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Essential factual questions

Who are the 20 per cent of customers whose business delivers 80
per cent of our profits?

Who are the customers who are served by our competition who
have a need profile most similar to our best?

What do those customers want from their suppliers that we can
deliver better than our competitors?

Which customers cause us the highest costs as we try to serve
them?

How much profit do they deliver?

Mrs Thatcher may have been wrong

Business shows that for some risk-takers bucking the market may be fun,
wildly exciting and highly profitable. Most forward-looking firms, recog-
nizing the complexity and volatility of the market and the speed with
which the business and economic cycle spin, prefer to manage the market.
That can be fun too, especially if you manage the market by making your
competitors dance to your tune.

Market dominance, creating the rules by which your competition has to
play, is probably the most fun that you can have in business as well as being
the only logical way to approach the market. When working in the USA I
found that American corporations would leap at the chance to dominate
their markets, force the competition to spend their resources playing
catch-up, lower competitors’ profits and eventually force them to lose
money and withdraw. Or as they might express: “kick ass”. I had great fun
in this area too. By the very nature of things competition never stands still,
particularly if you are coming from behind. If you start off by being smaller
and weaker you are wise to give no inkling to the currently big and pow-
erful of what you are up to, so I had all the extra fun of being involved in a
“cloak and dagger” activity. But make no mistake about it, in Jack Welch’s
words “if you don’t control your destiny someone else will”. In business
terms that means that either you create the rules for your industry or
someone else will and “me too” rarely leads to worthwhile market share.

The maxim “first know yourself” makes absolute sense so the first set
of questions that you may wish to ask are directed at you and your peers.

n Is there consensus at board level that we share a burning
determination to become and remain the best of the best? (Unless
the answer to this question is an unequivocal “yes”, you can forget
the rest. Someone, somewhere out there is going to steal your
business from you.)

140 Key management questions