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The Three Rules: How Exceptional Companies Think Hardcover – May 30, 2013

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Product Details

  • Hardcover: 384 pages
  • Publisher: Portfolio Hardcover (May 30, 2013)
  • Language: English
  • ISBN-10: 1591846145
  • ISBN-13: 978-1591846147
  • Product Dimensions: 9.4 x 6.5 x 1.2 inches
  • Shipping Weight: 1.6 pounds (View shipping rates and policies)
  • Average Customer Review: 4.3 out of 5 stars  See all reviews (24 customer reviews)
  • Amazon Best Sellers Rank: #68,439 in Books (See Top 100 in Books)

Editorial Reviews

From Booklist

What makes a great company great? How much of corporate success is due to random good luck or to good planning and execution that can be passed along to help other companies? Raynor and Ahmed analyzed performance data on more than 25,000 companies from 1966 to 2010 to uncover the essential elements of high corporate achievement. After settling on 344 exceptional companies, they explored those factors that set the exceptional apart from all others in industries as varied as semiconductors, pharmaceuticals, and confectionary. Looking beyond regulation, competition, and myriad other factors, they boiled down success to three rules: better before cheaper, revenue before cost, and don’t get distracted by anything other than the first two rules. Among the exceptional performers are Merck in pharmaceuticals, Abercrombie & Fitch in retail, and Maytag in appliances, each described in excruciating detail to explain how it outperforms competitors. But beyond the tables, charts, and statistics lies a book written in very accessible language and with a simplicity of focus on the basics that can apply to any sector and any business. --Vanessa Bush

About the Author

MICHAEL E. RAYNOR is a director at Deloitte Services LP, 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 bestselling and critically acclaimed The Strategy Paradox and The Innovator’s Manifesto.
MUMTAZ AHMED is a principal in Deloitte Consulting LLP and the chief strategy officer of Deloitte LLP, responsible for the U.S. firm’s strategy, corporate development, innovation, eminence, and brand.

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Customer Reviews

Overall, every president, CEO, or anyone in the C-Suite of a company should read this book.
Jim Altfeld
In this regard they show the way for doing scientific and analytically based business research.
Mark P. McDonald
Maybe that is what I love most about the book: that you can read it like a detective story.
A. Huun

Most Helpful Customer Reviews

29 of 31 people found the following review helpful By Mark P. McDonald TOP 1000 REVIEWERVINE VOICE on May 30, 2013
Format: Kindle Edition
Three Rules is an example of real business research. It represents the most comprehensive research project to date that looks at the factors behind sustained business performance. It has been a while since I have underlined, highlighted and annotated a business book like this one. Highly recommended for serious students of business performance.

I suggest reading the April 2013 Harvard Business Review Article "Three rules for making a company truly great" and then you should buy the book in hard copy, as an electronic version will not support the level of notes, highlights and underlines you will make and need to refer to latter.

Michael Raynor and Mumtaz Ahmed led a team of people who looked at more than 25,000 companies for more than forty years to identify the core rules for sustained superior performance. Raynor and Ahmed found three:

Rule 1: Better before Cheaper - companies that sustain their performance through time do so by non-price benefits such as a great brand, style, functionality, experience etc.

Rule 2: Revenue before Cost - sustaining performance involves more than just creating value but also capturing that value in the form of profits.

Rule 3: There are no other rules - making decisions and executing strategies that put better before cheaper and revenue before cost are the fundamentals for sustained success.

The book provides an examination and discussion of these three rules, their statistical background and support. Raynor and Ahmed illustrate each of these rules through detailed case studies of three companies in the same industry.
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11 of 11 people found the following review helpful By Bret L. Simmons on June 10, 2013
Format: Hardcover
I am not a big fan of popular press business books that claim to have "the" answer (supported, of course, by their mountain of global evidence) about what you need to do to make your business successful. There simply is no prescription for success, and research that "proves" any cause-and-effect relationship for strategic variables that does not contain fatal methodological flaws is extremely rare. Most books of this type contain errors in the research methods that render any conclusions the authors offer highly suspect and sometimes total garbage.

I am, however, a big fan of the logic of the service-profit chain. For years I've taught my students that all things being equal, a business that is not growing is dying. Growth through excellence of product and service is the most important sustainable competitive posture. Growing a business comes through helping employees become better, and then unleashing and enabling them to continually improve the business processes that drive impressive products and service for customers. Do that on a consistent basis and you will have your competitors forced to close their doors instead of you being forced to close yours.

This book by Michael E. Raynor and Mumtaz Ahmed provides additional credible evidence to support the logic of the service-profit chain, so I am giving it a rare recommendation. This book is not an easy read - the authors acknowledge the methodological flaws that render most books of this type total crap, and they address these issues head on in chapter 2 with some stuff that had me pausing and thinking carefully.

Their methods appear to be sound, and their conclusions are a home-run in my book. Their three rules are 1) Better before cheaper, 2) Revenue before cost, and 3) there are no other rules. Simple, logical, and supported by their methods and other streams of peer-reviewed empirical research.
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Format: Hardcover
With rare exception, the best business books are research/evidence-driven and that is certainly true of this one. Michael Raynor and Mumtaz Ahmed rigorously examined a database of more than 25,000 companies from hundreds of industries throughout a period of more than four decades and eventually identified 344 companies that qualified as statistically "exceptional." That is, 174 "Miracle Workers" (the best of the best) and 170 "Long Runners" (exceptional but at a lower level). But after five years of research, they failed to identify a consistent pattern of behavior that separated the exceptional companies from all the others.

Eventually, they shifted their attention from what people in these companies did to series of hypotheses about how people in these companies [begin italics] thought [end italics]. Their conclusion is that exceptional companies have people who consistently make the best decisions about (a) what to do, (b) how to do it, (c) what not to do, and (d) why. For example, which questions to ask? Which problems to solve? When and where to compete?

In this context, I am reminded of a passage in the first chapter of a book co-authored by Noel Tichy and Warren Bennis, Judgment: How Winning Leaders Make Great Calls, in which they assert that what really matters "is not how many calls a leader gets right, or even what percentage of calls a leader gets right. Rather it is important how many of the [begin italics] important [end italics] ones he or she gets right." They go on to suggest that effective leaders "not only make better calls, but they are able to discern the really important ones and get a higher percentage of them right.
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