What the best enterprises are doing to consistently increase ROSF

12 of the usual suspects!  According to Phil Ruthven, Chairman of IBISWorld, as reported in BRW April 8-14, 2010, p17.

[In surveys by IBISWorld over the past decade, it has been found that about 1/4th of the nation's largest enterprises match, or do better than, world-best practice in profitability over a 5 year period.  1/6th of them exceed an ROSF (Return On Shareholder Funds) of 25% pa, and almost 1/10th do better than 8 times the bond rate (which averages approximately 6% pa over 5 year periods, indicating almost 50% ROSF pa.

Interestingly, the successful firms that do manage to achieve world-best practice averages are less frenetic and less complicated than those that don't.

So what do they do that's different?  It seems they do the things we all expect, as below, in rank order.  They ...

1. stick to one business at a time and do not diversify
2. are forever innovative, valuing the business' IP
3. aim to dominate some segment(s) of their market
4. outsource non-core activities to enable growth
5. don't own 'hard' assets
6. have good and professional financial management
7. plan from the outside in, not the inside out
8. anticipate any new industry lifecycle changes
9. follow world-best practice for their own type of business
10. develop strategy alliances
11. develop unique organisational cultures
12. value leadership first and management second

Being involved in just one industry at a time is still one of the most important factors, made more relevant by the emerging borderless world of commerce.  Being constantly innovative is a close second; and picking one's territory (market segment) in which to stand out or dominate is also critical.

Yet all of these elements are important in achieving world-best practice returns ... consistently.

And one that will never drop off the list is leadership; not forgetting how much a leader needs in the way of good management as well.]

Are all of these 12 in your sights as part of your business planning for 2010/2011 and beyond?