The soft edge | Rich Karlgaard

Summary of: The soft edge: where great companies find lasting success
By: Rich Karlgaard


Dive into the world of ‘The Soft Edge: Where Great Companies Find Lasting Success’ by Rich Karlgaard and discover the secret ingredient that sets exceptional businesses apart from the rest. This book explores the significance of the ‘soft edge’ – the deeper meaning that a company communicates to its customers and employees. Building upon the foundation of strategy and the hard edge of operational efficiency, the soft edge lies in cultivating trust, smarts, effective teamwork, taste in product design, and the storytelling that defines your brand’s purpose. This summary will guide you through the five pillars that support a company’s soft edge and explain why focusing on these aspects can lead to enduring success in the fast-paced and competitive business world.

The Soft Edge of Successful Businesses

The foundation of great businesses lies in their strategy, which comprises the base of an equilateral triangle. However, businesses need to go beyond just executing a good strategy. The soft edge – encompassing a company’s values, culture, creativity, innovation, and purpose – is what truly sets a business apart. Although hard edge operations can be measured through quantifiable figures, the soft edge cannot. The five pillars that support the soft edge are trust, smarts, teamwork, taste, and story. Businesses that develop and maintain a strong soft edge are the ones that become truly great.

The Power of Trust

Trust is a fundamental aspect of successful businesses. Both external and internal trust are crucial to building a sound reputation. The latest Edelman Trust Barometer shows that trust affects corporate reputation more than the quality of products or services. Companies that prioritize trustworthiness as a core value can reap significant benefits. For instance, Northwestern Mutual has spent years cultivating trust with its customers and is now the largest insurance provider in the US. Similarly, NetApp’s reputation for honesty and openness has earned them a place as one of the most innovative companies to work for. Building trust begins with open and honest communication with employees and customers. This is essential to create a culture of trust that leads to committed staff and satisfied customers.

The Secret to Being a Smart Business

Smart businesses are defined by hard work and the constant quest for improvement. Being ready to change, learn from mistakes, and seek inspiration from others is what makes a company smart. David Chang, a famous chef, and the owner of the Momofuku restaurant group, implements continuous improvement and acknowledgment of mistakes in his restaurants, allowing his staff to try things out and learn along the way. The Mayo Clinic, a healthcare giant, uses lateral thinking to train their employees, sending them to train at two of the world’s largest companies in the hospitality industry. By treating their patients as customers and learning skills not typically taught in the healthcare industry, they provide superior care. To be a smart business, think outside the box, learn from competitors, and remember that having smarts is an ongoing process.

Small Teams for Big Success

The key to a successful business is not just intelligence but also small, efficient teams. Humans naturally gravitate towards working in small groups and businesses should follow suit. Teams of 8 to 12 people ensure effective communication and efficiency. Porsche and SAP saw significant improvements after implementing this strategy. Furthermore, the most effective teams are made up of individuals with diverse backgrounds and skills. Nest Labs, for example, ensures that engineers, marketers, and designers all work together to bring different perspectives to product development. Ultimately, businesses should create teams that reflect the diversity of their customers. By doing so, they can create products that appeal to a wide range of people.

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