By Edward D. Hess,
Adjunct Professor of Organization and Management, and
Executive Director – Center for Entrepreneurship and Corporate Growth,
In October, The Center for Entrepreneurship and Corporate Growth at Goizueta Business School at Emory University hosted a conference for CEOs and leading national business school faculty entitled “Hitting The Growth Wall: The Problems of Growth in Large Organizations.” Faculty attended from New York University, Columbia University, University of Michigan, Emory, Texas A&M;, University of Richmond, Insead, University of California -Davis along with CEOs and others from major U.S. corporations.
In synthesizing the presentations and discussions, I thought it would be interesting to share with you – business builders – what leaders of large organizations are dealing with – how to avoid a growth wall or plateau.
Interesting Consensus Points:
- Regardless of industry or the type of business, they all were struggling with the same issues: how to keep improving and how to be entrepreneurial and disciplined at the same time;
- All the product companies were trying to become solutions (service) companies;
- Incremental or constant improvement wins out over major changes or big risk taking;
- There is an emphasis on detailed measurement – measuring and rewarding behaviors which drive profits;
- An engineering process mentality is in favor, not a financial manipulation nor a M&A; nor a marketing mentality;
- There is an emphasis on “constructive dissatisfaction,”, “critical inquiry”, and the challenging of underlying business model assumptions;
- The silver bullet is: employee satisfaction drives customer satisfaction which drives results;
- Almost all are using some form of a balanced scorecard; and
- All of these leaders were into the minute details of running their businesses.
Let me discuss a few key points which impressed me.
Back To Basics
Incremental improvement, trial and error, and rigorous intellectual critique were the tools being used, NOT the latest consulting firm fad.
Measure IT; Reward IT
Secondly, most reaffirmed the basic business management principles of:
- Measure the right behaviors;
- Employees will do what you measure;
- Reward what you measure; and
- Make a meaningful part of compensation contingent on behavior.
And surprisingly, these big companies with lots of money and intellectual firepower were still tinkering with what to measure; and testing the validity and reliability of what they were measuring.
Execution – Not Strategy
The language was one of constant improvement, incremental improvement, being better each day, improving processes – not innovation, not change, not risk taking, not boldness, nor aggressive diversification, rather, product extensions, market extensions, and servicing products were the order of the day. A real back to basics approach – a real focus on being able to execute.
Doing Without Really Knowing
Many of the leaders acknowledged that the world is an unpredictable place; change comes faster and is more volatile. They were comfortable with saying we do not know – we cannot predict – so we must take small steps and act and learn and remain intellectually open, nimble and challenge ourselves often and yes, even as a matter of course.
Business builders will recognize this approach as iterative entrepreneurism. Yes, big company leaders need entrepreneurial skills to manage their businesses in these volatile times.
Taking Care of The Troops
Employee satisfaction was mission critical, crucial, and a real focus. Why? Because happy employees make for happy customers.
And employee happiness was more than just money. Interesting tidbits: One leader has an employee open door policy and an employee open phone policy – which he answers without a screener or gatekeeper. Another leader spends four days a week in the field with the troops, working side by side with them – listening and learning and teaching.
Promote From Within
Three of the top performing companies had a promote from within policy and senior management had long tenures with the company, having come up through the ranks. All had mediocre records of bringing in top people from the outside into their cultures. They acknowledged the risks of insularity and rigid mindsets, but stressed the cultural value of challenging the status quo.
Quite Simply – Business Is Like Farming
All of these companies simply work hard at the basics of just executing on a daily basis. They understood the power of DISCIPLINE – the ability each and every day to get up and go try to be better. And it did not matter whether you were managing technologists, scientists, package deliverers, store associates, sales associates, or entertainers; it was the same.
17 years ago, Don McNamara of Bass Brothers Enterprises told me:
“Ed, business is a lot like farming. You get up each day, you plow the fields, you fertilize and water the seeds, and you pull weeds. Some days you get sprouts and some days you do not. And then you get up the next day and do it all over again, and again, and again.“