Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure [Hardcover]

Alfred A. Marcus (Author)

Book Description

ISBN-10: 0131451324 | ISBN-13: 978-0131451322 | Publication Date: October 20, 2005

What keeps great companies winning, year after year, even as yesterday's most hyped businesses fall by the wayside? It's not what you think -- or what you've read. To find the real answers, strategic management expert Alfred Marcus systematically reviewed detailed performance metrics for the 1,000 largest U.S. corporations, identifying 3% who've consistently outperform their industry's averages for a full decade. Many of these firms get little publicity: firms like Amphenol, Ball, Family Dollar, Brown and Brown, Activision, Dreyer's, Forest Labs, and Fiserv. But their success is no accident: they've discovered patterns of success that have largely gone unnoticed elsewhere. Marcus also identified patterns associated with consistently inferior performance: patterns reflected in many of the world's most well-known companies. Drawing on this unprecedented research, Big Winners and Big Losers shows you what really matters most. You'll learn how consistent winners build the strategies that drive their success; how they move towards market spaces offering superior opportunity; and how they successfully manage the tensions between agility, discipline, and focus. You'll learn how to identify the right patterns of success for your company, build on the strengths you already have, realistically assess your weaknesses, and build sustainable advantage one step at a time, in a planned and logical way.

Editorial Reviews

From the Back Cover

What keeps great companies winning, year after year, even as yesterday's most hyped businesses fall by the wayside? It's not what you think -- or what you've read. To find the real answers, strategic management expert Alfred Marcus systematically reviewed detailed performance metrics for the 1,000 largest U.S. corporations, identifying 3% who've consistently outperform their industry's averages for a full decade. Many of these firms get little publicity: firms like Amphenol, Ball, Family Dollar, Brown and Brown, Activision, Dreyer's, Forest Labs, and Fiserv. But their success is no accident: they've discovered patterns of success that have largely gone unnoticed elsewhere. Marcus also identified patterns associated with consistently inferior performance: patterns reflected in many of the world's most well-known companies. Drawing on this unprecedented research, Big Winners and Big Losers shows you what really matters most. You'll learn how consistent winners build the strategies that drive their success; how they move towards market spaces offering superior opportunity; and how they successfully manage the tensions between agility, discipline, and focus. You'll learn how to identify the right patterns of success for your company, build on the strengths you already have, realistically assess your weaknesses, and build sustainable advantage one step at a time, in a planned and logical way.

About the Author

Alfred A. Marcus is Edson Spencer Chair of Strategic Management and Technological leadership at the University of Minnesota, Carlson School of Management, where he has been on the faculty since 1984. At Carlson, he teaches and conducts research in strategic management, macroeconomics, business ethics, and business and the natural environment. He has also served as Visiting Professor at MIT's Sloan School of Management. Marcus is author or coeditor of eleven books and has published numerous articles in journals, such as the Strategic Management Journal, Academy of Management Journal, Academy of Management Review, Organization Science, California Management Review, and The Journal of Forecasting. He has consulted and worked with many major corporations including 3M, Corning, Excel Energy, General Mills, and IBM.

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Product Details

• Hardcover: 400 pages
• Publisher: Pearson Prentice Hall (October 20, 2005)
• Language: English
• ISBN-10: 0131451324
• ISBN-13: 978-0131451322
• Product Dimensions: 9.2 x 6.4 x 1.4 inches
• Shipping Weight: 1.6 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (26 customer reviews)
• Amazon Best Sellers Rank: #1,792,757 in Books (See Top 100 in Books)

More About the Author

I was born in Pittsbugh, Pa. and grew up in Squirrel Hill in the 1950s and 1960s. My bachelor and master's degrees are from the University of Chicago. Besides Minneapolis, Pittsburgh, Chicago, and Boston (I did my PH.D at Harvard), I have lived in Seattle (5 years, from 1979-1984) where I worked in research and consulting. I have traveled throughout the world, many times to Europe and the Middle East and last year I got a chance to travel to Hong Kong and China and to Russia. Every year for the past five years I have taken a group of Carlson School students to Costa Rica to study at INCAE, a very fine business school. As part of the research I My comments of business and management topics regularly appear in newspapers, television, and magazines. I have taught for more than 20 years at the Carlson School of Management at the University of Minnesota. I also teach in the executive masters program in the management of technology located in the Center for Technological Development and Leadership in the engineering school of the University of Minnesota. The courses I teach are business strategy, business ethics, business and the natural environment, and the environment of technology.

