Getting in the Way of Growth

I was reading the Wall Street Journal recently and I stumbled across a statistic that I thought was interesting if not disconcerting. A recent survey they conducted indicated that more than 100 Fortune 500 CEOs confess that they are, at best, only able to realize 50% of their growth potential in the firms they lead.

Now I began think, if it’s that hard for the country’s top CEOs to achieve growth how must it be for the rest of us?Certainly this is quite a performance gap. Why is it so difficult to overcome the barriers of growth? It seems these same CEOs are successful in bringing about efficiencies, reducing costs, reengineering business processes. Shouldn’t these things translate into corporate growth?I say NO, absolutely not! In fact these are the very things that may PREVENT consistent, long-term growth of any organization large or small. In fact evidence of this is visible wherever we look.Consider the global leaders of the Dow Jones Industrial Average. There is no economic indicator that is more synonymous with growth in this country than the DOW.Let’s look at four of the most rock solid companies operating in completely different industries all of whom are flagship components of the DOW: Proctor & Gamble, IBM, Coca-Cola and Disney.The giants of growth and success, right? WRONG.What do you see when you look at these leaders? STAGNATION!Hey I don’t mind telling you I have stock in all three of these companies and over the years I’ve done OK, but I’m talking about GROWTH.Proctor & Gamble considered to be the world’ leader in product marketing and brand management grew at a rate of only 2.4% between 1997 and 2002. This is far slower than the growth of our economy. IBM engineered the most successful turnaround of any market leader and prospered during the tech boom and bust.Yet they grew less than P&G’s 2.4% rate for the same period. Despite the fact Coke is one of the largest equity holdings of the legendary Warren Buffett, they grew at a rate of only 3.3% for the same period. And finally Walt would roll over in his grave if he knew that his Disney had grown at a rate of only 0.7% for the same period.Some may say well these are old companies Mark institutions really. Or they’re past their heyday or it’s been an uncertain economic environment as of late or any other of a host of excuses. But I believe there are some very good reasons that the powerhouses of our economy are slowing and unable to get back into a growth mode. This is relevant to small business because most small businesses pattern their growth strategy after the big boys and this is often why they just don’t grow!You see most of these larger concerns have tremendous momentum, top-of-the-mind awareness and consumer equity. Yet these organizations have sustained their market position without growing by alternately downsizing/cutting costs and latching onto some new technological fad and riding it out for a time. This is not consistent, sustainable but rather growth in short bursts.Graeme Deans and Fritz Kroeger in their book, “Stretch! – How Great Companies Grow in Good and Bad Times,” talk about the secret to long-term, sustainable growth. They say, there is no secret it is the result of implementing a growth strategy in four areas of the business: operations, organization, strategy and stretch.1. Operations – This represents getting your operation in order, targeting dramatic improvements in internal processes such as product development, sourcing, quality, delivery, customer service, sales and pricing.2. Organization – This represents finding the optimal organizational structure, culture issues, compensation, rewards and incentives, value chain reconfiguration and business unit accountability.3. Strategy – Take a fresh, holistic look at the company’s strategy and be willing to make wholesale changes. This may involve a higher risk tolerance.4. Stretch – This refers to expanding the company’s frontiers culturally, economically, geographically and strategically. Often times this involves breaking down old barriers and paradigms of doing business. This might include perhaps addressing new markets, customer bases, product categories.All of these elements can be applied to a small business as well as a large. Great companies find a way to grow regardless of the economy. They focus on innovation and calculable risk. Don’t let the economy or trends in your industry get in the way of your companies growth. Put together your own Stretch plan and start growing. Because remember if you’re not growing you’re actually shrinking.I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email Deo

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