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A Look at Three of the Best Wealth Creators

Three of this year’s leading wealth creators are profiled below. All share one underlying reason for their prosperity: synergistic strengths. Their principal strengths reinforce one another, creating a notably more powerful wealth-creation effect, as we’ll see. (These write-ups reflect company events and performance up until June 30, 2015.)

Starbucks

StarbucksCEO Howard Schultz

S&P 500 RANK 13

BACKGROUND
With more than 21,000 coffee shops in about 60 countries, Starbucks is the world’s No. 1 specialty coffee retailer. In addition to hot and cold beverages, food items, roasted beans and coffee accessories, it’s known for providing customers with a welcoming ambiance, comfortable sitting areas, friendly service and free Wi-Fi.

SYNERGISTIC STRENGTHS
• An admired, trusted brand, recognized worldwide.
• A strong value proposition: high-quality custom coffees and teas, in a cafe atmosphere, complete with Wi-Fi and bathrooms for customers.
• A high-potential business model (reflected in the stock price); premium pricing, international opportunities (China, India, etc.); diversified distribution channels, including supermarkets
(packaged coffee, K-Cups), kiosks, hotels and airlines.
• Management with intent: expanding into juices, teas and energy drinks; forming fruitful partnerships; exploiting opportunities, such as the lunch and evening periods; and improving the current customer experience.


3M

3MCEO Inge Thulin

S&P 500 RANK 17

BACKGROUND
3M manufactures products for industry, safety and graphics, electronics, energy, health care and consumers.

SYNERGISTIC STRENGTHS
• 3M’s value proposition: consistently high product performance that’s worth the price premium.
• Brand: In this case, product reputation—it will meet your need, and be “on spec.” Example: 3M’s adhesive products stick, appropriately. This reputation enables a bit of pricing power.
• Business design: 3M has a sound sense of where to play. A good bit of its sales are of consumables, such as industrial sanding disks and components embedded in other manufacturer’s products. Both of these create recurring revenue.
• World-class, centralized R&D that over time has garnered more than 100,000 patents. That R&D results in one-third of sales coming from products less than five years old. Finally, there is R&D’s technology leverage. Its innovations, in abrasives, adhesives, filters and coatings can be pushed out through more than one of the operating businesses above.


Cognex*

CognexCEO Rob Willett

RUSSELL 3000
($100M-$500M) RANK 3

BACKGROUND
Cognex provides machine-vision hardware and software that’s used in manufacturing products and tracking their distribution. It enables direct part mark (DPM) identification that facilitates
accurate assembly and can track individual parts over their life, leading to quality improvements. Its surface inspection systems division, divested on July 7, 2015, provided continuous inspection
of the making of glass, paper, metal and plastic to ensure the absence of defects.

SYNERGISTIC STRENGTHS
• A solid value proposition, that saves customers (a lot of) money and helps them succeed by improving manufacturing productivity.
• Its business is somewhat protected from price competition by its advanced, proprietary technology. It holds 403 patents, with another 330 pending, worldwide. The result? A pre-tax net income (three-year average) of 26.7 percent of sales.
• A culture in which people tend to stay, rather than taking their considerable machine-vision expertise elsewhere.

This article appeared in the November/December 2015 issue of Chief Executive magazine, page 32. To subscribe to Chief Executive magazine, click here.

About Drew Morris

Drew Morris
Drew Morris (drew.morris@greatnumbers.com) is the founder and CEO of Great Numbers! The company helps executives find the various dimensions of the upside in their businesses and mold it into a prosperity design—a blueprint for delivering that upside. He has no stake in any of the companies mentioned.