Risk & Business Magazine Lovitt & Touché Fall 2015 - Page 9

Competitive Advantage Juggling Six Balls BY: VERNE HARNISH AND ANDY BUYTING F our times the revenue growth, twelve times the stock performance, and over 700 times the profit growth over an eleven year period. What competitive advantage led to this huge margin in performance of one group of companies over another in similar industries? In a landmark study of over 200 firms by Harvard professors John Kotter and James Heskett, it was found that companies which equally focus on three key stakeholders (customers, employees, and shareholders) dramatically outperform companies which emphasize one over the others. competitive disadvantage over those firms that see and treat all three key relationships as equally important. People/Relationships This employee, customer, and shareholder triumvirate is what I refer to as the “people” or “relationship” side of the business where the main focus is on keeping all three of these stakeholder groups happy. These three fundamental relationships also determine the cash flow of the business. Simply put, the employee group represents all those individuals and organizations you “employ” and pay, including suppliers, contract workers, government officials (OK, maybe not “... companies which equally focus on three key stakeholders (customers, employees, and shareholders) dramatically outperform companies which emphasize one over the others.” This means companies exclaiming that the customer is #1; or that employees are the most important asset; or that the main focus of business is making money for the shareholders/ owners will be at a significant RISK & BUSINESS MAGAZINETM FALL 2015 9