Introduction to the Top, Middle and Bottom Thirds

A lot of people and groups of people do formal comparisons of one type or another.  You see from time to time the results of "studies" that have been done comparing American cities or states on various criteria to determine "the best place to live" or "where you have the best chance of finding a good high-tech job."  Which hospitals are "the best" at providing health care.  Which airports and airlines provide "the best service and on-time performance."  On and on it goes.  Let's face it.  We live in a competitive world.


Most of these studies are presented as simple rankings that show which city or airline was number one, which one was number two and so on.  However, in many studies involving such things as comparisons of similar technologies and comparisons of business results within an industry or between industries the results are not presented in number one and number two fashion.  Individual companies may be told how they ranked as part of the process, but not all companies know how all the others ranked on an individual basis.  It's part of the confidentiality of such projects.


So if they don't do number one and number two for the world to see, how do they do it?  The participating technologies or companies or whomever it may be are divided into groups.  Many studies divide the participants into "quartiles" (top 25%, etc.) while others use other metrics.  My personal experience is with regular reports that divided participating companies into thirds (Top Third, Middle Third and Bottom Third).  It allows more participants to be in the top group, and there is less work to do when comparing the various groups.


It's important, whenever possible, for individual companies to compare themselves ("benchmark") to others in their industry in standardized comparisons.  Why is it important?  Because individual companies need to know where they rank and why.  Changes made on any other data is guesswork.  No doubt that certain talented individuals with a lot of years of experience are able to "see and feel" how an industry in changing, and do pretty well.  Also, individual companies with multiple locations are able to rank those locations on various metrics, and those comparisons are valid.  However, even though those companies can compare locations, they may be using flawed strategies in the entire company if they don't know the industry.


This is why you always hear about companies that don't make it.  They sell out or merge or just quit the business.  It happens because no two companies in an industry make the exact same bottom line profit or operating profit.  A company needs to do all it can to be in the Top Third.  Top Third companies make money 90-95% of the time.  Middle Third companies pretty much break even most of the time, and Bottom Third companies lose money most of the time.  This is the reason (in a free enterprise, capitalistic system) that there is consolidation ("fewer and larger") which is exactly why we, as a world, are now dominated by global, multinational corporations.


On Wall Street, "Mergers and Acquisitions" is considered to be an activity that needs to be dynamic.  People who work in "M&A" get upset when there isn't much action, because it usually means that very few companies are making enough money to buy out others which is a sign of a weak economy.


Each individual company needs to do all it can to be in the Top Third.  It means having "the right mix", and it has to be done within the constraints of such things as the neighborhood or the community (for a labor force), the location of the clients and how the demands on the clients are changing.  The "right mix" or "best mix" for one company will not be the same as for others.  It needs to be constantly monitored and changed when necessary.


Okay, so now you know about benchmarking.  We will visit this subject often because we need our Christian small businesses to be profitable so they will be able to continue serving and helping others and being good examples of people who love God and serve Him.  We need them.  We need to support them.  That leaves the question, "Who are they?"  If you know a Christian small business owner or manager, please let me know.  We want to help them.  Thank you!


thetan3n1project@gmail.com


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