An excerpt from the introduction of Repeatability.
What you see depends on where you sit. If you are high in the stadium at a tennis match, you see the angles and patterns of strategy, but miss the violent physicality of professional tennis on the ground. At courtside, you see the physicality, but at the cost of the angles and positioning. And only on the court itself, in the action, do you have a full sense of the speed of the ball, and the fact that only through almost instant reactions, with repeatable and well-grooved response patterns, can any strategy be successful at the highest level of the game.
In our combined careers, we have logged more than fifty years in the business of strategy consulting, shoulder to shoulder with senior executives of global companies. For about twenty-five years of that time, we have been privileged to lead the Global Strategy practice of Bain & Company, examining the broad patterns of business success and failure. We have also been part of teams starting and managing businesses. Each position has given us a different slant on the topic of how companies find their next wave of profitable growth. Today, each is leading us to the single insight at the center of this book—the growing power of repeatable models.
During the last ten years, we have led a research project at Bain on this topic, reported on in a series of articles and books with Harvard Business Review Press. The books, called “the trilogy” by our publisher, looked at the three ways that companies grow (or fail to do so). These are through growth in market share and profit share in the core, growth from expansion into surrounding adjacent markets, and, sometimes, redefinition of the business model itself. We called this the focus-expand-redefine cycle of growth.
Yet, only after we had looked at the success factors of companies from so many different angles—both personal and research based—did we see how the nature of strategy in business itself is changing fundamentally. What once were more lasting sources of competitive advantage—like market positioning, a unique product offering, a powerful brand, or a set of deep customer relationships—have, in many industries, become more ephemeral and fleeting, to the point where, at the time of this writing, we calculate that only about 9 percent of global companies have been able to achieve more than a modest level of sustained and profitable growth over the course of the last decade.
The nature of successful strategy is changing in three ways. First, it is now much less about a detailed plan than about a general direction and a few critical initiatives—almost a strategy on a page—built around deep capabilities that can be constantly improved, adapted, and reapplied. The reason for this is the increased speed at which information flows and change occurs in the world, compressing time. These changes are shifting the nature of competitive advantage toward deep capabilities and how they combine in a business model that can adapt and repeat successes of the past over and over.
Second, strategy is now less about anticipating how the world will change, which is increasingly difficult to know, than about superiority at rapid testing, learning, changing, and adapting.
Some of the great stall-outs of recent years, such as at Nokia, have occurred because of failure to adapt to change. Some of the most powerful success stories, such as at Apple, have been fueled by best-in-class systems to test, gain feedback, and adapt. Central to this responsiveness, we find, is the ability to maintain a level of simplicity of the business model (for instance, Apple has only about sixty products) in an increasingly complex world.
Third, effective strategy is becoming increasingly indistinguishable from an effective organization. The best strategies are those that the organization readily embraces, mobilizes around quickly, and provides feedback on. Such strategies almost feel as if they were pulled up from the bottom rather than pushed down from the top. When the full organization understands deeply the strategy, its ability to learn and adjust to change will have a good chance at being better than competitors’. We refer to this result as shortening the distance between the CEO, the front line, and the customer.
A central insight from this book is that complexity has become the silent killer of growth strategies—complexity of organizations layered with constant new initiatives and systems, complexity of messages throughout the organization, complexity of implementation across different markets, complexity of IT systems to keep track of it all. Complexity creeps up on companies, confounds learning, slows response time, and saps organizational and management energy. It is a truism that from the first product sold by the founder to his first customer, the complexity of most businesses grows exponentially, drawing senior management farther and farther away from the front line.
It is no wonder that our CEO surveys and interviews highlight the tension CEOs feel between speed of markets (and therefore the need to respond) and complexity (and therefore slowness) of organizations. Some said that by the time they are partway through implementing a major new initiative, the world has changed, and it is time to launch yet another.
But strangulation by complexity is not an inevitable fate. Perhaps the most important contribution of this book is that it explains the consistent way that 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.