Customer Reviews

Most Helpful Customer Reviews

5 of 5 people found the following review helpful:

5.0 out of 5 stars Winning and Losing Practices, January 1, 2006

By 

Turgay BUGDACIGIL (Istanbul, Turkey) - See all my reviews

This review is from: Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure (Hardcover)

“This book reveals the secrets of the long-term better-than-industry performance of the winners. I t shows distinct patterns in the 1992 to 2002 results. The differences in outcome are not random or a matter of mere chance. The circumstances that the big winners and big losers faced were similar. What explains the differences in performance is that the winners pursued and executed different strategies than the losers. In this book, I reveal how the traits of the big winners came together into larger patterns made up of a sweet spot, agility, discipline, and focus. Firms that achieved advantage wove together these elements into larger wholes. The positive aspects of the separate components supported and reinforced each other. Similarly, the negative traits of the losing firms supported and reinforced each other…Most of the insights in this book derive from the reports that the managers wrote. Their names and the companies they analyzed are listed in the Acknowledgments. The reports pointed me in certain directions, but I take full responsibility for where I ended up. The conclusions are my own. I presented the results and obtained feedback at a number of venues…All long, lessons are learned and specific advice is given on what a company can do to become a big winner and avoid being a big loser. This advice is concrete, specific, and actionable. It is among the most important takeaways you will get from this book (from the Preface).”

In this context, Alfred A. Marcus divides this invaluable book into fourteen chapters. At the end of each chapter, he summarizes these chapters as following:

1. Persistent Winning and Losing – Achieving sustained competitive advantage is not easy. You cannot dismiss any element. A sweet spot, agility, discipline, and focus are essential. Although managers might able to identify future opportunities, few have the agility to move into them, the discipline to protect them, and the focus to take full advantage of them…

2. Companies That Hit and Missed the Mark – This chapter has shown that firms that are big winners and firms that are big losers are hard to find. Being a big winner is harder than being a big loser. Some industries have no firms that are big winners or big losers. Firms that are big winners are concentrated in large industries; in large industries, there is more open space for finding a sweep spot. Big winners are smaller than big losers. Small firms are more agile than large firms. Their smallness makes it easier for them to escape detection. They are more likely to avoid competitive retaliation. Big winners and big losers are in industries with higher market returns. The potential profits are greater. There is more risk and more opportunity…

3. Companies That Keep Winning – This chapter has described the nine big winners that are the subject of further analysis in this book. Several points stand out. The nine winning companies succeeded despite being in small industries that did not have good returns. These industries were not ones where they could easily find sweet spots no other firms occupied. The big winners succeeded despite low overall returns in the industries in which they competed. These firms were survivors of a poor overall stock market in the first six months of 2002. The fact that their sales tended to be spread out helped them do well in this period. When the tech market collapsed, they had alternative customers to which they could turn…

4. Sweet Spots – This chapter has provided examples of the sweet spots that the big winners occupied. These sweet spots depend on gaining control over the classical five forces in strategy starting with customers. Big winners gained control of the five forces through the following measures: (1) co-designing products and services with their customers, (2) embedding themselves in their customers’ central processes and infrastructure, and (3) being a broker between themselves, their customers, and their suppliers. The sweet spots that the big winners occupied increased their alignment with their customers…

5. Agility – This chapter has shown the moves that the big winners made. They were agile. There was no single formula they followed, but a general pattern to their agility. They responded swiftly to threats and opportunities. Their small size gave them great flexibility. They grew their business in accord with their customers’ changing needs. They moved toward new and promising markets where their customers had specialized needs that only they could meet…

6. Discipline – This chapter has shown the discipline that the sweet spot companies displayed. They maintained ongoing, effective programs that reduced costs and raised quality. They took control of distribution. They smoothly managed their acquisition. They created special cultures that got their employees involved. They monitored and influenced regulatory changes and promptly complied with government laws and requirements. They not only put themselves in sweet spots, but they also developed the capabilities to protect them…

7. Focus – This chapter has shown the type of focus that sweet spot companies exhibited. They concentrated on their core strengths. They did not chase opportunities that were too risky. They had plans for product enhancements, extensions, and sequels. Their dedication to their customers was near total. Extensive collaboration led them to meeting the cutting-edge needs of customers for solutions. They were not in the business of providing mere isolated products, no matter how technically superior the products might be. With great care, they applied these principles to their global expansion. They identified markets with growth potential. They developed and extended the reach of their high-growth, application-specific products and deepened their penetration of global markets…

8. Companies That Keep Losing – This chapter provides information about the industries in which the big losers competed, the products they sold, and their competitors. This analysis parallels that of Chapter 3, “Companies That Keep Winning.”

9. Sour Spots – Companies find themselves in sour spots when they lose control over the classic five industry forces, the most important of which is customers. You can avoid losing control by doing the following: (i) make sure that you are able to sell your products and services at prices that your customers can afford; (ii) price these products and services at levels that enable you to make a profit; and (iii) have business models that are simple enough that you can carry out tasks and activities well. Being in a sour spot means distance and misalignment with customers. It means that you are unable to sell them sufficient quantities of goods and services to be consistently profitable. Your customers’ switching costs are low, and it’s easy for them to abandon you. This chapter has provided examples of sour spots you should avoid…

10. Rigidity – This chapter has shown the failed moves of the big losers. They tended to rely exclusively on the expansion of their core products for growth. These products were hard-to-differentiate commodity products sold on the basis of price. Big losers accumulated additional product capacity at high prices even though there was insufficient demand for their product. They did not respond vigorously when they experienced a decline in their core business. Their size took away from their flexibility. Because they were rigid, they inhabited sour spots.

