In business, companies either grow or die. The end of a non-growing company can come about slowly or suddenly, but like the slow antelope its demise is a matter of “when”, not “if”. This means that creating faster growth occupies an ever-increasing share of a leader’s daily thoughts.
[featured-image size=”rss_daily” single_newwindow=”false”]Photo courtesy of Jennifer[/featured-image]
Let me share with you something I’ve noticed in my own career.
I have noticed that there is something that naturally occurs which I will call complexity asymmetry. The concept is straightforward: while an outcome we desire is simple, the array of potential tactics to achieve the outcome are incredibly complex.
The outcome can usually be described in a short sentence – for example, “We want to boost the revenue growth rate of our organization by 20% next year”. Simple to say. Easy to understand.
But the possible steps to get there are like a swirling cloud of sub-atomic particles that bounce around, defy order, and confound a leader with their endless shape-shifting. Thus the complexity asymmetry. How might a leader confront this swirling mass and formulate a cohesive set of tactics to pursue the simple objective she has?
This is where I like to find a taxonomy, or a way to construct a mental map that will help me categorize and organize the flying atoms into some simple, understandable containers. I ran across one recently that lays out a mental map for the sources of growth that I want to share, and I also want to provide a natural trap inherent in those sources.
Let’s dive in….
The article I read was Five Commandments for Faster Growth by Peter Cohen, published in Wharton’s online journal. The quick summary is that companies can create growth from one of these five sources, “ranging from the most basic to the most challenging”:
• Customers: Get a bigger share of your current market
• Geographies: Take your product/service to a new place
• Products: Create something new you can offer to the market
• Capabilities: Add talents and technologies to penetrate new growth opportunities.
• Culture: Create a place where employees tap into new markets and opportunities.
There are of course many ways to break each of these down further, but for a leader who needs to boost growth and finds herself confronted with this swirling mass of atomic confusion (which is further exacerbated by the many opinions and biases of those she works with), then this model is one way to move from confusion to early clarity.
Let me point out one potential trap however. It’s not a weakness of the model, but a weakness in ourselves and a typical business environment. We’ll call it the attractiveness of the “sugar high”.
Note that the options Mr. Cohan lays out increase in complexity and, thus, time. While there are some situations where this isn’t strictly true (for example, an acquisition might immediately add to any/all of these dimensions), for the most part his steps follow sort of a natural law. Just as you can’t accelerate growth of the grapes in your vineyard you can’t change an organization’s culture overnight either. Fine wine takes time.
But here lies the trap. This is, in part, the source of the issue that Clayton Christensen noted in The Innovators Dilemma. As demand for immediate results increase, the leader bypasses the harder sources of growth and reaches for the “easier” ones – e.g. attract more customers through lower pricing, or jump into a poorly thought-out geographic expansion. And who can blame them, when they know that the only business results their management care about are the next quarter or the current fiscal year?
Meanwhile, the new competitor is moving up from below and bringing to market different capabilities and a different culture. The larger, more short-term oriented company doesn’t sense the coming business disruption because they’re expending most of their energy trying to tap sources that have a shorter path to (slightly) improved results. Nokia was the king of the mobile phone market until one day, they weren’t.
Here’s my encouragement to you: great leaders are great leaders all the time. They know that building the right culture is always important, and thinking a few years down the line is part of their job.
What if you don’t believe your company values long term thinking? Don’t worry about it. First of all, you might be wrong. Secondly, the job market is always looking for people who understand all five sources and how to tap into them. And thirdly, in the process you’ll have developed a habit of mind which will make you a more effective leader.
Good luck!