Breakthrough - PCC - ebook

Breakthrough will help executives lead their teams topeerless, unsurpassed performance by helping them define a grandgoal and engage the organization to pursue and achieve that goal,no matter how difficult the challenge seems. Based on a ten-yearlandmark study of more than seventy bold, Breakthrough companiessuch as IBM, Dayton-Hudson, Progressive Insurance, EMC, AmericanStandard, Charles Schwab, and Dell Computer, the book shows howthese remarkable companies adopted outrageous objectives and thendid what it takes to achieve remarkable results.

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How Great Companies Do 1Breakthrough

A breakthrough is an enterprise-scale business innovation—something significant enough to shape the business enterprise in the future either by reforming the company's core or moving the business into new markets and new business models. In essence, successful breakthroughs change the firm(and often its markets)forever.

Breakthrough results appear in any of four key dimensions:

1. Profitability—a breakthrough may enable one company in an industry to achieve greater profitability than everyone else.

2. Operating performance—breakthrough may provide a company with such operational excellence that it can pursue and profit from new opportunities its competitors ignore. For example, Dell Computer, the worldwide leader in PC sales in 2001, is a great example of how superior operating performance can carry a marginal competitor to market leadership. All of Dell's successes have sprung from the fact it has been able to convert its own business model cost savings into competitive pricing, growing market share and greater profitability than any of its peers.

3. Market position—a breakthrough may enable a new market entrant to become the market champion on the strength of a better business model than anyone else is using. A breakthrough can be the bridge to move to a stronger competitive position, perhaps by moving from a niche market to the broader marketplace. An excellent example of a company, which used a breakthrough strategy to enhance its competitive positioning, is Countrywide Credit. In the 1980s, Countrywide specialized in the resale of packaged loan portfolios to investment groups. In 1989, the company decided on an outrageous goal to become the largest home loan provider in the United States. To achieve that, Countrywide equipped its loan officers with sophisticated decision support systems and access to third-party databases so that each loan officer could approve or decline a loan in minutes. Countrywide also offered attractive interest rates to lowrisk customers. By the end of 1992, Countrywide had grown from having $1 billion in lending activity to having more than $32 billion in loan volume—making the company the largest home loan provider in the United States.

4. Company profile—a breakthrough may be the pathway for a company to raise its profile within the broader business environment. For example, Charles Schwab's breakthrough strategy led to the launch of the discount brokerage industry.

By cutting brokerage fees and providing consumers with other services, Schwab has grown by the start of the year 2000 to having more than 6.6 million accounts, $725 billion under management and more than 17,000 employees in 325 branch offices.

Key Thoughts

"Breakthrough is the bedrock of business success. Every corporate success cycle starts with an innovation that triggers superior performance. Aspiring firms everywhere seek to find breakthroughs that will focus their energy and fuel their success. Few find them, and not all that do are able to realize their full potential. For those fortunate few firms who find breakthroughs and fulfill their promise, life is glorious. However, cycles of superior performance that begin with a breakthrough will inevitably end—unless further innovation occurs to renew the firm's position and performance. Today's leaders must ask themselves, 'When will we need to begin our next breakthrough? What will it be? 'Don't wait until the bitter end to start your next success cycle."

Bill Davidson

"Operating performance or process innovations play a central role in most breakthroughs."

Bill Davidson

"Breakthrough can occur anywhere within an industry structure. The most common place to look for breakthrough in an industry lies at the entry point to the market."

Bill Davidson