Posts Tagged ‘challenge’

The One Thing You Must Do To Grow Your Business

Tuesday, July 30th, 2013

Here’s the single biggest thing that I think separates companies which grow successfully from those that don’t.Learning to give up control to grow your business

It’s that the owners of successful businesses understand that they personally will have to change – and they are willing to make those changes.

I said that back in March of this year.

Today, I read about Clay Mathile – who sold his company for $2.3 billion in 1999.

In case, like me, you hadn’t heard of him, he owned “Iams” the pet food company. And he built annual sales from $500,000 in 1970 to $1 Billion in 2012.

For the first 10 years he put all of his energy into growing the business, working 12 to 16 hours a day. Sales reached about $10 million annually.

He realized then that he couldn’t run the business alone. So he hired the best plant manager he could find – so far so good.

But a month later the new plant manager took Mathile out to lunch and asked, “Are you going to let me run the plant?”

That’s when Mathile realized that not only was he unable to let go of control of the company but, worse still, it was an obstacle to the company’s success.

Shortly after that he signed up for a professional management program. In one session he was asked to write all of Iams’ production and manufacturing challenges on white boards.

In another flash of insight, Mathile recognized that he’d created 75% of the problems that were up on the wall.

That’s when he stepped back, looked at what he was doing and learned to let go of his desire to control everything and listen to the experts he had hired.

This was a key part of what allowed him to lead the company to achieve consistently high rates of growth.

Mathile knows from experience that giving up control can be a challenge for entrepreneurs who have poured so much of themselves into their business.

He describes it as not only a shift in how the business owner thinks of his/her role, but also a shift in how they have to behave – in what she or he gets up in the morning and does each day.

“You need to let go instead of holding on so tightly,” says Mathile. “If you don’t bring on expert employees and begin delegating responsibility, you will prevent your business from growing to its full potential.”

Realizing that he had to change must have been difficult for Mathile. But making those changes to his thinking and behaviour must have been excruciating.

He did it and he was successful.

I rest my case.

You can read Catherine Clifford’s article about Clay Mathile here and you’ll find details of Mathile’s new book here.

 

If you enjoyed this post you’ll also enjoy To Be Or Not To Be … In The Room That Is

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3 Things That Shape A Good Strategy

Wednesday, September 14th, 2011

It’s the time of year when many business owners and their teams are doing their business planning for 2012.

So in my last 2 posts we talked about the 4 hallmarks of bad strategy and the 2 reasons why there is so much bad strategy.1 

Now I want to focus on the underlying structure of a good strategy and Rumelt’s views on the 3 components of that.

1. Understanding the nature of the challenge

I may be making a “blinding statement of the obvious” when I say that it’s not possible to develop a strategy which will be successful, unless you understand the challenge.

But I’m also probably correct in saying that no strategy – even the ones that later proved unsuccessful – has been approved without the key players believing they did understand the challenge.

Typically the situations which create problems or challenges for companies are complex. A good “diagnosis”, to use Rumelt’s term, simplifies the complexity by identifying those aspects of the situation that are the critical ones. This makes failing to face the real problem impossible (see the first post in this series).

I think that really understanding the challenge requires business owners to:
• Refuse to replace thorough analysis with positive (or wishful) thinking.
• Commit time and resources to a completing that thorough analysis.
• Combine the product of trained analytical skills with their intuition.
• Remain objective in the face of other (opposing) ideas.

2. An integrated approach for dealing with the critical issues

Rumelt describes this as a guiding policy for overcoming the critical issues.

I believe that in order to develop this integrated approach, choices have to be made about which goals to pursue. This helps avoid one of the causes of bad strategy.

And immediately a company embarks on this route they take a giant step away from the template style of planning that Rumelt criticizes so much.

The approach we’ve used successfully for some years now requires conscious thought being given to the implications of the strategy for all functions in the company – not only marketing and sales but also operations, finance, HR and systems.

Our approach raises, and answers, questions like how will we finance growth; what skills and experience will we have to develop or hire to take us to the next level?

3. Coordinated actions that translate the integrated approach into results

Rumelt provides an interesting example of coordinated actions. He talks about Nvidia’s strategy for capturing leadership of the 3-D graphics chip industry.

The CEO realized that releasing a new, better chip in much less time than their competitors was the key to success. That became the company’s guiding principle.

The coordinated actions were – forming 3 development teams working on overlapping schedules; investing in infrastructure to prevent delays in fabricating chips and developing drivers; and regaining control of the development of drivers.

It’s easy to see how these 3 actions supported Nvidia’s guiding policy/integrated approach.

The strategy worked brilliantly for 10 years. But, as we know, no strategy, however brilliant, will remain unchallenged forever.

4. Wrapping up

Three apparently simple things underpin a good strategy. But, as I’ve said before, strategy is like all of those other things in life that seem simple but yet are not. Did I tell you about my golf swing……..

1 The posts summarised an article written by Richard Rumelt, published in the McKinsey Quarterly and based on his recent book “Good Strategy/Bad Strategy: The Difference and Why It Matters”

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