In a global beauty contest for companies, the winner is . . . Apple Computer.
Or at least Apple is the most admired company in the world, according to Fortune
magazine’s annual survey. The others in the global top ten are Google, Berkshire Hathaway,
Southwest Airlines, Procter & Gamble, Coca-Cola, Amazon.com, FedEx, Microsoft, and
McDonald’s. What do these companies have that separates them from the rest of the pack?
According to a survey of executives, directors, and security analysts, these
companies have very high average scores across nine attributes:
(1) innovative-ness,
(2) quality of management,
(3) long-term investment value,
(4) social responsibility,
(5) employee talent,
(6) quality of products and services,
(7) finan-cial soundness,
(8) use of corporate assets, and
(9) effectiveness in doing business globally.
After culling weaker companies, the final rankings are then determined
by over 3,700 experts from a wide variety of industries.
What do these companies have in common? First, they have an incredible
focus on using technology to understand their customers, reduce costs, reduce
inventory, and speed up product delivery. Second, they continually innovate and
invest in ways to differentiate their products. Some are known for game-changing
products, such as Apple’s iPad. Others continually introduce small improvements,
such as Southwest Airlines’s streamlined boarding procedures.
In addition to their acumen with technology and customers, they are also on
the leading edge when it comes to training employees and providing a workplace
in which people can thrive.
Prior to the global economic crisis, these companies maintained reasonable
debt levels and avoided overpaying for acquisitions. This allowed them to weather
the crisis and position themselves for stronger subsequent performance than many
of their competitors.
In a nutshell, these companies reduce costs by having innovative production pro-
cesses, they create value for customers by providing high-quality products and services,
and they create value for employees by training and fostering an environment that
allows employees to utilize all of their skills and talents. As you will see throughout this
book, the resulting cash flow and superior return on capital also create value for investors.
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