Top Three Reasons Companys Fail to Thrive

In the last ten years I have had the privilege of helping mature companies whose sales had flat lined produce “breakthrough” growth–often doubling the size of the business. The solution in each case matched the needs of the company–definitely not “one size fits all”. But this article isn’t about the solutions–it is about what held these companies that obviously had growth potential from achieving it.

Let’s start with what didn’t hold them back. Each organization had talented executives that cared deeply about their businesses. The leadership had deep experience to draw on as they made decisions about the company’s future. There were also many talented and dedicated staff members running the various functions of the business and the day-to-day operations. The strength of the respective industries varied but all were in established industries.

So what is the problem? The fundamental issue for many companies is that their strengths –committed and good talent combined with a well established business–are what hold them back. Let’s look at three different examples.

1. Issue One: Executives believe they can develop the growth plan themselves. Most organization leaders of company’s under $1B are expected to work “in” the business, not just “on” the business. They roll up their shirt sleeves and pitch in where needed. They understand the business at the operational level. It is what they do every day which breeds confidence that no one knows what the business needs more than they do. Who can argue that they know the business better than anyone? Yet, being mired in the details is the worst place to be when creating strategy. It breeds a plan that works within current structures and capabilities; it doesn’t challenge the status quo. All too often you will here “we can’t do that because” or “we tried that once and it didn’t work”. In this situation, the executive team doesn’t have the skill set or training to challenge what they do every day, to orchestrate a well defined new reality, or even recognize that they aren’t taking advantages of market opportunities because they simply don’t see them. They are too close to the situation, too narrow in their thinking and too predictable in the outcome. As an example, I worked with one company to develop a game plan and then they hired a new COO who essentially chucked the plan (he wasn’t part of developing it). He knew better. The company continued floundering with no clear direction. Two years later, he was gone, the company was back and we did another plan. This one they are using and they are reaping the reward of strong growth!

2. Another common mistake is confusing objectives with strategy. Many companies set annual goals and objectives to correspond with annual budgets. In almost ALL cases, any organization doing a one day plan or a one page plan is doing that. It is what Rockefeller Habits teaches in their book. Nothing wrong with organization performance improvement. Just don’t confuse it with strategy. A list of things to do better is essential. Strategy is one overarching principle or concept that guides all the other decisions you make and lasts several years or longer. If you have a list vs. a concept you know whether you fall into this trap. I worked with a client that annually created a list of very strong objectives and they were growing the business. We took a different approach and found that there were some fundamental issues that held their growth back from what it could be–culture, a weak functional area and a few other things. The contrast between the two approaches was obvious. One created a to-do list; the other addressed organizational issues that had to be dealt with at the top to improve the results generated by the to-do list. Which approach are you using? If you have a clear strategy, an annual to-do list to implement it works. Without the strategy, you are likely creating chaos by trying to do everything for everybody in your to-do list.

3. The last issue is what I call inside-out thinking. Creating a strategy by asking what does the company want or where does it want to go essentially is a wish list. It is highly unlikely to succeed. Rather a company needs to create a strategy asking where is the market going and what can we do to meet those needs better than anyone else? That is outside-in thinking. Few companies I work with can answer the outside-in questions. All the data they collect is about how well they do what they are already doing. And while that is good data for operational improvements, it doesn’t support the creation of a strategy. One of my clients is in an industry that is significantly challenged by changing consumer preferences, outdating the old model and demanding new ones. Data that compares performance of last year to this one or reports customer satisfaction with the current model is great for operational enhancement but not a refinement of business strategy or development of a new business model. For that, we need information about leaders of change in the industry, rate of change in consumer patterns and other data that looks at things outside our current model. One reason companies don’t make the big changes is that they don’t collect the type of data necessary to give them confidence to make the change. What kind of data does your company collect? Inside-out or outside-in or both?

If you face any of these issues, give me a call and we can get you on the path to doubling your growth–even in a mature industry with a tough economy. It is all in the perspective you take, the questions you ask and the data you have to empower decision making.

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