Business Rules That Make Companies Truly Great… Business Rule #1: Swim Upstream– Ignore Conventional Wisdom…

Business rules are intended to assert business structure, to control or influence the behavior of the business… Business rules describe the operations, definitions, constraints that apply to an organization. Business rules apply to– people, processes, workplace behavior, computer usage, smartphone etiquette… business rules are necessary to better achieve goals, remove obstacles to market growth, reduce costly mistakes, improve communication, comply with legal requirements, increase customer loyalty…

On a personal level according to Scott Peltin; in business there are three types of workers; Sinkers, Floaters, Swimmers…

‘Sinkers’ are over-whelmed, over-worked, over-tired, always in crisis…

Floaters’ are too often comfortably numb as they fail to realize their true untapped potential, they just manage to stay afloat…

‘Swimmers’ are full of energy, resilience, vision, commitment to excellence, strategy for success, habits that energizes themselves, the organization, the brand… Swimmers are high performers, full of passion… and without them companies don’t succeed… Hence, Rule #1; be a ‘swimmer’…

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Business rules exist whether or not they are ever written down or talked about… they are part of an organization’s consciousness… However, rules do not dictate specific worker behaviors, and they are not strategies… there function is to create a foundational concept on how to build a great company… but whether a company becomes great or not, well that all depends on many factors…

Realistically, there are no rules that exists (real or implied) that will build a great organization; there are only ‘articles’ written by pundits that are titled– ‘rules for building an organization that is truly great’… According to Michael E. Raynor and Mumtaz Ahmed; business rules can be a useful antidote to intuition, and that can take the form of either a single leader’s vision or the collective hunch of the top management team (which often comes with a veneer of post-hoc rationalization)…

Having formal work rules in business even if they’re not required is a good idea, because they help protect the business from litigation and maintain a higher quality of work-life in the workplace… Management and workers must understand what is expected of them, and not only in the work that they do, but also in behavior… When rules are carefully selected, clearly defined and communicated, and fairly enforced they provide a stable and more manageable workplace…

Having clear work rules ensures that both workers and management understand what is acceptable behavior and what is not… A clear definition of what is required and the consequences of failing to comply make it easier to respond consistently to workplace disruptions… An ambiguous rule, or no rule, or uneven enforcement of a rule… opens the potential of a remedial action being challenged as arbitrary or discriminatory…

In the article Three Rules for Making a Company Truly Great by Michael E. Raynor and Mumtaz Ahmed write: Most strategies and management advice that business leaders turn to is often unreliable, impractical… Hence, frustrated by the lack of rigorous research, we undertook a statistical study of thousands of companies, and eventually identified several hundred companies among them that had done well enough for a long enough period of time to qualify as ‘truly exceptional’. Further, we discovered something startling; many of the choices that made some of these companies truly great were consistent with just three seemingly elementary rules:

  • Better Before Cheaper: Every company faces a choice; it can compete mainly by offering superior non-price benefits, such as; great brand, exciting style, or excellent functionality, durability, convenience; or it can meet some minimal acceptable standard along these dimensions and try to attract customers with lower prices… Hence, we labeled– ‘miracle workers’ as overwhelmingly adopting the former position… and ‘average Joes’ typically competing on price… and ‘long runners’ that showed no clear tendency to one way or another…
  • Revenue Before Cost: Companies must not only create value but also capture it in the form of profits. By an overwhelming margin, exceptional companies garner superior profits by achieving higher revenue through either higher prices or greater volume. Very rarely is cost leadership a driver of superior profitability… There’s nothing startling about the notion that higher prices can lead to higher profits, but we were impressed by the range of contexts in which companies have built business on this idea… Just as companies can lower prices while adhering to ‘better before cheaper’, they can also drive out inefficiencies and lower costs while following the ‘revenue-before-cost’ rule. But companies cannot achieve superior profitability through cost leadership…
  • There Are No Other Rules: This underscores the uncomfortable (or liberating) truth that in the pursuit of superior profitability everything but the first two rules should be on the table. When considering all other determinants of company performance, e.g.; operational excellence, talent development, leadership style, corporate culture, reward systems… you name it– and there was a wide variation among companies of these performance types… also there is no doubt that these and other factors affect corporate performance, but there was no clear and consistent pattern of ‘how’ they really mattered…

In addition, it was found that the companies that had remained ‘exceptional’ (i.e., superior profitability) had done so despite changing their approaches in a number of the critical determinants of performance: The reason? The changes they made kept them aligned with the first two rules. In other words, top-performing or ‘exceptional’ companies are persistent in seeking a position unrelated to ‘low price’ and adopt a ‘revenue-driven’ profitability formula, while everything else is up for grabs…

However, the absence of other rules does not give permission to shut down thinking… Companies are responsible for searching actively, flexibly for ways to make and follow rules in the face of what may be wrenching competitive change… and, it takes enormous creativity to remain true to first two rules… Bottom line; if companies want to beat the odds they must concentrate on ‘creating value’ with– ‘better before cheaper’; and on ‘capturing value’ with– ‘revenue before cost’…

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According to Sam Walton (in his book: Sam Walton, Made in America: My Story); running a successful business boils down to few simple rules. These rules helped Walmart become the global leader it is today. They continue to apply them to every part of their business:

  • Commit to your business: Passion, commitment, and truly believing in the purpose and value of the business is the first step to success… You must be a believer more than anybody else– you must show it every day by doing your best, and soon others around will catch the passion, it’s like a fever…
  • Share your profits with all your associates and treat them as partners: Partners have a vested interest in the business and whether an associate or management as partners working together, everyone has incentives to perform above expectations…
  • Motivate your partners: Money and ownership alone aren’t enough; set high goals, encourage competition, keep score… and, don’t become predictable…
  • Communicate everything you possibly can to your partners: The more partners know, the more they understand… the more they understand, the more they care… and once people care, they strive for excellence…
  • Listen to everyone in your company: Listen carefully to all the relevant parties; associates, customers, suppliers, everyone in the value chain… push responsibility down the organization… force good ideas to bubble-up from within…
  • Exceed your customers’ expectations: Delight customers with what they want and exceed expectations… fix mistakes, don’t make excuses, make it a great customer experience…
  • Swim upstream: Innovate, create, counter conventional wisdom… If everybody else is doing it one way, there’s a good chance you can find a better niche by going in a different direction…

In the article Rules for Breaking Rules by Gwen Moran writes: No one likes to be thought of as a conformist who is afraid to take a chance and break rules every once in a while… But breaking rules for the sake of doing so– or without at least a good understanding of what is at risk– can lead to bad decision-making and lamentable consequences…

Like it or not, there are some ‘rules to breaking the rules’… and when you should go for it, and when you should not… Before you go maverick be sure the situation fits these criteria; know and understand the real value of breaking the rule(s), calculate the risk, breaking a rule(s) should aligns with values that matter, prepare for consequences of rule breaking…

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According to Mark McMillion; when you know enough to realize a rule(s) does not make sense, or it bogs down, e.g.; innovation, creativity, customer service, productivity… it’s often a good time to break the rule(s)… According to Julie Austin; if a rule is telling you to do something that’s against– ethics, morals… then act accordingly. But even in morally sound situations, you must think through consequences of your actions and be prepared to own them, whether they go the way you intended, or not…

In ‘making’ rules company’s must be sensitive to the needs and circumstances for those affected, and ‘enforcement’ must be consistent and fair… But with ever- increasing diversity in workplaces making and enforcing rules that are ‘fair’ for all is problematic…