Trade and enterprise
Chilean companies setting the standard for sustainable growth
The new book ‘Repeatability: Build Enduring Businesses for a World of Constant Change’ by economist Chris Zook, uses Chile as an example for new business models.
Thursday, August 16, 2012
The South American economy is spreading, just like the Chilean wine industry. Photo: Iain Watson
Just as Chilean wines are “uncorking” around the globe, so too are Chilean companies, which are providing a business model for the rest of the world.
But don’t just take our word for it - check out Chris Zook’s recent article on repeatable business model practices. Chilean businesses are used to illustrate 4 out of his 5 examples.
Zook is a partner at Bain & Company, a global business consulting firm. His recently published book “Repeatability: Build Enduring Businesses for a World of Constant Change” argues that a few key business elements can lead to a country’s economic growth. And Chilean companies, Zook says, exemplify these growth elements.
Business model frameworks and Chilean companies
At Bain & Company, Zook’s research found that job creation is particularly successful in “sustained value creators” - companies that are growing revenues and profits by at least 5.5 percent in real terms, and earning their cost of capital.
While only 10 percent of companies in the world exhibit this quality, the number of sustained value creators in Chile is plentiful, and it’s increasing. Bain & Company's research showed that about 15 percent of Chilean companies fall into this category - well above the global average.
Zook also points to Chilean company Falabella as an excellent example of his book’s focus, “repeatability.” While Falabella is Chile’s most successful large-scale retailer, it can also boast an impressive two decades as a Bain & Company’s sustained value creator business. Only the top 2% of all companies have achieved that level of growth.
Zook’s was especially impressed by Falabella’s systematic approach to customer service.
“What particularly impressed me in talking to the management team was their investment in systems and methods to make sure that serving the customer is always a top priority,” he wrote.
Looking at Chile’s Future
Gross domestic product is on the rise in Chile, the country enjoys high levels of foreign investment, and a myriad of other statistics illustrate Chile’s economic strength in different ways - but Zook emphasizes that the key to a country’s growth is its businesses.
“The healthy growth of countries must ultimately be based on the healthy growth of its businesses - the ultimate creators of jobs,” wrote Zook.
And as Zook’s examples illustrate, Chile’s healthy businesses are paving the way for the Chilean economy’s bright future.