In his best seller good to great, management researcher and writer Jim Collins listed surprisingly simple characteristics that make ‘good’ companies ‘great’. These include promoting CEOs from within, focussing on facts, and establishing and maintaining a culture of discipline. Distilling the complex DNA of a successful corporation down to a handful of general rules always carries the risk of being too simplistic. But, as the Business Today-Ernst & Young study of Best Managed Companies in India reveals, the companies that are able to deliver on interests of various stakeholders— shareholders, employees, vendors, and community—and do so consistently year after year, do tend to have business philosophies that converge at a fundamental level. In other words, being a best managed company is no coincidence.
More often than not, best managed companies, as the study methodology defines elsewhere in the issue, tend to be those that are “driven by strong values and governance principles, are high on commitment to innovation, quality, people and society and above all, delight their stakeholders through robust all-round performance.”
In this particular study, Business Today and Ernst & Young began with the entire universe of listed companies— a number that came to about 4,900. Then, we added several filters—pertaining to the size of revenues and market cap, the number of years of listing, internal and external surveys—to narrow the race down to a manageable set of companies, which were taken up for detailed profiling. As we studied the final set of winners, it became apparent that there is a set of attributes that India’s Best Managed Companies share among them. Mantras of Management Success (see page 52) explains in detail what these attributes are, but if one were to put them in three broad buckets, these would be vision, operational excellence, and sensitivity.
Best Managed Companies have goals that are stunningly immodest. Their span of vision tends to be vastly wider than those of their competitors; they have processes and systems that don’t buckle under their ambitious growth; they have talent that’s not just better, but also that wants to stay put; and they have a much better of way of connecting with the society and sharing wealth. Such qualities enable India’s Best Managed Companies to, sometimes, do the impossible; reinvent their business models, acquire companies that are much larger than themselves, go from a relative laggard to industry leader, and change the rules of the game in an industry, while doing well by their shareholders. Finally, what these companies have in common is they recognise that being good isn’t good enough. They need to be the best.