Review: How Companies Win – Dave Calhoun & Rick Kash

Rating: 4 stars. A great read once you get past the first chapter. Really good information and thoughts about a “new” way to do business. I learned a lot from reading this book, it made things very clear. I didn’t enjoy the writing style; a bit too academic and procedural as opposed to a story/advisory form. But good points and enlightening.

How Companies Win starts off a little slow and talks about the state of the economy post-credit-crisis. There was some description of what happened in the crisis, but I feel that they didn’t cover this adequately. However, they did ensure that the focus of the book was obvious “consumers are cutting spending on the ‘unreasonable’ items”. They talk about how we have gone from a supply-economy – where we make a product, market it and hope people buy – to a demand-economy – where we find out what customers want, make the product and give it to them. This may seem obvious, but in the past few decades we have been operating the wrong way and using useless tools like mass-marketing to sell our products. This is a paradigm shift. Businesses must compete on value for customers rather than cost-cutting and price.

The book goes on to explain that knowing your customers is what makes you a long-term successful brand. Find out which of your customers are most profitable. Identify what their current needs are, what their needs are changing to, and what might be their needs in the future. Knowing your best customers’ current and future needs, helps you create a valuable product and sets up your company for the long-term.

But, how well do you know your customers? Calhoun and Kash, stipulate that precision is integral in a business; knowing what your customers are thinking when they are thinking it, is vital. A company must utilise tools and put in place procedures that allow it to get up-to-the-minute feedback from their customers. This will enable the company to “hear” their customers and change dynamically to meet their needs. Precise, timely information provided by inherent systems is required by a company to “know” their customers needs, and to change dynamically to meet them.

Furthermore, companies must shift their view on innovation from an “outright innovation” to an “iterative innovation” approach. Instead of spending loads of money on R&D to find the “next big thing”, companies should focus in what their customers want, now and in the future. By focusing on iterative innovation, a company can consistently meet the needs of consumer demand. A much cheaper and less risky approach is to improve on the current model. Note, that iterative innovation is only possible if the company’s goal is to meet the needs of the customer, and is founded in a great team – where each individual knows their role in that goal. Innovate iteratively, and consistently meet the needs of your customers in order to create value in the long term.

In order to be successful, a company must create value in the eyes of the customer, differentiate themselves from competition and compete on service (not price). By building a community of customers, keeping engaged with them and “knowing” them, a company can always be a step ahead of anyone when meeting the needs of it’s consumers. By always being the first (you were the first to listen to your customers) and the best (you know what your customers want) at focusing on the needs of the customers, the company will have the ability to set their price. Being the best and first to meet the needs of your customer will differentiate your company and allow you to set the price.

There is more than just customers and products to worry about though. One must also remember to focus on optimising the supply chain and operations, and to build a good team. Most importantly, every member of the team must have defined, understandable, measurable goals. Your staff, customers, suppliers, and promoters should each know how they fit in with your goals. Staff, customers, suppliers and promoters must understand where they fit in your company’s goals in order for your goals to eventuate.

It is always a good idea to connect and collaborate. Grow your company by linking manufacturers, retailers and promoters together, in order to share information. This “demand chain” will provide precise, immediate information about your customers and is accessible by each party. Help each other out, share information and grow together, whilst everyone focuses on meeting the needs of the end-consumer. Connect and collaborate with manufacturers, retailers and promoters in order to share information about the customer and grow your businesses together.

Tying the demand-focused products with the collaboration between the great supply-side (manufacturers, retailers and promoters) relationships helps build a long-term successful community of customers : A BUSINESS.

Some interesting extras:

  • Current, Latent and Emerging Demand: Your customers currently demand a particular product from you, but they have some thoughts on what they would like changed. This helps you understand what your current and emerging demands are from your customers. However, latent demand is the demand that, not even your customers know about yet. If you know your customers well enough, then you may be able to predict what latent demand is waiting to be released, just by knowing what problems they face you can solve them.
  • Have you identified Strategic Growth Areas based on Latent Demand? Test your assumptions: “I believe X will happen, because Y is happening. This is similar to Z (a precedent example).” Once you are happy with your assumptions you can then (1) predict where demand is (will) be, and (2) take the necessary actions to meet it.

If you read this book and have any resounding thoughts, please leave comments for discussion below. I found this book really interesting and enlightening, and would love to discuss some of your thoughts with you.

What did you think of the book? Is this the natural progression of businesses? Of society?

2 Comments to “Review: How Companies Win – Dave Calhoun & Rick Kash”

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January 24, 2011 Reply

[...] a comment January 25, 2011 I was reading this article in the Economist, and having just read How Companies Win, it started me thinking about the way Newspapers are [...]

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