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Formulas for success in business can be misleading

In his most recent article, "Forget Formulas: How Managers are Fooled in their Search for Success," author Phil Rosenzweig writes of the over-importance many business leaders place in following cookbook style recipes for success offered by well-regarded books such as Built to Last and Good to Great.

Rosenzweig writes of the example of K-Mart in the early 1990s; the company had met most of it's own performance measures such as improving its inventory turns, making better use of central purchasing to reduce its costs, using point-of-sale information technology and making its supply chain management more efficient. And yet, despite these improvements and K-Mart's focus on its own performance metrics, the company had faltered by the end of the 1990s, losing its market share to rivals Wal-Mart and Target.

Following formulas for business success can never ensure high performance because they "treat performance as if it were absolute rather than relative (to one's competitors)." In order to truly achieve high performance, companies (and their leaders) must be willing to take risks in order to do things better than their rivals.

True, there is a need for having a clear focus, strong values, and a concern for customer needs. But when it comes to building a high-performance, profitable company, these dimensions should never overshadow the "vital dimension" of competition.

Read the full article in PDF form here.

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