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How To Pronounce Heroic
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Given the ever-changing business environment, it is clear that companies can only thrive if they update their strategies and organizations, but large companies realize that they are different in the way they do this. Although it may seem counterintuitive, they adapt well because they are smart people.
The 18 companies in our study fall into two different categories. We began our research by identifying large European companies that have survived at least 100 years and outperformed the broader market at least 15 times in 50 years.
Only nine large companies could pass this test – Siemens, Nokia, Allianz, Legal & General, Royal Dutch Shell, GlaxoSmithKline, HSBC, and Lafarge. We call these companies ‘gold medallists’. In fact, on average they outperformed the market by a factor of 62.
In a second step, we selected a comparison company for each gold medal. The best comparison companies started business at the same time, in the same country and in the same market, with above-average performance for most of their history but not achieving the same as the gold medalists. from one in 10.
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The four principles may seem counterintuitive to some. Some important ideas seem to be missing. Why, for example, does innovation not play a more important role? What about the hero leaders? Are the company’s core values irrelevant to its long-term survival? In the end, no matter what we think or say, the data provides the answer.
Consider the role of business culture, which some experts believe is a key variable in long-term success. And it’s important that it has some explanatory power, but it doesn’t discriminate between levels of success. Siemens, for example, has a strong culture that can be traced back to the company’s founder Werner von Siemens, but so does AEG, its company for 90 years.
The data tells us that culture matters – because all top companies and most comparable companies have strong cultures – but strong culture does not differentiate the quality of a good company.
Four principles guide the way to deal with competition in business. These are not specific tools or methods, and none of them can be used to help companies comply with the principles. Different tools and methods can be used.
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A historical analysis of companies shows a clear pattern: leading companies have been better but less innovative than their comparable companies.
The top companies in terms of spending money on research, even if they don’t care about research, further innovation is essential for long-term survival.
However, efficiency is more important for high performance. Companies can compensate for a lack of search capability by doing better but they cannot, in the long run, make up for a lack of search capability .
The different stories of Glaxo and Wellcome illustrate this point. Wellcome was a true innovator from its earliest days in 1880. When Henry Wellcome went into business with Silas Burroughs he wanted to make a name for himself as a medical pioneer.
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The researchers at his research center don’t seem to like it if their findings are used for the business end but this is not their main concern. What they really care about is research and publishing. The market economy is clearly secondary.
At Glaxo the story is very different. Use has become part of Glaxo’s DNA as research has become part of Wellcome’s DNA.
Glaxo began to grow after Alec Nathan bought a patent to make powdered milk. Instead of investing in great new products, he emphasized using existing lines, especially dry milk.
With a passion for expansion, Nathan built successful business partnerships and became a leader in the UK. This is an early example of Glaxo using a machine designed by someone else.
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Building on this tradition, Glaxo’s biggest success after success was Zantac, a prescription drug introduced in 1981. Zantac was a breakthrough not in science but in practice. business.
When Glaxo was ready to develop Zantac – five years after launching SmithKline’s best ulcer drug, Tagamet – it didn’t have the best science or the best Tagamet treatment; rather it is a similar product but packaged in a lower dosage that controls side effects better.
According to the recommendations, “my products” will not increase more than 50 percent of the market. The apparent absence of a second coming to the market can also be viewed as timing.
As a pioneer, SmithKline has invested in educating doctors about new types of antibiotics. Glaxo’s salespeople may therefore be more motivated to promote the benefits of Zantac compared to Tagamet. Glaxo decided to pay for Zantac to emphasize its superiority over Tagamet.
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While SmithKline invested more in R&D and produced more patents during that period, Glaxo fared better in sales and profits.
In 1995 Glaxo took over Wellcome,
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