The Fortune 500 has listed the top U.S. companies in the U.S. since 1955, and the Fortune Global 2000 — ranking the top companies in the world — began in 2003. What’s striking today is the accelerating rate with which companies make and then topple off these lists. Hence the title of Ralph Welborn, PhD and Sajan Pillai’s compelling new book, Topple: The End of Firm-Based Strategy and the Rise of New Models for Explosive Growth(Greenleaf Book Group, May, 2018).
Turnover on the Fortune 500 has reached nearly 80 percent in just 12 years. The average time organizations stay on the list has plummeted from 35 years in 1970 to 14 percent now. To Welborn and Pillai, who are both veteran consultants on business strategy, such statistics are a clear indication that the old business models are no longer sustainable. As the authors explain, there’s a far better way forward: Thinking outside the box of “the company,” and consider the larger business ecosystem.
The model comes from the playbook of highly disruptive companies such as Uber, Amazon, and Google – all of which constantly push the envelope, seeking new ways to provide value and asking strategic questions. Whatever a company’s size or focus, the authors note, it should make sure it understands the ecosystem in which its customers engage, and then rethink where and how to play in that ecosystem. The results could well be explosive, if not sustainable growth.
Uber created new sources of value in ground transportation — not by producing or operating vehicles, as was the traditional method, but by orchestrating new and different capabilities from different actors that address customer needs. Its business model is centered on identifying what customers want to do, and then providing a convenient and versatile service that helps them do it.
For any leader who wants to rethink their role in this new competitive reality, Topple offers plenty of clear instruction. Instead of asking the age-old question, “How do we improve our products and services?” it’s far more effective to ask, “What is it that our products and services afford our customers to do?” That’s how Amazon achieve its explosive growth — by turning shoppers into information-rich consumers. It’s a perspective that necessitates thinking beyond the confines of any single firm, as it requires capabilities beyond what any one company — or even industry — can provide. But certainly orchestrating a combination of diverse providers toward a common objective, as Amazon did, has proven its worth.
The benefits go far beyond short-term opportunities, enabling companies to find new prospects for addressing what the authors call “wicked” problems — those massive, complex challenges that hamstring growth in any market. For instance, it took a whole array of different organizations to tackle the overuse of antibiotics and the rise of drug-resistant bacteria. This successful collaboration, involving a whole range of assets and skills, brought together participants motivated by many different types of value as well (economic, health outcomes, etc.).
Topple lays out a useful roadmap for business today, offering strategies for moving beyond the concept of businesses as a competitive, zero-sum game of “I win, you lose.” Survival and growth require we play a better game — in which partners share in new sources of value. In this new era, the new motto should be, “If one wins, we all win.”
Learn more at the authors’website.