LEARN TO ANALYZE DETAILS Uncommon Denominators.(LEADERS & SUCCESS)(IBD'S 10 SECRETS TO SUCCESS)

Byline: Robin Grugal

6 There's a certain amount of lift that comes from being in a highflying industry. But it's certainly not a prerequisite for greatness. Some of the best companies in history have produced spectacular returns in unspectacular industries.

Take Wells Fargo. It beat the overall market by four times during a period when the banking industry ranked in the bottom quartile of industries in total returns. And both Pitney-Bowes and Nucor beat the market by well over five times when their industries ranked in the bottom 5%.

What's their secret? A deep understanding of what drives their economic engines, says Jim Collins, a prominent management researcher and author of "Good to Great."

Profit Ratio

The management of each of these elite companies, after careful analysis, honed in on a single "economic denominator." That is, they picked up on the one ratio (profit per x) that if increased over time would have the greatest and most sustainable impact on their company's results. In turn, they built their businesses around this ratio.

"The denominator can be quite subtle, sometimes even unobvious," said Collins. "The key is to use the question of the denominator to gain understanding and insight into your economic model."