The Three Rules: How Exceptional Companies Think by Michael E. Raynor & Mumtaz Ahmed - Book review

The Three Rules

How Exceptional Companies Think

By: Michael E. Raynor, Mumtax Ahmed

Published: May 30, 2013
Format: Hardcover, 384 pages
ISBN-10: 1591846145
ISBN-13: 978-1591846147
Publisher: Portfolio/Penguin

"We wanted only those companies that were good enough for long enough that we could be confident something special was going on. We wanted companies that were truly exceptional, write director at Deloitte Services LP, Michael E. Raynor; and Chief Strategy Officer of Deloitte LLP, in their research based and excellence seeking book The Three Rules: How Exceptional Companies Think. The authors describe the fundamental reasons that cause some companies to achieve peak excellence, sustained long term performance, simply continue in mediocrity.

Michael E. Raynor (photo left) and Mumtaz Ahmed understand that the components and principles that drive superior performance over the long term are not obvious at first glance. The authors point out that simply clearing set and arbitrary benchmarks does not provide insights into effective, and top performing firms either. Simple lists that rank businesses also fail to be true indicators of real superiority.

The authors through applying statistical research and analysis, along with detailed case studies, determine which companies are indeed truly exceptional in their overall performance. Since the authors found that company success results from some combination of skill and mere chance, they remove the element of luck from the equation, through the use of statistical data.

Mumtaz Ahmed (photo left) and Michael E. Raynor recognize that companies must make the key decisions to achieve superior performance. The authors propose three simple rules, based on their empirical research, that encompass all decision making for the top performers:

* Better before cheaper
* Revenue before cost
* There are no other rules

With this powerful formula in place, the authors demonstrate how persisting with these rules, transforms a company from one getting mediocre results, to one achieving exceptional performance. Regardless of industry, company size, or length of time in business, the three rules held firm as a measure of success. The authors utilize rigorous and quantifiable analysis, rather than intuition, to determine success.

The removal of the diistracting noise from the real signal resulted in a classification of success as Miracle Workers in the top echelon, Long Runners who were not in the highest levels but had strong performance over a long term, and Average Joes who performed at a mediocre level.

For me, the power of the book is how Michael E. Raynor and Mumatz Ahmed combine their rigorous research based analysis of company performance, with a very clear and concise set of three rules for achieving greatness. The authors present a very strong case for both their classifications of companies on the performance scale, and for their rules as the key to the success of those firms. The use of rigorous statistical methodology goes far beyond the usual intuitive ideas, conventional wisdom, performance benchmark, and company biographical approaches used in other success literature.

In that sense, this book is superior to even the books considered classics and standards on the topic. The liberal usage of charts, graphs and statistical measures could make the book a more challenging read for many readers expecting a traditional treatment of the subject matter. That would be too bad as the hard data approach utilized in this book is the source of its high quality. If this book were considered in the terms used by the authors, it would fall into their highest classification as Miracle Worker.

I highly recommend the important and landmark book The Three Rules: How Exceptional Companies Think by Michael E. Raynor and Mumtaz Ahmed, to any business leaders in any industry who are seeking a valuable and readily applicable book for achieving peak performance for their organization. This no nonsense and challenging book is well worth reading; and then reading again and again, to transform your company into a top performing business.

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