Three Rules (Actually) to Exceptional Performance

In their recently published book The Three Rules: How Exceptional Companies Think, Michael Raynor and Mumtaz Ahmed try the true and tested shock factor approach to marketing & analysis. I admit their information is very accurate and useful. The first two points especially are spot-on.

But the third is a marketing gimmick that always wins. The power of three. “The Two Rules” just doesn’t have the same zip and bang of the number 3!

 

It is why Hollywood uses the Three Act script as Gospel. Humans like a Beginning, Middle and End. Head, Body, Legs. We are naturally inclined to be interested and more involved with the number.

 

However, it is not the fact that Raynor & Ahmed are able to pull the age old marketing trick out of the hat which has made their book such a success. It is the unknown which they leave the reader enticed by; rule three.

 

Like a line straight out of The Fight Club their three rules to exceptional performance are:

 

Rule 1 – Better before Cheaper (make a better product not a cheaper one)

Rule 2 – Revenue before Cost (make more revenues rather than going for cost cutting measures)

Rule 3 – There is no Rule Three (look at everything else and all your choices with the first two rules)

 

Applause, applause. Fantastic. We buy a book to learn about the three rules of exceptional performance and we realize that 30% of is nothing.  Talk about exceptional performance, these guys didn’t even need the third rule they set out themselves to find!

 

Here however there is a disjoint between marketing, statistical prowess and reality.

There is a third rule. The most important rule in truly Exceptional Performance; Appreciation, the appreciation that you create in your employees and your customers.

 

This is not a better product, or a better revenue proposition. This is talking about the actual appreciation that is felt by the customer and the employee in what they have done. They have used your service, provided your service, created your product, and bought your product.

 

 It may be great, it may make you a lot of money in the first purchase. But if you fail to create appreciation for your company in your employees and your customers, you will soon find out that the revenue and the products/services will disappear very very quickly. Because you just lost your customer, you just lost your employee. It won’t matter if you have the best product. It won’t matter if you have the best revenue model. It won’t work without customers and employees.

 

 

And here is where Raynor and Ahmed have missed out the Z-correlation. Statisticians like X-Y; it’s easy to understand correlation in two dimensions. However, what they are not very adept at, or what they sometimes neglect is the third axis. The Z; that one correlation that takes great performance to exceptional performance. That correlation that turns Apple from a dying technology start up into the most profitable company in the world.

 

Exceptional performance is not a two dimensional object. It is based in a three dimensional world and it is a three dimensional metric. To get truly exceptional performance from your company. You need Rule 3.

 

Rule 3 – Yes there is a rule 3; this is the most important rule you have always learnt. Treat others like you want to be treated, literally. Be as nice to them as you want to be to yourself. Want for them what you want for yourself.

 

Do not cause a problem for them, make sure they enjoy as much as you, make sure that they get what you get. If not, then your performance will always be unexceptional.

 

Imagine this, you want to be successful and have the biggest, best and loudest of everything. Well so do your customers, so do your employees. So why would you feel it is exceptional to be above your customers or your employees?  

 

The pyramid structure that is continually perpetuated into society just is not exceptional. It is exceptional for only a very few. The rest of the companies are really below average. Meaning that cumulatively we as an entity, economy, global market are not exceptional at all. In fact we are significantly below average. 

 

But aside from the global perspective, the reality is that we do need to look carefully at individual company performance in a three dimensional method. Analyzing long term strength of a firm will not be accurate unless we look at all three information streams as a cohesive product.

 What is the (x,y,z) of your performance? Are you satisfied by your current position on the chart?

Is your product better, are your volumes and revenues stronger AND do you have the appreciation in your company from your employees and customers? The cumulative effect of the three factors will determine the long term strength of your company’s performance.

 

This does not mean, look at me and judge how I treat you and then decide how to treat me. Nor does it mean pretend to be nice just because you need to be, superficial people get caught out very easily. This also definitely does not mean treat others in a negative manner just to see if they will react in a negative way or not. That is not exceptional performance by you, and negative performance of others should not concern you either.

 

To truly excel with your company and excel with your product/service you need to think outside of yourself. Think outside of the situation and think about the big picture of what you want out of your employees and your customers. You need them, more than anything else you need to convince them that they need to be there for you.

