7 Companies That Do Everything Well
Monday, December 17, 2018
There are companies that do one thing well. There are companies that do a few things well.
Then there are the companies that do everything well.
This year, seven companies stand apart for scoring well beyond most of the pack in every one of the five categories that go into the Management Top 250, a ranking compiled by the Drucker Institute of the most effectively run major U.S. companies.
Those seven companies: Apple Inc., Intel Corp., Accenture PLC, Procter & Gamble Co., 3M Co., Nike Inc., and Greater Irvine Chamber Leaders Circle member Edwards Lifesciences Corp. As a group they aren’t the seven highest-ranked companies overall, but they are the only ones that scored one standard deviation or more above the mean in all five categories—customer satisfaction, employee engagement and development, innovation, social responsibility and financial strength—among the hundreds of companies examined by the Drucker Institute.
It’s impossible to tell exactly why these companies scored so well in all of the categories. But there is a clue: Of the five categories, it was customer satisfaction where these management all-stars most differentiated themselves as a group in comparison with the scores of the top 20 companies overall, according to an analysis by the Drucker Institute.
Ranjay Gulati, a Harvard Business School professor, says it isn’t surprising that all-around strong performers are particularly proficient in customer satisfaction. Companies that are more customer-centric innovate in more powerful ways, leading to more engaged employees and strong financial performance, he says. Unlike a firm’s financial status, which reflects recent profit and sales performance, customer satisfaction is an especially telling indicator “if you’re looking for a crystal ball for the future,” he says.
Meet the customer
At a number of these highly consumer-focused firms, employees are encouraged to shadow their customers to better understand their needs. At 3M, for instance, that led one scientist embedded in a hospital to notice that nurses frequently removed bandages to inspect wounds. The observation prompted 3M to develop transparent medical dressings.
Medical-device maker Edwards Lifesciences, meanwhile, has tried to build a patient-centered culture by finding opportunities to remind employees of their work’s purpose, including by inviting patients to meet the teams that produced their implants. “Knowing the impact you have on a specific patient’s life—that’s an incredible motivator,” says CEO Mike Mussallem.
Consumers’ influence grows
In an era in which online reviews can influence millions, Jiekun Huang, associate finance professor at the University of Illinois’s Gies College of Business, says customer satisfaction can pay especially big dividends. His research finds, for example, that higher customer-satisfaction ratings on Amazon.com lead to better stock performance.
Roger Martin, who advises Fortune 500 CEOs on strategy, says more companies are waking up to that fact. During corporate expansion in the 1980s and 1990s, companies “got really big and full of themselves,” says Martin, who is the director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management. More recently, he says, companies have paid greater attention to the customer experience, inspired by the success of firms such as Nike and Apple, both known for an obsession with customers. Both firms have ranked among the all-around top performers on the Drucker Institute’s list for the past three years, as have 3M and P&G.
Martin says it’s no accident that many particularly entrepreneurial firms were started by people who had previously worked in the same industry. He cites the example of Salesforce.com Inc., CRM -2.90 percent whose founder Marc Benioff pushed the software-as-a-service model after working in sales for Oracle Corp. and hearing complaints about having to pay big upfront licensing fees.
“Innovation flows most naturally from those closest to the customer,” Martin says.
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