THE THREE RULES

Moneyball meets Good to Great: Two analysts dive deep into data and reveal the surprising truth about why some companies fly higher—and longer—than others. Michael Raynor and Mumtaz Ahmed of Deloitte Consulting conducted a massive five-year study to find out what drives exceptional, lasting performance in business. Raynor is also the coauthor of The Innovator’s Solution.

What makes some companies outperform over the long-term? In the pharmaceutical industry, it’s Merck. In clothing, it’s Abercrombie & Fitch. It used to be Wrigley in candy and Maytag in appliances. Every industry has its outliers that deliver superior performance over the long run, despite facing the same constraints as competitors. What are they doing differently?

Drawing on exclusive access to Deloitte data and analysis of almost 25,000 companies spanning 45 years, Raynor and Ahmed identified 394 companies that are true long-term standouts in every kind of industry—from medical devices to trucking, semiconductors to discount stores, and beyond. Using cutting-edge statistical analysis coupled with detailed case studies, they discovered that what sets those companies apart is not how they act, but how they think.

Exceptional companies, when faced with tough choices, follow three strategic rules:
1) Better before cheaper. They rarely compete on price.
2) Revenue before cost. They drive profits through price and volume, not thrift.
3) Everything else is up for grabs. They stay open-minded about other strategic choices.

In THE THREE RULES, Raynor and Ahmed explain how executives can apply theseguidelines to their own organizations to take control of their own destinies and deliver exceptional long-term performance.

Michael E. Raynor is a Director at Deloitte Services LLP, where he explores corporate strategy, innovation and growth with clients in a variety of industries. He is the coauthor, with Clayton Christensen, of The Innovator’s Solution, and the author of the critically acclaimed The Strategy Paradox and The Innovator’s Manifesto.
Mumtaz Ahmed is a strategy practitioner in Deloitte Consulting LLP and the Chief Strategy Officer of Deloitte LLP, responsible for the firm’s strategy, corporate development, innovation, and brand.