 

There is nothing that matters more than appreciation in value. That means appreciation of the value that others see from your company. Make sure your employees are always aware of your presence and ability to support all of their life goals. Make sure that your customers are always aware of your presence and ability to support ALL of their life goals.

 

Steve Jobs and Apple did not become successful because they made a product. Apple gained success because Steve knew that the product needed to be a part of you, it needed to be there for you and Apple needed to be there for you. Take a look at the retail model of any Apple store, the primary strategy is to always have an Apple Guru in Bright Blue within your line of sight, so that you know that Apple is there for you. So that you know that they are just as excited as you to be there, right now.

 

Make learning and engagement a part of your company practice. You need to ensure that your company cherishes the progress of others. Instead of being fearful of your competition be supportive of progress. Take Elon Musk and Tesla as example. The Hyperloop project was a concept that Elon Musk developed in reaction to an overly expensive interstate rail network between LA and San Francisco.  However, unlike many so called ‘pioneers’ Musk wrote a white paper detailing the conceptualization of the Hyperloop and invited the world to help develop a working prototype.

 

This very same ethic needs to be established into your company strategy, go out and make sure that you provide for your employees and customers to excel. Don’t wait for them to ask you for it, don’t write out long and lengthy performance assessment reports. Do it. Make them excel, make them engage, make them learn and experience. Your customers and your employees are not sitting around waiting for nothing. It does not matter what your opinion on their value is, make their value what you value yourself to be. If you are not valuing your employee as you do yourself, you do not value your company. If you are not valuing your customer as you do yourself, you do not value your company. It is critical to the success, and performance of your company above all else. 

 

They want you to engage them in useful tasks and with useful products; they want to be improving themselves and their lives. Nothing in this world wants to be static, not even an atom. So why would you assess your employees or your customers in a manner where there commitment or performance is based on you not being able to engage with them enough?

 

 

“We can’t get our customers to engage enough with this great product/service” has it occurred to you that your product however interesting and great it may be is not enjoyable in acquiring? If you make it impossible for your customers to interact then you will not be successful in retaining the customers you need. 

 

 Or “We can’t get the best performance out of our employees”. Well, did you ever think that you yourself are failing and not the employees, no matter how uneducated or underdeveloped they may be? It is your responsibility as a company to develop your customers and your employees; it is not their responsibility to make your company successful. If you make it impossible for your employees to gain a satisfied employment then you will not be successful in retaining the talent you need. 

 

Clearly there is a disconnect here with what HR and Consultants continually look for in performance improvement in companies and the reality of what makes a truly exceptional company.

 

Case in point the Google moto; Do Good. Google set a clear and simple mission statement for their employees and also for anyone that uses their product. Do Good. But more importantly Larry Page and Sergey Brin set out a mission statement for themselves; Do Good. Meaning do good: to your employees, do good to your customers and do good for your world. It is not a simple coincidence that some of the most revolutionary thinkers and companies of our time all follow the third rule.

 

Innovation requires your company to be ahead of the bell curve, an innovative environment therefore needs to be ahead of the bell curve.  What truly innovative companies and thinkers realize faster than most is that the bell curve is the main problem, stop thinking about everything as a bell curve.  Start thinking of everything as a sphere, you live on one.

 

Your company performance is a sphere that is tangential to the (0,0,0) point on the (x,y,z) axis, if you cannot improve at each point along the axis then your company will not outperform and will have a limited performance range. This correlation also shows the result of too much performance in only one category.

 

Too much imperative on revenue will lead to stress on your customers, who will leave and result in reduced revenues. Too much importance on a better product will lead to stress on employees, who will leave and in turn your product will suffer and your revenues will then reduce. 

 

The optimum trajectory around the exceptional performance sphere is to provide a lot of appreciation, product improvement and revenue improvement altogether, equating to a balanced approach for each, and over time the cumulative trajectory of the Spherewill result in an exceptionally performing company.

 

This is the method that companies which reach stratospheric levels of recognition take in their pursuit of excellence. This is the method that all companies who want to be exceptional need to take in order to get the net exponential effect out of their product/service, employees and customers.

 

In our super connected and advanced world to stay ahead of the curve you need to be able to see in perspective what your company needs to improve performance.  The research of Mr. Raynor and Mr.Ahmed is excellent and extensive, however the conclusion that there are only two rules in the end that matter, sorely underplays the value of appreciation.