Books: Running on intuition: the fuel for success

The champion of 'process' now celebrates 'people companies' - those that let staff 'do the right thing'. Henry Stewart reports.

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Last Updated: 31 Aug 2010

Outsmart!: How to do what your competitors can't
Jim Champy
FT Prentice Hall
£14.99

When Jeff Grady bought an iPod in 2001, he tried to get a protective case but couldn't find one. So he made his own, started selling them to friends, and within five years had built DLO, an accessories company with sales of $84m.

DLO is typical of the companies championed in Jim Champy's new book, which analyses the fastest-growing enterprises in the US. Others include MinuteClinic, providing instant low-cost medical advice from nurses based in supermarkets; Partsearch, which sells consumer goods parts that are normally hard to get; and Sonicbids, an internet-based firm that brings bands and promoters together.

All are great companies that are meeting a clear market need. The book emphasises that 'opportunities lie in neglected fields everywhere', and calls on the reader to look for the breakdowns in their industry, and where 'money gets lost or left on the table'.

Champy was responsible (with Michael Hammer) for the influential book Reengineering the Corporation (Harper Business, 1993). At the height of its popularity, it was claimed that nearly 80% of Fortune 500 firms had adopted re-engineering, restructuring and streamlining of processes. His view now is that 'reengineering is not enough. Companies have to go beyond that and completely change the nature of their business model.'

The history of management ideas has been a battle between those who focus on process and those who focus on people and motivation. Reengineering was on the process side but in Outsmart!, Champy recognises the other side of the argument. 'When left alone,' he says in the introduction, 'good people will do the right thing.'

At the core of every example he gives is a state-of-the-art IT system and a solid operating model, but there's also a focus on valuing people and giving them freedom. SmartPak was set up in response to the problems stables had in ensuring horses got the right medicine and supplements. It built a $40m business based on supply packs. 'We use information technology for every single thing we can,' explains founder Paal Gisholt.

Three-quarters of its orders are taken online, yet SmartPak invested in a call centre staffed with well-trained experts - seen as 'the horse world's wise men and women'.

Champy has found firms with an 'almost fanatical focus on solving a customer problem'. He's not afraid to celebrate the 'stubborn breed of leaders... who have bucked the outsourcing trends of the past two decades and outsmarted their rivals by doing everything themselves'. He is scathing about firms that outsource just to cut costs. He applauds SA Robotics, producer of hi-tech robots for the nuclear and other sectors; while keeping everything in-house, it grew from $1.7m to $17m in just four years.

Ambitiously, the author aims 'to deliver the most current intelligence available on how to succeed in today's brave new world of business'. His book is a great read, packed with ideas and the perfect choice for a three-hour journey, but it doesn't deliver the 'wow' moment I remember from reading Reengineering the Corporation - the suddenly realisation that the way businesses were organised made no sense at all.

The message here is about being clever and outsmarting the opposition. The challenge is to turn this into guidance to enable the reader to, as the subtitle promises, 'do what your competitors can't'. As an entrepreneur, I read management books expecting to take away at least a couple of ideas for improving my business. On that test, I'm not sure this book succeeds.

But there are important lessons here. Too many companies 'see ideas and rather than act on them, they study them, they form committees, they try and elevate everything into a process'. Instead, the fast-growing companies run on intuition and don't get caught up in the slow planning processes of 'incumbent' companies. Ultimately 'with a nod to Nike', Champy's advice is simple: 'Don't dwell too long on what could go wrong. Just do it.'

Henry Stewart is founder and chief executive of Happy, the award-winning training company. He can be contacted at henry@happy.co.uk.

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