cover image The Three Rules: How Exceptional Companies Think

The Three Rules: How Exceptional Companies Think

Michael E. Raynor and Mumtaz Ahmed. Penguin/Portfolio, $29.95 (372p) ISBN 978-1-59184-614-7

Deloitte executives Raynor (The Innovator's Solution) and Ahmed were determined to find out what made certain companies succeed and others fail, and set out to perform the ultimate "success study." With a research team from Deloitte, they analyzed 45 years of Compustat data on more than 25,000 unique companies%E2%80%94compiling nearly 300,000 pieces of data (company-year observations) from 1966 to 2010. In the process, they identified three categories of organizations: Miracle Workers, Long Runners, and Average Joes. The authors looked at the behavioral differences among the companies studied, but there was no single area in which successful companies stood out%E2%80%94they excelled in virtually every area. But there were three rules that held firm. Rule #1: Better before cheaper (don't compete based on price). Rule #2: Revenue before cost (higher revenue is more advantageous than lower costs in achieving profitability). Rule #3: There are no other rules. The book offers a solid and engaging analysis, but one that is performed without much further insight into the dozens of comparative case studies presented, such as a comparison between Merck ("miracle worker"), Eli Lilly ("long runner"), and KV Pharmaceutical ("average Joe"). The dry writing and repetitive message make this book a tough sell for any but the most devoted success-seeker. Agent: Wesley W. Neff, Leigh Bureau. (June)