Featured image by f11photo
David Malcolm, San Diego entrepreneur, understands what makes a successful company.
For one thing, he says, a remarkable idea is not the key ingredient in the secret sauce of a successful company. There are deeper levels in what makes a company great and outlast competitors.
For another, good companies establish themselves with foundational building blocks. These foundational blocks create a mission, vision, and quality culture within the organization. Furthermore, there are additional pieces to the puzzle regarding long-term business success.
The Right Leadership Is Essential, Says Malcolm
“Yes, every business needs a strong company culture, mission, and vision. However, the company will fail without the right leadership,” said David Malcolm, a San Diego entrepreneur.
As president of Cal West Apartments, Malcolm has an insightful entrepreneurial perspective gained from his four decades of business experience. It is this depth of experience that qualifies him to share the difference between companies that thrive and those that fail. When reflecting on why some businesses fail while others prosper and leave a legacy, Malcolm says the quality of leadership is the number-one requirement during a company’s development.
“I would rather have a great leader versus a weak leader with strong written vision and mission statements,” said Malcolm. “Company culture starts with the leader regardless of written policies. Employees quickly see through the pretty speeches when they see hypocritical actions by the company’s leadership. Great companies must have all of the above: leadership, culture, mission, and vision.”
A Company’s Mission Plays a Vital Role
Even though leadership is a primary player in business success, a company’s mission plays a vital role. A company’s mission is especially important during significant growth stages, but it is also important in the company’s overall operation. With a mission in mind, leadership can better establish a company’s long-term and short-term goals. Moreover, the mission will generate a sense of purpose throughout the organization and keep everyone on the same page. A company’s mission serves as a grounding anchor not in who a company is or what a company does but in how a company runs.
Even with solid leadership, culture, vision, and mission, however, there are still factors that can lead a company to failure.
For example, according to the Small Business Administration (SBA), 20% of small businesses do not make it past their first year in operation. In addition, only 50% of small businesses succeed for five years of operation. Only 33% make it to ten years or more.
Though a company’s leadership might have the skills, there could be a lack of experience in managing a business or working within a specific sector that leads a company to failure. Financial hurdles and marketing campaigns that miss the mark also jeopardize business success.
Malcolm Strives to Reinvent Cal West Continually
Underestimating the costs of marketing campaigns and operational improvements can lead to financial issues. Establishing budgets for ongoing marketing campaigns through all stages of a company’s growth helps constantly communicate to consumers how an organization adapts to customer needs over time. As Malcolm says, he and his team at Cal West Apartments continually strive to “reinvent” their company. Further, they endeavor to communicate that to their customers.
RELATED ARTICLE: MAJOR CASH FLOW MISTAKES THAT CAN KILL YOUR BUSINESS
“Reed Hastings, the head of Netflix, is a hero of mine,” said Malcolm. “Reed has reinvented Netflix several times, always striving to improve his product and service. If you recall, Netflix started by mailing DVDs to homes, promising never to develop original content. Today, Netflix is a leader in the streaming space and produces some of the best content in the world. Cal West looks nothing like it did just four years ago. We constantly strive to improve our products and service, just like Netflix. And this willingness to change will help keep us ahead of our competition.”
RELATED ARTICLE: WHAT TO LEARN FROM NETFLIX’S MARKETING STRATEGY
What Malcolm is also referring to is a competitive advantage. In this case, competitive advantage comes with adapting company operations to modernization, just as Netflix did and is still doing. A competitive advantage is defined as the characteristics integrated within a company that assist with efforts to keep up with and surpass the competition. Maintaining a competitive advantage is another significant piece of business success.
“Competitive advantage comes in many forms. It could be the product cost, product design, service, convenience, or first to market, to name a few,” Malcolm points out.
Being the Best Gives a Company Competitive Advantage
Harvard Business School professor Michael Porter is considered a pioneer in defining competitive advantage, categorizing the concept into cost advantage and differentiation advantage. Cost advantage focuses on beating the competition with lower price points for the same or similar product or service. Differentiation advantage highlights gains by offering superior products or services at the same price.
“At Cal West Apartments and its twenty-plus related companies, we believe our competitive advantage is not one single thing,” said Malcolm. “We believe we must be the best in service, pricing, appearance, design, technology, and ease of transaction. Someone will always ‘knock you off’ if you only have one advantage. Having the mindset of being best of class in all areas of your company’s operations will help ensure business success.”
A Company’s People Make All the Difference
Being the best of class in all company areas boils down to the people who operate those areas. To this end, maintaining a high-performing team to manage the operation of a company contributes to fostering business prosperity. According to Malcolm, mediating this angle of success for a business begins with hiring. It then continues with retaining employees.
“We constantly have our competition try to ‘steal’ our employees. Keeping an exceptional team is very difficult since opportunity will always come knocking at the door of high-performing employees. Maintaining great employees isn’t necessarily about paying them more than the competition. Employees want to be recognized for their work. They want educational opportunities and opportunities for advancement, to name a few,” said Malcolm.
Malcolm’s experience and findings align with those of other prominent business leaders and workers. The New York Times interviewed over 500 leaders in business who stressed the importance of company leadership supporting a work environment founded on mutual respect and trust across all parties to instill teamwork. A study reported by CNBC shows where most workers’ modern mindset lies, as 56% of employees will opt for a strong workplace culture over higher pay.
Malcolm concluded, “The entire cycle of a company’s success has many moving pieces, but leadership’s actions and approach influence so much for better or worse.”
About David Malcolm
David Malcolm of San Diego is an influential real estate professional, entrepreneur, and community leader with over four decades of work experience. Mr. Malcolm is an esteemed graduate of Harvard Business School’s Presidents Program, a licensed real estate agent and broker, and a Certified Commercial Investment Member (CCIM). David Malcolm has run and advised multiple public and private companies and held several municipal and statewide public offices.
RELATED ARTICLE: HOW THE SUPPLY CHAIN AFFECTS BUSINESS SUCCESS