Risk & Business Magazine Lovitt & Touché Fall 2015 | Page 9

Competitive Advantage
Juggling Six Balls

BY: VERNE HARNISH AND ANDY BUYTING

F

our times the revenue growth, twelve
times the stock performance, and
over 700 times the profit growth over an
eleven year period.
What competitive advantage led to
this huge margin in performance of
one group of companies over another
in similar industries? In a landmark
study of over 200 firms by Harvard
professors John Kotter and James
Heskett, it was found that companies
which equally focus on three key
stakeholders (customers, employees,
and shareholders) dramatically
outperform companies which
emphasize one over the others.

competitive disadvantage over those
firms that see and treat all three key
relationships as equally important.
People/Relationships
This employee, customer, and
shareholder triumvirate is what I refer
to as the “people” or “relationship”
side of the business where the main
focus is on keeping all three of
these stakeholder groups happy.

These three fundamental relationships
also determine the cash flow of the
business. Simply put, the employee
group represents all those individuals
and organizations you “employ” and pay,
including suppliers, contract workers,
government officials (OK, maybe not

“... companies which equally focus on
three key stakeholders (customers,
employees, and shareholders)
dramatically outperform companies
which emphasize one over the others.”
This means companies exclaiming that
the customer is #1; or that employees
are the most important asset; or
that the main focus of business is
making money for the shareholders/
owners will be at a significant

RISK & BUSINESS MAGAZINETM FALL 2015

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