The Global Rule of Three

**Finalist for the 2022 Leonard L. Berry Marketing Book Award from the American Marketing Association, which recognizes the top marketing books annually**

In our increasingly digital, mobile, and global world, the existing theories of business and economics have lost much of their appeal with the phenomenal rise of Chindia, the reality of Brexit, the turmoil caused by the Covid-19 pandemic, and the seismic shifting of the global center of gravity from west to east. In the area of innovation, the traditional thinking that a developed country, often the US, will come up with the next major innovation, launch at home first, and then take it to other markets does not ring true anymore. Similarly, the world where conglomerates go bargain-hunting for acquisitions in emerging markets has been turned upside-down.

This book reveals and illustrates the Global Rule of Three phenomenon, which stipulates that in competitive markets only three companies (which the authors call "generalists") can dominate the market. All other players in the market are specialists. Further, whereas the financial performance of generalists improves as market share increases, specialist companies see a decrease in financial performance as their market share increases, as the latter are margin-driven companies. This theory powerfully captures the evolution of global markets and what executives must do to succeed. It is based on empirical analyses of hundreds of markets and industries in the US and globally. Competitive markets evolve in a predictable fashion across industries and geographies, where every industry goes through a similar lifecycle from beginning to end (or revitalization). From local to regional to national markets, the last stop in the evolution of markets is going global. The pattern is so consistent that it represents a distinct and natural market structure at every level.  The authors offer strategies that generalists and specialist should follow to stay competitive as well as twelve expansion strategies for global companies from emerging markets.

 

This book chronicles this global evolution and provides impactfulmanagerial implications for executives and students of marketing and corporate strategy alike.
 

“Coming out of the current COVID crisis, many expect further industry consolidation across sectors. The Global Rule of Three lifts the curtain on what this future could look like. The book is packed with great insights into the dynamic forces shaping most industries: above all, that those who know how to truly serve will be the long term winners.”

—Paul Polman, Co-Founder & Chair, IMAGINE and former CEO, Unilever

“Congratulations for writing a seminal book on how industries evolve, grow, plateau and revitalize over time! Simultaneous coexistence of both the volume driven full line competitors (oligopoly) and the margin driven niche players (monopolistic competitors) is unique to competitive positioning Globally.”

— Philip Kotler, S.C. Johnson & Son Distinguished Professor of International Marketing (emeritus),

Kellogg School of Management, Northwestern University, USA

“The Global Rule of Three is an eye opener! It provides ablue print on how to compete globally especially against growing competition from Multinationals from the Emerging Markets such as China and India. Buy it, you will like it!”

—Ram Charan, Best Selling Author and Advisor to Global Enterprises

“The Global Rule of Three offers a plethora of historical as well as contemporary examples to chronicle the evolution of hypercompetition leading up to the current pan-industrial revolution. A must read for every manager interested in the spiraling competition from multinationals of emerging markets such as China and India.”

—Richard D’Aveni, Bakala Professor of Strategy, Tuck School of Business, Dartmouth College, USA

“The merger of T-Mobile U.S.A. and Sprint is a great example of the Rule of Three. The next battleground in global wireless networks will be won by those companies that implement strategies to take advantage of the Global Rule of Three. This is just the tip of the iceberg and will befollowed by shakeout of streaming services. The Global Rule of Three will provide leaders an invaluable guide on how to navigate the turbulent waters ahead.”

—Ralph de la Vega, Former Vice-Chairman, AT&T and Founder of the De La Vega Group, USA

“The Global Rule of Three is the international extension of Jag Sheth's original insights into the strategic path of industries from telecom and media, to finance, manufacturing, services, and consumer products. He offers more than compelling theory, but also proven realities. This book reveals the ongoing competitive strategic priorities large global enterprises use to become number one or two competitors globally through their leveraging large domestic market advantages for companies from nations such as China and India. There is no book like this with such clear vision through the fog of competitive battle and no top leader who can risk not gaining this insight.”
—Jeffrey A. Sonnenfeld, Senior Associate Dean for Leadership Studies and Lester Crown Professor of Leadership Practice, Yale School of Management, Yale University, USA

“A compelling and deep exploration of the causes of the consolidation of global markets, and the consequences of being governed by the ‘Rule of Three.’ The authors pose provocative questions that strategists must anticipate and address to avoid driving their company into ‘The Ditch.’

—George S. Day, Geoffrey T. Boisi Professor Emeritus at the Wharton School of the University of Pennsylvania, USA

“Since the rule of three and four was first proposed by Henderson in 1976 to explain industry structure, globalization and technology have reshaped competition. The Global Rule Three is a must read for any manager interested in whether and how industry ecology has shifted.”
—Martin Reeves, Chairman of the BCG Henderson Institute and Managing Director and Senior Partner, Boston Consulting Group, USA

“Afact of economic life has been the growth of oligopolies within countries around the world, as well as in sectors dominated by multinational companies. Greater concentration has been observed in industries over the past 40 years. While some may quibble with the provocative focus of this book on the number ‘three’ (as opposed to say ‘two’ or ‘four’) the authors provide many insights on the reorganization of industries which will be useful to strategists and consultants, as well as sparking testable hypotheses among scholars who research industrial concentration and M&A. The authors have been especially bold in predicting, by name, the three companies in several sectors which they say will dominate in the year 2030.”

—Farok J. Contractor, President-Elect, Academy of International Business and Distinguished Professor, Rutgers Business School, USA

Jagdish N. Sheth is Charles H. Kellstadt Professor of Marketing at the Goizueta School of Business at Emory University, USA. 


Can Uslay is Associate Professor of Marketing, Founding Co-Director of the Center for Market Advantage, and Vice Dean for Academic Programs and Innovations at Rutgers Business School, USA. 



Raj Sisodia is F.W. Olin Distinguished Professor of Global Business and Whole Foods Market Research Scholar in Conscious Capitalism at Babson College, USA.