One of the key drivers of the Challenge Dividend is the presence of a tough, "Core Competitor". For a smaller company, the Core Competitor may be the market share leader who seems to have all the resources. For the share leader, a Core Competitor might be the young, growing start-up that is breaking the rules and inching into its sweet spot. Nearly every company has a single Core Competitor, but few publicly call it out. But those with the courage to do so can send a strong signal to employees and investors.
Over this past weekend I was trapped in the house thanks to cold rainy weather, and while flipping channels landed on a History Channel show called "History's Business". This particular episode featured the story of Cummins. Cummins was founded in 1919 as one of the early innovators in diesel engines, and nearly 90 years later the company is still growing strongly. In 2005 the company enjoyed its most profitable year and nearly reached $10 billion in total revenues, after coming out of a tough global recession.
The highlight in the interview came when Tim Solso, Chairman and CEO of Cummins, was asked which company is his main competitor. I have seen countless similar questions each morning on CNBC and most leaders choose to downplay competition and avoid a direct answer. But Solso stepped up to the plate:
"The main competitor for engines is Caterpillar. We're the last two global companies and we compete in every market...all over the world. Caterpillar is really the company that makes us be better in order to compete with them."
Solso gets it. He understands that a strong Core Competitor is not a curse, but rather a blessing. Further, he is unafraid to publicly name and give kudos to Caterpillar. This message will reverberate throughout the halls of Cummins, keeping the employees hungry and focused. They know they have a long way to go to beat Caterpillar, a company 4 times its size. But they can be confident that the challenge itself will make their products and work better.
I love to see two strong competitors going head-to-head in global markets. It ensures that the pressure to win will keep them improving, and building better, cleaner, more fuel-efficient engines for the world's consumers.
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