Research confirms the validity of the 12 Golden Rules of Business Success

 

The Ruthven Institute Hub helps shape business school teaching – to improve corporate Australia’s profitability and performance.

Research confirms the validity of the 12 Golden Rules of Business Success 

Melbourne, 25 October 2021 – Following a systematic review of the factors contributing to world’s best practice profitability and success, the research team at the Ruthven Institute Hub has released findings which will be used to shape the curricula of university business schools and inform strategic decision-making by corporate leaders.

A strategic alliance between the Ruthven Institute (RI) and The University of Melbourne, created the RI Hub, because of shared concerns over the ongoing performance challenges for corporate Australia, and a joint belief that only fresh and innovative approaches to business and practice and teaching will bring about meaningful change for the next generation of business leaders.

RI analysed corporate data spanning 45 years to recommend better business strategies to help deliver world-leading best practice and performance, while the RI Hub team’s work involved surveying more than five decades of scholarships from the fields of strategic management, finance, economics and accounting.

Ruthven Institute’s Chairman and Founder Phil Ruthven said “The profitability of Australian businesses hasn’t improved in five decades, with just one in 10 of Australia’s 2,000 largest corporations achieving world’s best practice returns of 22% on shareholder funds after tax over any three to five-year period, compared with over one in four US corporations. The standard in the Industrial Age up to the mid-1960s had been 11%.  In fact, our largest corporations struggle to achieve an average 8% return.”

Led by Associate Professor Andre Sammartino and Dr Sabutay Fatullayev of the University of Melbourne’s Department of Management & Marketing, the team conducted exhaustive and intensive research which confirmed that the Ruthven Institute’s 12 Golden Rules of Business Success are broadly based on ‘sound theoretical grounding and reflect the consensus thinking on these strategic choices and organisational practices, with hundreds of empirical studies largely supporting the Golden Rules’.

“For example, we repeatedly identified the performance benefits of firms staying focused on a single industry rather than diversifying their attention. Another consistent finding was the performance gains from outsourcing non-core activities. We also found that several of Ruthven Institute’s Golden Rules, such as the advice to carefully target specific market share sizes, were found to be more finely tuned than current studies suggest,” said Associate Professor Sammartino, in the Department of Management & Marketing at The University of Melbourne.

The RI Hub was designed to drive up the world’s best practice profitability of Australian businesses, to help promote the value or evidence-based decision-making and leadership, and to inform curricula to train undergraduate and post-graduate business students for the future.

The results will create exciting opportunities for RI Hub researchers to explore by tapping into the Institute’s comprehensive data on Australian firms, as well as providing Australian business students with new local case studies highlighting real-life examples where companies have grappled with business decisions relevant to the application of the 12 Golden Rules of Business Success.

“For too long our students have been exposed to evidence and examples that primarily reflect the US experience. It has been exciting for them to see core strategy issues and performance considerations from a setting much closer to home. It has really got them thinking about what firms could be doing better. We’re delighted to be doing work that can have such a positive short- and long-term effect on the profitability of Australian firms, that cannot continue to hope to survive in an increasingly competitive region without changing practices,” said Associate Professor Sammartino.

The RI Hub is translating these findings into educational content and teaching materials for both undergraduate and post-graduate business students to help improve students’ capabilities in evidence-based decision making and to explore the complex relationships between business decisions and the Ruthven Institute’s 12 Golden Rules of Business Success.

“Australian businesses continue to make fundamental strategic errors that hurt the bottom line, and impact our nation’s productivity and economic wellbeing,” said Phil Ruthven. “We’re sharing the RI Hub’s investigations in a series of Research Notes and Practice Notes translating key concepts and findings, as well as developing insightful training and practical tools for our corporate clients to boost strategic thinking, help evidence-based decision making become the norm, and improve the expertise of local C-Suites.”

By rigorously interrogating Ruthven Institute’s 12 Golden Rules of Business Success, the RI Hub’s findings will ultimately help Australian businesses achieve world’s best practice profitability.

Please find a link to the RI Hub here.

Images of Phil Ruthven and Associate Professor Andre Sammartino can be found here.

 The Ruthven Institute’s 12 Golden Rules of Business Success

Based on 45 years of analysis of Australia’s top 1000 companies, the Ruthven Institute has distilled the essence of a winning business strategy to develop its 12 Golden rules of Business Success.

 

  1. Focus on one business at a time
  2. Know your industry and its life cycle phase
  3. Emulate world’s best practice
  4. Be forever innovative (unique IP)
  5. Be the master of your own destiny (as a major, niche, ultra-niche or boutique)
  6. Plan from the outside in (not the inside out)
  7. Outsource non-core activities (to reduce complexity)
  8. Don’t own hard assets (a passive asset and returns too low)
  9. Manage your finances wisely
  10. Develop strategic alliances (particularly overseas)
  11. Lead from the inside out (with competent C-Suite executives)
  12. Develop a unique organisational culture

About the Ruthven Institute

The Ruthven Institute was founded in 2017 to help Australian businesses achieve world’s best practice performance and profitability while respecting their social and environmental obligations. The Institute encourages an informed approach to business and investment decision-making by superfunds and fund managers via its comprehensive strategic and financial assessment of Australian companies’ medium-to long-term performance.

The Institute’s product offering is centred on the 12 Golden Rules of Business Success – founder Phil Ruthven’s recommended guidelines (as validated by the University of Melbourne) for maximising growth, productivity, and profitability. For more information, visit ruthven.institute.

About The University of Melbourne

The University of Melbourne is Australia’s largest research-intensive university. Consistently ranked among the world’s top 40, it attracts the best and brightest from around the world. As a globally engaged university renowned for quality teaching and high-impact research, the University of Melbourne is committed to sharing advances that contribute to society and have a broad ripple effect.

For more information or to arrange an interview:

Anna Caswell

Anne Wild & Associates – Media Representatives for Ruthven Institute

Telephone: +61 2 9440 0414

Mobile: 0402 336 082

Email: acaswell@awassociates.com.au

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