Are you paranoid, or just perceptive?
By Sidney Hill, Jr., executive editor -- Manufacturing Business Technology, 2/1/2006 12:00:00 AM
Former Intel CEO Andy Grove once summed up his philosophy for business success in a book titled Only the Paranoid Survive. And it appears that Intel still operates under that assumption.
Why else would a company that became the leading supplier of microprocessors primarily through its association with Windows-based PCs not only put its chips into a new iMac, but also authorize Apple to launch an advertising campaign with the central message that those Intel chips are now free to "do a whole lot more than they've ever done in a PC?" Apple clearly is creating products—such as its hot-selling iPod—that consumers want, and the Intel brass believes it's time to at least pitch a tent in Apple's camp.
Apparently, maintaining a sense of paranoia is what Paul Loftus, a managing director with Accenture, would refer to as Intel's "competitive essence." Loftus directs Accenture's North American Industrial Equipment Practice, which coined the term competitive essence following a study in which it uncovered the key characteristics of high-performing manufacturers.
Loftus describes competitive essence as the ability to "create and maintain a unique combination of business attributes that help [companies] rise to challenges and outperform their peers."
While these attributes may vary from company to company, Loftus contends that market leaders typically build their business strategies around four pillars of high performance.
These pillars are:
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Global flexibility, characterized by a value chain nimble enough to seize growth opportunities wherever they may arise.
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Innovation and pricing power, nourished by customer insight to enable continuous generation of new products and services.
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Productivity plus, or the operational excellence and balance-sheet strength to undertake successful acquisitions.
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People Performance, a commitment to continuous learning and rigorous talent management.
Accenture's study of 100 high-performing industrial manufacturers shows that the manner in which a company incorporates these pillars into its business reveals its competitive essence.
For instance, American Standard—an $8-billion manufacturer of products ranging from bathroom fixtures, heaters, and air conditioners to control systems for automobiles—has saved more than $300 million since launching a global materials management initiative six years ago.
"They look for a balance between quality, cost, and consistency of supplier performance," Loftus says. "They also take a collaborative approach with suppliers."
Then there is Kone, an escalator manufacturer based in Finland that specializes in tracking customer-service issues. Gathering that data allows Kone to charge premium prices for service contracts that offer uptime guarantees, in addition to building improvements into new products.
The bottom line for all of these companies—as it is with any high performer—is a refusal to believe that what made them successful today will be good enough tomorrow. That fits Andy Grove's definition of paranoia, which in business can be a good thing.
