Companies & Industries

Outsmarting the Competition


Author Jim Champy believes the seeds of tomorrow's great business opportunities sprout out of today's economic problems

The dizzying pace of upheaval in today's business world makes it tough out there for leaders. Major U.S. companies struggle just to keep up with the economic clout of competitors in Mexico, China, and India.

And as if that weren't enough to strike fear in the hearts of business leaders, the U.S. now finds itself on the cusp of a recession, with all that such a downturn entails in the already troubled housing, labor, and credit markets.

So what's a leader to do? It's not exactly a time for rejoicing, but neither is it a time for glum acceptance. For out of today's grave problems sprout the seeds of tomorrow's great opportunities—opportunities that will, in Darwinian fashion, be grasped by the smartest businesspeople among us.

New Growth Strategies

The business universe has become a dynamo of powerful new practices that can sharpen any company's competitive edge. That's why I often say there's nothing new in management theory, but there's much that is new and exciting in business.

And much of what's new concerns the strategy needed for growth—the goal of any successful company. Today's approach bears no resemblance to the past, when privileged men occupying corner offices joined hands with hired guns from various consultancies to design a company's strategy, totally ignoring the collective wisdom that arises from within the business itself.

Times change, but not everyone gets the message. The crux of the problem for old-style leaders, I believe, is that the practice of management has been over-intellectualized. The concept itself is relatively simple. The verb "manage" comes from maneggiare, an Italian word meaning "to handle"; the French expanded on the concept and influenced U.S. understanding with ménagement, meaning "care" and "consideration."

What's New in Management Thinking

In the early 20th century, Mary Parker Follett, a social worker and management theorist whose ideas infused the business world, put a human face on the concept by defining management as "the art of getting things done through people." Then another Frenchman, mining engineer Henri Fayol, who rose to run his company, decided that management was made up of five functions: planning, organizing, leading, coordinating, and controlling. Too limited, cried Fayol's critics. And so it has gone, with contributions to management theory coming from economists, business schools, consultants, and leaders themselves.

Unfortunately, much of what has been trumpeted as revolutionary management thinking (i.e., the totally "horizontal" company that would right all that was wrong with the vertical framework, or the "nimble organization" that vowed to teach us how to adapt to change at a moment's notice) has ended up being little more than fads. Now, after spending more than 30 years thinking and writing about management and business, I'm convinced the best ideas in business come not from academics or consultants but from the people doing the work inside real companies, those who meet the challenges each and every day. And in today's complex, volatile, and demanding global marketplace, a company's record of growth is the yardstick by which ideas should be measured.

Exceptional growth rates signal success, as I describe in my new book, Outsmart!, which shows how a company can make itself into one of the smart survivors by staking out new strategic options. My exemplary companies are outsmarting and outgrowing their competitors by finding distinctive market positions and sustainable advantages—whether those be innovative thinking, the simplification of complex customer problems, or learning from the success of others.

Exceptional Growth Rates and Unusual Strategies

For instance, in Outsmart! I tell the story of Mike Howe, the fellow who recognized a simmering crisis in health care and turned it into a business strategy for MinuteClinic, a chain of retail outlets staffed by nurse practitioners who tackle common medical problems in less time and at lower cost than hospital emergency rooms can manage.

I also write about Jeff Housenbold, the president and chief executive officer of Shutterfly (SFLY), who turned the company into much more than an online photo finisher. Seeing families on the run and generations separated by long distances, he parlayed the problem into a thriving social expression and personal publishing business where families and friends share experiences as well as photos.

My book contains a half-dozen other examples (dozens more were left on the cutting-room floor). What they all have in common is exceptional growth rates and unusual strategies that merge irresistible promises with a finely honed ability to deliver.

New Rules for the Game

Perhaps the best news for leaders everywhere, however, is that these ideas can be adapted to their own businesses. They don't require big bucks from venture capitalists or IPOs to become airborne. All that's needed is the ability to spot an unmet customer need, backed by an enthusiastic resolve, and a thoughtful plan to put the idea to work.

We live in a time of innovation and expansion—a world of smart and smarter strategic options. The prize will go to shrewd competitors who can stake out new territory, define the boundaries, and even set new rules for the game.

Jim Champy is chairman of Perot Systems Corporation's consulting practice and head of strategy for the company. His latest book is Outsmart!: How To Do What Your Competitors Can't. Champy is also the author of the 3 million-copy international best-seller, Reengineering the Corporation: A Manifesto for Business Revolution, as well as Reengineering Management, X-engineering the Corporation, The Arc of Ambition, and Fast Forward. Champy earned a BS and MS degree in Civil Engineering from MIT, as well as a JD from Boston College Law School, and lives in Boston.

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