What It Takes to Build a Best-In-Class Company — 3 Essential Elements The journey to excellence is not a matter of chance but a deliberate pursuit to shape the future and raise the bar for all who follow.

More than 5 million businesses were created in the U.S. in 2022. What makes the true industry giants stand out in a world of fierce competition? What separates an average company from a top-tier organization that's successful and pivotal in shaping the future?

Drawing upon 20-plus years as an entrepreneur, during which I've witnessed numerous businesses rise and fall, I've gathered insights into critical factors that differentiate outstanding enterprises from the rest.

Let's dig into the essential elements that elevate a company to best-in-class status, exploring how ethical conduct, innovation and social responsibility are admirable goals and vital drivers of success.

Related: How to Take Advantage of Your Underdog Status and Conquer Industry Giants

Ethical practices: A foundation of excellence

When we talk about ethical conduct in business, we're not just checking boxes to comply with laws and regulations. We are establishing a compass that guides our companies' actions, shapes culture and dictates how we interact with stakeholders. In a time when trust can shatter like glass and reputation is everything, integrity is the foundation upon which best-in-class businesses are built.

In my enterprises, I've learned that cultivating a culture that values doing the right thing, even when it's tough, is critical. This means creating an environment where your team feels empowered to make ethical decisions, with you leading by example. Weaving ethics into your company's DNA increases credibility, fosters trust and boosts profitability.

And here's the magic: When customers and clients trust your company, they become loyal advocates, bolstering your reputation and driving sustainable growth through word-of-mouth referrals. Ethical practices also attract socially conscious investors, further boosting your company's financial health.

To establish and strengthen ethical practices:

• Create ethics and values statements as a team and share them internally and externally.
• Incorporate your ethics and values into your brand messaging, recruiting, and training materials.
• Embody these in your conduct as a leader and organization.

Related: More Than Just A Moral Compass: The Power Of Ethical Business Practices

Pioneering business practices

Innovation isn't confined to new technology and cutting-edge software. Best-in-class companies view innovation as a continuous pursuit of creative solutions to problems, whether in your products, services, how you treat team members or the processes that drive your business.

Innovation isn't just a buzzword; it's a significant driver of profitability. A recent McKinsey & Company study found that companies embracing innovation enjoy a substantial performance edge, outperforming their peers by a staggering 2.4 times in economic profit.

Nurturing innovation doesn't only mean hosting grand brainstorming sessions; it involves having a company culture where every team member feels empowered to contribute ideas regardless of their title.

It centers on embracing diverse voices and perspectives, encouraging experimentation, and seeing failure as a stepping stone to success. Best-in-class companies are pioneers who establish themselves as thought leaders in their industry and push the boundaries of what's possible.

I learned these principles early in my business career through observing successful companies and leaders. After a few years of ideation and experimentation, I found what worked for my leadership style and industry. Today, I'm still trying new things and paying close attention to results and the feedback of my teams, clients and other stakeholders.

Which approaches to innovation will work for you? You'll only discover by jumping in fearlessly and getting creative.

To leverage innovation in your business:

• Look for opportunities to improve efficiency, productivity, and results.
• Include your leadership and frontline teams in planning from the start.
• Talk to clients, investors and other stakeholders to gather unique perspectives and discover new ideas.
• Due your due diligence: Study a variety of strategies and solutions.
• Take risks (measured) — don't be afraid to disrupt the status quo.

Related: How To Use Entrepreneurial Creativity For Innovation

Leading the charge for positive change

To be a best-in-class company, you can't shy away from taking on significant challenges.

This means fully embracing environmental, social, and governance (ESG) principles and addressing critical concerns such as sustainability, reducing your carbon footprint, promoting employee wellbeing and engaging with the community.

It has become evident that stakeholders want, need and deserve a business approach that aligns with their values and addresses pressing global concerns.

A recent study revealed global investors are increasingly focused on ESG issues in their investment strategies. Roughly 89% of investors considered ESG issues in some form as part of their investment approach in 2022, up from 84% in 2021.

Equally vital is the commitment to diversity, equity and inclusion (DEI). Companies that prioritize diversity and inclusion not only contribute to a more equitable society but also reap the rewards of being able to tap into a variety of perspectives and ideas.

When you demonstrate an unwavering commitment to positive change, you enhance employee engagement and elevate your brand's reputation, resonating with socially conscious consumers and investors.

To become a more conscientious organization:

• Listen to your stakeholders and the public to learn what's most important to them.
• Research more into what comprises ESG and DEI initiatives.
• Hire professionals or retain consultants with relevant expertise.
• As with ethics, share these values across your organization and let them guide your actions.

Related: Why ESG-Conscious Companies are Resilient Companies

Standing the test of time

Success goes beyond the bottom line; it hinges on a relentless pursuit of excellence. Best-in-class companies understand this truth.

They thrive by integrating ethics into their DNA, prioritizing innovation, and leading positive change by adopting ESG and DEI initiatives.

Through these pillars, they enhance profitability, but more importantly, create a lasting positive impact that solidifies their best-in-class status, setting a high standard for all who follow.