11. Ineptness – This chapter has shown the ineptness of the big losers. They did not develop capabilities to defend the positions they occupied. They lacked skills to provide customers best-in-class service and customizable offerings at low cost. Also, these losing companies did not gain mastery over the supply chain and were ineffective in managing their acquisitions. They neither motivated their employees to ensure that their moves were well-executed, nor did they adhere to high ethical standards and have the capabilities to manage regulation. They were in sour spots not only because of rigidity and ineptness, but also because of a lack of focus.

12. Diffuseness – This chapter has shown the lack of focus that the big losers showed. They spread themselves thin and failed to maintain clear strategic direction. They were unable to identify and emphasize markets with future promise. They tended to rely on global business to try to fix domestic problems. None of what they did worked quite as intended.

13. Winning and Losing Practices – This chapter has explained what it takes to be a consistent long-term winner. It takes finding a niche that no one else occupies, but that is not enough. You need the agility to move that space, the discipline to protect it, and the focus to fully exploit. You must do it all. Anything less, and being a big winner will be beyond your reach.

14. Turnarounds – The lessons in this chapter have special relevance if you are trying to manage yourself out of decline or trying to keep your company’s strengths intact. The key to being a big winner is to find a sweet spot. Focus on it. Have the discipline to protect it. Have the agility to move it. The key to being a big loser is the opposite. Be diffuse, inept, and rigid, and you will find yourself in a sour position.

Strongly recommended

7 of 8 people found the following review helpful:

2.0 out of 5 stars Short Longevity for Such Books, January 23, 2006

By 

Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews
(HALL OF FAME REVIEWER)    (REAL NAME)   

This review is from: Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure (Hardcover)

Only about 3% of the 1,000 largest U.S. corporations outperformed their industry's average market performance during the 1992-2002 decade, while about 6% underperformed. Companies that suffer sustained poor performance include familiar names such as Goodyear, the Gap, Safeco, and Campbell Soup; those consistently doing well are relatively unknown and smaller - eg. Family Dollar, Dreyer's, and Brown and Brown (insurance broker).

Marcus et al conclude that winners had strong strategies that stayed within a "sweet spot" (eg. little or no competition; a low-cost producer position), agility to get to and/or maintain that position, discipline, and focus to stay within their sweet spot. "Big Winners and Big Losers" goes on to then elaborate on comparisons of winners and losers, within specific sectors.

All the preceding makes eminent sense - the problem is that it is hard to use as a strategy guide and soon begins to contradict other situations.

Unfortunately, "Big Winners and Big Losers" is hauntingly reminiscent of Tom Peters' 1984 "In Search of Excellence" - the approach was similar, and a number of "best practice" companies were identified. The problem was that not too many years later, many/most of them had since faded. Another problem is that the book covers so many firms and so much ground that it is unable to provide much useful information - eg. just how did Dreyer's build up its 90% distribution market share?

Marcus et al also suggest that smaller firms have an advantage. But what about Wal-Mart? Would Wal-Mart be better off at a smaller size - some have concluded that it would, on the basis of tracking its ROI data over time which sometimes lags Family Dollar. Further, Wal-Mart was once was in almost the identical competitive position as Family Dollar (praised by "Big Winners and Big Losers"). Should Wal-Mart have stayed small - doubtful for at least three reasons - 1)Wal-Mart would not have the strong clout with suppliers that it now does. 2)It probably would have been subsequently bought up by another firm and no longer in existence. 3)Finance and economics both teach that maximum profits are attained when marginal costs reach the level of marginal revenues - not at any particular size level.

I believe a much more sustainable foundation for excellence is achieved through studying the speed, efficiency, and quality aspects of "The Toyota Production System," some other credible approach to significant cycle-time reduction, and Larry Bossidy's "Execution," and "Confronting Reality." These lessons are truly generally applicable.

6 of 7 people found the following review helpful:

5.0 out of 5 stars A Unique Prism, January 24, 2006

By 

Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure (Hardcover)

This book represents the best of what I love about Wharton Press.

A topic like big winners and big losers lends itself to having some egomaniac who fails to understand the difference between being lucky and great, hire a ghostwriter to produce a pointless pontification full of meaningless clichés and generalizations.

Instead, Alfred A. Marcus, a management professor at the University of Minnesota, compares and contrasts the practices of successful and failing firms. To achieve this, he enlisted more than 500 practicing managers, divided them into teams of five or six and directed them to review the performance of a company that either out-performed or underperformed its market group for 10 years.

Their critiqued reports lead to four themes. Big winners:

1. Occupied sweet spots.
2. Possessed the ability to move into these spots.
3. Disciplined themselves to defend their spots.
4. Exploited and extended their positions.

The reports revealed big losers:

1. Occupied sour spots.
2. Were rigid.
3. Could not defend their positions.
4. Could take advantage of their positions.

What fascinated me about this book is Marcus' discussion of how the individual companies managed the nuisances or tensions created by the four themes.

Achieving sustained competitive advantage is never easy. Firms that consistently do it are worthy of study and investment. Marcus's book provides managers and investors with a unique prism through which to view their opportunities.