Last week, I posted my bi-weekly blog for The NYReport entitled What Do Meg Whitman And United Airlines Have In Common? The blog focused on the importance of being average in certain areas of your business in order to excel in other areas. The inspiration was recently hearing Meg Whitman, ex CEO of eBay, speak at a New York event about her candidacy to be governor of California. She mentioned that at a recent campaign stop, a voter asked what she planned to do about a particular issue if elected. “Nothing,” she responded. “I will focus on three things and only three things: jobs, spending, and education. Anybody who has worked with me knows that I am a big proponent of purposefully deciding what and what not to do based on the future that you have declared for your business.
A common thread for CEOs that have created significant value for their business is making a fundamental decision on the three areas that requires their attention and focus in order to generate long-term company value.
In keeping with the theme, here are three great examples of Order of Magnitude CEOs and their Three Keys that led to value creation ranging from billions to millions:
a. Obsess Over Customers (the creation of a marketplace where customers can now purchase virtually any product directly from Amazon OR a competitor that has a better price shows this obsession)
b. Invent (the Kindle which has sold millions of units is just one recent and high profile example)
c. Think Long-Term (free shipping for orders over $25 even though it was costly in its startup phase)
It is amazing how far Amazon has come, starting off as an online bookstore in the mid 90s to where they are now, with revenue of close to $10 billion in the 4th quarter of last year.
2. Herb Kelleher/Gary Kelly (Southwest Airlines)
a. Low Cost (Southwest still only flies one type of plane to keep costs low and in their early days Southwest turned around planes in 10 minutes which enabled them to lease fewer planes)
b. Customer Service (Southwest continually shares and celebrates great stories about customer service with their employees)
c. Focus on People (did you know that Southwest has the highest paid employees in the airline industry except at the executive levels?)
It also turns out that Southwest is the only airline to be profitable every single year since its inception in 1972 and is the only airline to make the top 10 list of the World’s Most Admired Companies.
3. Bryan Janeczko (Nu-Kitchen, sold to Nutrisystem)
a. Focus (within meal delivery service, Nu-Kitchen focused solely on weight loss)
b. Scalable Production Environment (Nu-Kitchen scaled meal preparation and meal delivery by outsourcing both components because doing it themselves would not help value creation)
c. Direct Marketing (Nu-Kitchen focused on word of mouth in Manhattan, Online Search, and “Buzz” through Public Relations)
The focus on these Three Keys enabled Nu-Kitchen to have an Order of Magnitude exit in 2008 just five years after its founding.
Selecting the Three Keys has been used by Founders & CEOs that have built firms worth millions (Nu-Kitchen) to billions (Amazon, Southwest) and every time I meet another Order of Magnitude CEO, they know their Three Keys.
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