Posts Tagged ‘Jim Collins’

3 Lessons About Successful Business Growth

Tuesday, January 27th, 2015

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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It Starts With A “Corny” Story

Friday, March 9th, 2012

Ever been in a situation when you see or hear something – and then a few days later you see or hear a variation of it?

That happened to me this week.

It started when I read a blog post called “What You Can Control in a Tough Business Climate” by Karie Willyerd.

A “Corny” Story

She describes how, as communism came to an end in Romania, bureaucratic decision making resulted in a cornfield being divided amongst local farmers.

Each farmer was given 2 rows.

They didn’t – or wouldn’t – collaborate so the results of each individual’s work could be easily compared with those of his or her contemporaries.

When the following summer came, the quality of corn which grew varied widely. Some rows produced knee-high, healthy plants. Others produced shin-high plants which were sad to see.

Willyerd’s point is that everyone had been given the same seed and fertilizer and so the difference in results was caused by the people and the decisions they made.

And now to business….

Next she describes a study she conducted with some colleagues.

The goal was to determine if simply executing a business strategy, regardless of what it is, would make a difference to the value of a company.

They focused on the 4 variables they believe are the foundations for the ability to execute. And they found that improving any of them produced an increase in the company’s value.

But they found that 2 of them – aligning goals throughout the organization, top to bottom and across; and identifying and treating high performers differently than low performers – produced the greatest increase.

Putting it together

Willyerd believes that in business, as in farming, there are many factors which can’t be controlled – e.g. drought and the performance of the economy.

So the key to success is to focus on those that can be controlled.
A company’s ability to execute its strategy is definitely one of those.

Two other controllable factors are:

  • Whether the owners, and their management teams, communicate explicitly with every member of their team and align them behind the company’s goals (derived from the strategy). If they don’t parts of the company may meet the business owner’s expectations, but others won’t.
  • People are the seeds of the growth, and ultimately the value, of a company. Owners should, therefore, surround them with resources and nurture them with benefits – particularly the high performers.

The Variation

As you know if you saw my last post, I’m reading Jim Collins’ book Great by Choice. In it he compares pairs of companies in 7 different industries to determine why one did well in uncertainty, even chaos, while the other did not.

Collins’ main theme is that the successful companies focused exclusively on the things they could control. And they kept on doing it no matter what was happening to the things they couldn’t control.

The final chapter talks about the role of luck – and it’s not what you might think (read the book)! In the summary, Collins talks about the importance of finding great people and building deep and enduring relationships with them as a means of creating good luck.

Final thought

You could argue that focusing on what can be controlled and getting good people aligned behind the goals is common sense. But, while Willyerd’s study confirms that they do produce results, Collins’ study demonstrates that companies routinely ignore them.

Where’s the sense in that?

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Cannonballs And Email – Or Anything Else For That Matter…..

Tuesday, February 28th, 2012

Cannonballs and email – really, what could they possibly have in common?

A couple of things – I found myself involved with both last week and one of them applies to the other. You see “cannonballs” is a metaphor and email, for this purpose, is a marketing tool.

Other marketing tools are direct mail, adverts (on-line or traditional), newsletters and any other printed or electronic promotional piece.

And cannonballs apply to them too – and other things……

Cannonballs first

I’m reading Jim Collins book “Great By Choice”. In it, as you may know, he contrasts pairs of companies in 7 different industries. His goal is to find the reason(s) why one of the pair did incredibly well in uncertainty, even chaos, while the other company very definitely did not.

Collins and his team wanted to determine the role of innovation in the relative performance of the companies.

They found that, contrary to their expectations, the better companies did not always “out-innovate” their less successful competitors. In fact, the opposite was often true.

What the better companies did do was to combine innovation with discipline. Collins introduced the cannonball metaphor to illustrate the point.

Imagine a company has to fight a battle (with its competitors). It has both bullets and cannonballs (products/services) but a limited supply of gunpowder (resources) to fire them with.

Should the company fine tune range and direction to the target? If so how?

Bullets are the obvious choice because they use least gunpowder. Get the range and bearing right and then use cannonballs to put a dent in the competitor.

Now email………

Last week I was talking to a client who was considering lead generation ideas.

He had a proposal recommending email campaigns and some other things. Our client said he didn’t have much faith in these campaigns because the results had always been poor in the past.

I asked him which of the variables – the layout and content of the piece, the quality of his list or both, timing of the drop – had been to blame. He didn’t really know.

We hear this all the time.

So I suggested he get 2 or 3 alternative layouts for a campaign. Each should have different graphics and copy than the others.

I told him to take them to 6 to 12 customers who he trusted to tell him what they thought. Then show the alternatives, one at a time, and ask the customer what the piece told him. Saying nothing, he should record the comments word for word.

This would give him quality control for the most difficult variable – layout and copy. When he heard that a layout was communicating the message he wanted, he could email or mail it to everyone.

There are variations on this approach. He could mail different layouts to larger parts of his list (say 10 % of the list for each layout) and compare the responses. He could also email or mail the pieces at different times on different days.

But whichever variation he chose, he would be firing bullets. Only when he found the layout which got the response he wanted should he fire a cannonball – emailing it to everyone.

Finally, anything else………..

The metaphor has wide application.

Why launch a new product before testing it with a portion of the market first? Why move into a new region, Province or country before firing bullets at part of it first?

And yes, why adopt a change in strategy before testing that first too.

This approach may take a little longer but it will dramatically reduce the risks and conserve valuable resources.

Any thoughts?

If you enjoyed this post you’ll like Why Strategy Is Still Worth A Business Owner’s Time

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