Besides teaching ethics and strategic management at the Carlson School of Management, 55-year-old Alfie Marcus is a prolific author. His new book, “Big Winners and Big Losers: The 4 Secrets of Long-term Business Success and Failure” ” written using research from strategic management graduate students ” appeared in bookstores Monday.
At 2 p.m. today in the Coffman Union bookstore, Marcus, a 22-year Carlson School veteran, will discuss his 12th book and sign copies. The Daily sat down with Marcus last week to talk about the new book, published by Wharton School Publishing.
What goal did you have in mind when writing this book?
I wanted to think through one of the most basic questions of strategy, which is: Why do some firms win for long periods of time while other firms lose for long periods of time? I also was aware of, and read on occasion, a lot of the popular business books.
On the one hand, the academic literature was not answering the question very well, and on the other hand, you had a lot of top business books that claimed to answer the question. And I thought they were very superficial and they were giving contrary advice. If I just was a little bit more rigorous, I would raise the standards.
What does your book offer that these other ones don’t?
A lot of the people among the popular business books use convenient examples (of winners) like Southwest Airlines to illustrate what predetermined ideas they have. They’re not really bound by the evidence and they’ve never really conducted a systematic study. There are some exceptions to that.
A lot of the advice is to transform everything. Reinvent yourself every day. Be profoundly agile. The whole name of the game is transformation. It’s like dizzying pace of change. That’s the message they convey.
There’s another genre of books that say, “Don’t change anything.” Dig in. Execute well. Be super efficient. Be highly disciplined.
If you’re a practicing manager and these are the most popular business books, you have to be confused because the advice is entirely different.
Do you choose one of them?
Basically, what I say is that you have to combine those attributes. That’s the reason it’s so hard to be a long-term winner. I looked at 1,000 firms between 1992 and 2002 and, using the criteria I established, only 32 of them had these dynasties for that period of time ” and they weren’t household names.
The four qualities of success are: You have to find a sweet spot, a niche where you provide for customers something that they can’t get anywhere else; you have to get to that niche, which is the agility side of it; you have to have the discipline to protect it ” if you find a niche and every competitor in the world can get there, you haven’t got very much ” and you have to have focus. What I mean by focus is the ability to take a winning business model and apply it again and again and reproduce it so you’re able to exploit the niche as well.
These four qualities I think combine ideas that are in the popular business press. But I’m saying it has to be done simultaneously.
Who are some of the big winners and big losers?
They are companies that you probably wouldn’t have heard of. Some of the big winners are Amphenol, Fiserv, Dreyer’s Ice Cream, Forest Labs.
If you actually look at some of the losers, the losers are some of the household names. You have Eastman Kodak, Halliburton, Disney, Campbell’s Soup, Goodyear, Hasbro. In general, the winners tend to be smaller companies than the losers.
A good example of a winner would be Family Dollar. It occupies a sweet spot. There’s a lot of competition in that sweet spot, but it’s very close to its customers. They have a very simple format. They repeat it again and again.
The losing company in that category I studied was The Gap. And I think if you were to go back to 1992 and ask all the smart money analysts, “Which of these companies should I invest in?” All the smart money would have gone into The Gap, but the person who would have had the intuition, the understanding and the analytical skills to see what Family Dollar was doing ” that person would have made a lot more money out of their investment.
Whom did you write this book for?
Everybody. I think anybody interested in business. But it’s not just business, (it’s) any organization. For instance, you could apply it to the strategic plan at the University of Minnesota. Do the leaders here have a clear sense of the sweet spot they want to be in? Are they really close to that market niche, to that customer base? Do they have the agility to get to that customer base? Do they have the discipline to do it?
The key test to this, of course, is if one can use (the book) prospectively. I’ve used it retrospectively. With hindsight, it’s easy to do. The real question is if it can be used as a management tool and also as an investment tool.
