Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure

This book represents the best of what I love about Wharton Press. A topic like big winners and big losers lends itself to having some egomaniac who fails to understand the difference between being lucky and great, hire a ghostwriter to produce a pointless pontification full of meaningless clichés and generalizations. Instead, Alfred A. Marcus, a management professor at the University of Minnesota, compares and contrasts the practices of successful and failing firms. To achieve this, he enlisted more than 500 practicing managers, divided them into teams of five or six and directed them to review the performance of a company that either out-performed or underperformed its market group for 10 years. Their critiqued reports lead to four themes. Big winners: 1. Occupied sweet spots. 2. Possessed the ability to move into these spots. 3. Disciplined themselves to defend their spots. 4. Exploited and extended their positions. The reports revealed big losers: 1. Occupied sour spots. 2. Were rigid. 3. Could not defend their positions. 4. Could take advantage of their positions. What fascinated me about this book is Marcus' discussion of how the individual companies managed the nuisances or tensions created by the four themes. Achieving sustained competitive advantage is never easy. Firms that consistently do it are worthy of study and investment. Marcus's book provides managers and investors with a unique prism through which to view their opportunities.

"This book reveals the secrets of the long-term better-than-industry performance of the winners. I t shows distinct patterns in the 1992 to 2002 results. The differences in outcome are not random or a matter of mere chance. The circumstances that the big winners and big losers faced were similar. What explains the differences in performance is that the winners pursued and executed different strategies than the losers. In this book, I reveal how the traits of the big winners came together into larger patterns made up of a sweet spot, agility, discipline, and focus. Firms that achieved advantage wove together these elements into larger wholes. The positive aspects of the separate components supported and reinforced each other. Similarly, the negative traits of the losing firms supported and reinforced each other…Most of the insights in this book derive from the reports that the managers wrote. Their names and the companies they analyzed are listed in the Acknowledgments. The reports pointed me in certain directions, but I take full responsibility for where I ended up. The conclusions are my own. I presented the results and obtained feedback at a number of venues…All long, lessons are learned and specific advice is given on what a company can do to become a big winner and avoid being a big loser. This advice is concrete, specific, and actionable. It is among the most important takeaways you will get from this book (from the Preface)." In this context, Alfred A. Marcus divides this invaluable book into fourteen chapters. At the end of each chapter, he summarizes these chapters as following: 1. Persistent Winning and Losing – Achieving sustained competitive advantage is not easy. You cannot dismiss any element. A sweet spot, agility, discipline, and focus are essential. Although managers might able to identify future opportunities, few have the agility to move into them, the discipline to protect them, and the focus to take full advantage of them… 2. Companies That Hit and Missed the Mark – This chapter has shown that firms that are big winners and firms that are big losers are hard to find. Being a big winner is harder than being a big loser. Some industries have no firms that are big winners or big losers. Firms that are big winners are concentrated in large industries; in large industries, there is more open space for finding a sweep spot. Big winners are smaller than big losers. Small firms are more agile than large firms. Their smallness makes it easier for them to escape detection. They are more likely to avoid competitive retaliation. Big winners and big losers are in industries with higher market returns. The potential profits are greater. There is more risk and more opportunity… 3. Companies That Keep Winning – This chapter has described the nine big winners that are the subject of further analysis in this book. Several points stand out. The nine winning companies succeeded despite being in small industries that did not have good return

Dr. Marcus has developed a most interesting way of looking at pairs of companies that are nominally in the same industry but where one of the pair has been a Big Winner and another a Big Loser. He does not look at the spectacular successes like Microsoft, but industries in mundane industries like food, retail, and toys. From this analysis he was able to identify four key points where the winners consistently did well and the losers did poorly. These points were: Find a spot, a niche if you will in the marketplace. Be agile enough to find and move into the spot you found. Have the discipline to concentrate your resources where they can do best. Identify your core strengths and play to them. After identifying these core points he had a second series of companies analyzed in terms of these four points. The second research confirmed his findings. I'm not so sure that companies are willing to recognize their own failures in regard to these issues. But as a way to look at companies from an investment point of view this might be a good way to analyze investment opportunities.

Reader-friendly Big Winners and Big Losers is a quick read, and it offers many interesting twists on common problems with corporations. This is one of those rare books that presents important research findings, and then explains in a clear, concise and compelling manner how to take that learning and directly apply it to make a company a winner! This is one of those rare books that business executives will read and keep handy for reference. That is all I will write about the book. I could write on and on about how good this book is. Read it. It will change the way you think about business.