3 Lessons About Successful Business Growth

Two books, published 19 years apart, yet saying similar things about a key aspect of successful business growth:Lessons about successful business growth

‘Built To Last’ was published in 1994. In it, Jim Collins analyzed 18 companies that he called visionary because they were the best in their industries – and had been that way for decades.

Collins argued that the core values and enduring purpose of all 18 could be separated from their operating practices and business strategies. And that, while the former never changed, the latter changed constantly in response to a changing world.

In her book ‘The End Of Competitive Advantage’, published in 2013, Rita Gunther McGrath studied the performance of large, publicly-traded companies from 2000-2009.

She found that only 10 of them grew their net income by at least 5% every year. All 10 had found ways to combine tremendous internal stability with tremendous external flexibility.

McGrath argues that to win in volatile and uncertain times, companies must learn to exploit short-lived opportunities quickly and decisively.

If you look at the things that Collins’ companies kept unchanged and those that gave McGrath’s companies their internal stability, you find, in my opinion, a number of similarities:

  • Collins’ companies all had a sense of purpose, a lofty aim. So did McGrath’s – to become world class. Neither talked about making money.
  • McGrath’s companies focus on values, culture and alignment. Collins’ had ‘cult-like’ cultures, only employees who shared their values stayed.
  • Collins’ companies invested in ongoing employee education, some building learning centres. McGrath’s also invest heavily in employee education and ‘upskilling’, increasing peoples’ internal mobility as the strategy changes.
  • The most senior executives in all 10 of McGrath’s companies were promoted from within. Collins’ companies showed amazing consistency promoting ‘home grown’ senior management and CEOs.

I think there are 3 lessons for the owners of smaller, privately-owned companies:

  1. Think about why you started the company. I’ll bet it was not ‘to make money’. Communicate that constantly, use it to shape the company’s values and vision, build your strategy on that foundation.
  2. Be clear about your values. Hire only people who share them and train those people to grow with you.
  3. View the company as something that can contribute to your community, long after you have moved on and develop people who will carry on your vision.

There are other lessons from these books. More on that later……..

 

If you enjoyed this post you’ll also enjoy 4 Things That (Positively) Affect Growth

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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Tags: 'Built to Last', 'The End of Competitive Advantage', business owners, combine internal stability with external flexibility, companies, culture and alignment, exploit short-lived opportunities, focus on values, invest in ongoing employee education, Jim Collins, Jim Stewart, Leadership, ProfitPATH, strategy, Strategy Execution, successful business growth, vision

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