How and why simplifying operations, sharpening focus, and liberating energy can be an antidote to escalating complexity
As Chris Zook and James Allen indicate in the Introduction, they share an interest in why so few companies (i.e. less than 10%) “have been able to achieve more than a modest level of sustained and profitable growth over the course of the last decade.” They cite three ways in which the nature of strategy is changing (see Pages 2-3) and then offer to explain how “the enduringly successful companies maintain a form of simplicity at their core. They have done so by creating what we call Great Repeatable Models that adhere to a consistent set of principles.” Actually, there are three: (1) a strong, well-defined core, (2) clear nonnegotiables, and (3) systems for closed-loop learning.
That is to say, Great Repeatable Models stay ahead because they compress the distance between management and the front line, enable better decisions to be made faster, and facilitate, indeed expedite continuous improvement. Although Zook and Allen carefully identify the “what” of building enduring businesses for a world of constant change, they devote most of their attention to explain HOW. This is consistent with the approach they take in Profit from the Core (Updated Edition, 2010). They thoroughly explain the three principles, devoting a separate chapter to each, then shift their attention – and their reader’s – to an especially important consideration, entropy, and how business leaders must avoid or respond and then eliminate it with behaviors that will help their companies to sustain and adapt their repeatable models “to fight the natural forces of entropy that seek to stop them.”
Readers will appreciate – and would be well-advised to review periodically – the “Ten Top Conclusions” that Zook and Allen share in Chapter 6 (Pages 199-202), material that compresses most of the most important insights shared in previous chapters. These conclusions “cut across different topics – how the world is changing and what it means for strategy, the power of the Great Repeatable Models, the design principles of strategies build around repeatable models, and their benefits, and of course, their limitations.”
Zook and Allen also include a “Repeatable Model Diagnostic” (Table A2-1, Pages 214-216), followed by an especially informative “Summary of Top Thirty Case Studies” (AB Inbev to Vanguard) in Appendix 3, Pages 217-228. It is important to keep in mind, when reading this book, that “complexity has become the silent killer of growth strategies” and that understanding what repeatable models are not (e.g. performance of repetitive tasks, replication everywhere of a business concept, an endless to-do list forced upon frontline employees) is perhaps at least as important as understanding what they are. It is also important to keep in mind that there are multiple Great Repeatable Models in almost any industry, and, that “performance is more about management decisions than the business [one happens] to be in.”
I think complexity resembles kudzu, at least in terms of its ability to “strangle” an organization. Chris Zook and James Allen can help to prevent or resolve that threat.