag down the entire organization with them if they don’t follow company values or fail to live up to their own espoused standards of behavior.
Always ask for a business reason behind every decision — Don’t invest in things that don’t have any business justification.
We should get rid of executive perks. They’re unnecessary and create a class system that doesn’t help workers feel like they’re all part of the same team. We also shouldn’t lay off workers when something goes wrong, because it makes them feel like they can’t trust management. Everyone on our teams needs to understand how their work affects the bottom line so that no one is working in vain (or at least knows if he or she is). We need to make sure there are systems in place for every function, which will help us identify waste and fix those problems more easily. It’s easier to make changes if we have clear processes in place first. If we want things done right, we need to practice over and over again until everyone gets it right every time. Technology isn’t important; what matters is using technology effectively.
It’s interesting how each of the most successful businesses started from scratch. Some were on the brink of bankruptcy, others in declining industries and some just lost their competitive advantage. However, they all had a good leader who saw a way to turn things around for them.
Leaders of the world’s most productive companies are similar in that they pay attention to details, don’t micromanage but keep track of what matters in their business and tell the truth.
They keep it simple and do not go for elaborate perks or complex strategies. They make things understandable to everyone and don’t complicate matters. They are modest about their accomplishments, as well as the rewards they give themselves. You can understand what they say because they speak in a way that is easy to comprehend. They compete intensely with one another because business is like a game to them.
Leaders focus on the long term, not just next quarter. They look years into the future because they want to build enduring organizations and not just feather their own personal portfolios.
People who hate waste are better leaders. They use valuable resources efficiently and avoid wasting time, money, or energy. These leaders also make sure to develop the people they’re training to succeed them in the future. It takes a lot of humility for these leaders to admit when they’re wrong and encourage others by listening intently to their ideas.
Leaders who detest bureaucracy try to keep communication and decision-making as open, direct and effective as possible. They do this by slashing bureaucracy whenever they can.
They have confidence in their employees—this is a rare trait. They’re humble and confident, which allows them to be successful leaders. These leaders trust their employees, and that builds more trust between the two parties.
The Ingredients for Productivity
Comparing these companies, we can see that there are common factors in all of them. However, the way they were able to capitalize on those factors was by facing a crisis or tragedy and learning from it.
Each company found a way to deal with the problem and accomplish their goal. They did this by:
Define one clear purpose — The Warehouse Group wanted to make goods that were once only affordable to the elite available to everyone. Yellow Roadway focused on service, not just transportation, when deregulation made trucking uneconomical. SRC taught every worker how the business worked in order to involve each person fully in the business.
It’s important to stick with the main purpose. If you don’t, cut any products that aren’t consistent with your mission. Ken Iverson transformed Nucor and passed the reins of leadership before he died by focusing on one business while selling others. He became a steel maker who had a relentless focus on productivity.
Openness — At Nucor and SRC, employees are open with each other about the company’s financial numbers. They also share information with suppliers and customers to avoid any internal cliques or cabals.
Companies that are the most productive don’t have bureaucracy, so communication is direct. They also don’t lay off workers for management mistakes, because they know their employees are part of the company forever unless they want to leave. If a manager can’t work in this kind of environment and isn’t honest or anti-bureaucratic, he/she gets fired.
Ask “WTGBRFDT” — WTGBRFDT means, “What is the good business reason for doing this?” Marion and Herb Sandler of World Savings Bank in San Francisco demand that every proposition be backed by solid reasoning. If something doesn’t have a sound business case behind it, they don’t do it. That makes them stick out from the crowd because most businesses are swept up in fads or fancy ideas.
Systematize — The world’s most productive companies create systems that everyone follows. These systems eliminate waste and allow people to work more efficiently by using proven methods. When someone fi nds a way to improve the system, these companies adopt it without hesitation.
Continuously improve—Continuous improvement is a cultural bedrock of the most productive companies. It begins by mapping out existing ways of working, focusing on commonly understood objectives and finding ways to attain those objectives with less waste of time and resources. There’s always room for improvement.
Performance-based compensation— The most productive companies in the world define what they want and pay people who perform. They don’t just do this to manipulate their employees, but because it’s a way of showing respect, giving recognition for a job well done, and making sure that there is justice in the workplace.
Technology is important, but it’s not a competitive advantage. It can be used to help improve your operations or service, and there are many ways to use technology in business. However, technology has become too common in our society for it to be a competitive advantage. If you have the newest upgrade, everyone else can get it as well.
Making Good Use of Technology
Recently, companies have made a lot of bad investments in technology. And the ones that avoid those missteps are more successful than others.
To automate a process, you must first understand that process. Map it out to make sure you know what is involved and why the steps are there in the first place. Next, identify your real goal for automating this process; be clear on what you want to accomplish with automation. Then think through the costs of developing an automated solution in-house versus buying one from someone else who has already done all of the work for you. Finally, calculate how long it will take before your investment pays off by determining a reasonable payback period with realistic assumptions about future growth and other factors.
- Negotiate with suppliers to get the best price possible. It’s a commodity, so why should you pay more? Relate it to a business purpose by asking yourself what is the good reason for doing this. The world’s most productive companies are extraordinary, but not unique. Almost any company that emulates them can achieve remarkable improvements in productivity if they have good leadership and management practices.