The Breakthrough Company: How Ordinary Companies Become Extraordinary Performers

by Pamela Wasley

Recently I sat across the table from the CFO of one of the world's leading providers of film production, processing and distribution services. He said something few executives say and that is "The best time to be looking for ways to improve your business is when your business is doing extremely well."  This insight was refreshing since most companies do exactly the opposite, resting on their laurels and relishing in their successes. 

His comment reminded me of an important insight I gained at a book-signing event featuring Keith McFarland, author of The Breakthrough Company.  Unlike most business books that point to the leadership secrets of large enterprises, Keith elaborates on the breakthrough growth secrets of small to medium-sized companies which enable them to push beyond the entrepreneurial phase. 

Some of the data in his book took me by surprise.  For example, only about a tenth of 1 percent of U.S. companies today will ever achieve revenues of more than $250 million in sales.  Only .036 percent will grow to $1 billion in sales.  Why is this?   Pushing to the next level, as the CFO mentioned above is striving to do, is the challenge I most often find with many small to medium-sized companies.

You will recognize the names of the nine companies mentioned in Keith McFarland's book who have achieved significant and consistent growth.  They include such companies as Intuit, Paychex, Chicos, Fastenal and SAS.  In the 15 years since their appearance on Inc.'s list of the 500 fastest growing companies in the U.S., the median revenue of these companies grew from $14.4 million to $799 million.  They outperformed their competitors on profit by a factor of 3 to 1.  A dollar invested in each of  6 companies who went public between 1993 and 2004 at their initial public offering (a $6 total investment) would have been worth $250 if each stock were held for 13 years following its IPO as compared to $25 if you had invested that same $6 in the S&P 500 over that same period.

This book lays out the characteristics inherent in the nine companies researched for this book. These key attributes explain why they became so successful.  However, one specific attribute reflects back on the comment made above by the insightful CFO and that is "You must continue to improve your company at ALL times, especially in the good times."
  
It is typical for companies to become complacent once they get ahead in the game, even  when their companies are best positioned to rake in even bigger rewards.  These nine breakthrough companies understood the importance of "upping the ante" at all times and grew to be brand names.  However, even the best of companies relax occasionally to the detriment of their growth  --  the key is to realize it early enough to do something about it before it is too late.

Let me leave you with this thought there really are no permanent breakthrough companies - only breakthrough companies that engage in continuous improvement which leads to sustainable success.  If you are a successful company today, do not succumb to resting on your laurels when your business is prospering.  Always be looking for ways to improve your business so that you, too, can become A Breakthrough Company.

Pamela Wasley is the President and CEO of Cerius Interim Executive Solutions, the largest provider of Interim Executive management services.
 

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