Sometimes it can pay big not to follow conventional business wisdom. That’s what Danny Miller and Isabelle Le Breton-Miller found when they analyzed the success secrets of long-lasting family firms for their book Managing for the Long Run: Lessons in competitive advantage from great family businesses. When they studied hugely successful family firms such as Wal-Mart, Fidelity, Cargill and Michelin, they were struck by how few of them followed some of the most popular management ideas.
Ways in which the long-term big winners departed from conventional business wisdom include:
- They spent little time analyzing the competition. Instead of analyzing rivals’ best practices, they focused on their own mission and how to make it relevant to their customers. Their strategy grew from the inside out.
- They steered clear of charismatic leaders. Although many family leaders were highly visible within their companies, and their deeds were the subject of lore, many firms were run by a cohesive top team. And some even had co-CEOs, rather than a single strong individual.
- They shied away from elaborate systems and grand strategies. These firms emphasized execution: get it done. The key was to ensure that their teams clearly understood and were deeply committed to the mission, not to devise complex control systems and incentives, detailed job definitions or bureaucratic rules.
- They avoided diversification or opportunism. These were meat-and-potato companies that knew exactly how they wanted to distinguish themselves and worked assiduously to do it. Following fads was rare, and diversification away from areas of core competency even rarer.
- They didn’t fixate on the bottom line. Most managers at these companies rarely mentioned profit, which they saw as an expected outcome and a means to keep the business going, not an end in itself. They were driven by mission and “feel,” not by the numbers.