In this episode of The Knowledge Project Podcast, acclaimed business consultant George Stalk Jr. shares his insights on the importance of time in business strategy, the differences between private and public companies, and the concept of ‘Hardball’.
He also discusses the challenges of changing corporate culture, the role of speed in business, and the importance of understanding and serving customers better than competitors.
Understanding and Serving Customers
Understanding and serving customers better than competitors is key to business success.
Competitive comparisons can help companies realize their shortcomings and improve their customer service.
However, many companies claim to be customer-focused without any quantitative representation.
The one that always works is know your costs better than your competitors know their costs because most people don’t know their cost. They think they do, they know the cost that gets between the revenues and the profit line, but they don’t know what happens behind and those are all averages. – George Stalk Jr.
Profitability Choices
Companies can choose when they want to be profitable, either now or in the future.
Family companies are often well-positioned to make this decision, as they can choose to forego immediate profits in favor of larger returns in the future.
The one sentence description of time-based competition or competing against time is giving your customers what they want when they want it where they want it faster than your competitors can do. – George Stalk Jr.
Advantages of Private Companies
Private companies often hold more capital, which can give them a competitive edge.
However, this advantage can vary depending on the specific circumstances of each company.
Private companies also tend to have a longer time horizon, which can lead to more strategic decision-making.
The Power of Time-Based Competition
Time-based competition is a powerful business strategy that involves delivering what customers want, where they want it, and when they want it, faster than competitors.
Companies like Walmart and Toyota have successfully employed this strategy, outpacing competitors and achieving faster growth and higher profitability.
Playing ‘Hardball’ in Business
The concept of ‘Hardball’ in business involves knowing your costs better than your competitors.
This knowledge allows businesses to gain market share by understanding how costs work and what volumes mean.
This strategy can lead to significant competitive advantages.
Speed as a Competitive Advantage
Speed is a crucial factor in business.
Companies like FedEx have built their culture around speed and time performance, which has allowed them to improve their performance and maintain a competitive edge in their industry.
The Challenge of Changing Culture
Changing a company’s culture to adapt to new strategies can be challenging.
It often involves challenging established norms and practices, and may result in significant turnover in management.
However, such changes are often necessary for the company’s long-term success.
Differences Between Private and Public Companies
Private and public companies have different priorities and strategies.
Private companies, especially family-owned ones, often prioritize long-term performance and stability, while public companies tend to focus on short-term gains.
This difference in focus can impact the companies’ performance over business cycles.
Implementing New Strategies
Implementing new strategies within a company can be challenging and may require overcoming internal resistance.
The example of Wausau Paper, which had to implement a strategy that saved the company from closure, underscores the importance of leadership and flexibility in driving change.
Trend of Private Ownership
The trend of companies being taken private by leverage buyout firms is becoming more prevalent.
Private ownership often allows for a longer time horizon and a more strategic view of the business, which can create a competitive environment where public companies may be at a disadvantage.
Agency Problem in Public Companies
Public companies often face an agency problem, where managers may prioritize their own financial goals over the company’s long-term success.
In contrast, family-owned businesses often have a closer watch on management, preventing them from deviating from the company’s long-term goals.
The Importance of Corporate Culture
A competitive corporate culture can drive a company’s success.
However, changing a non-competitive culture can be challenging and may require significant transformation.
Companies like Caterpillar and Amazon have built cultures focused on competition, which has been a key factor in their success.
