 |
| Articles |
|
Creating a Culture for Growth (cont'd)
Robert M. Tomasko
[This article was originally published in the First Quarter 2000 Forum, the journal of the Grocery Manufacturers of America]
Renewing growth No one of these five is better or worse than any other, only more or less appropriate to your situation and stage of market development. All can lead to growth, but none will last forever. Many successful growers shift from culture to culture as conditions and opportunities change. Less successful companies remain stuck with one business model and one growth culture, and eventually stagnate. Consider Starbucks, which started business as a modestly successful Specialist Seattle coffee bean roaster. Starbucks became a Rule Breaker with the addition of a Brooklyn-bred aggressive CEO and a growth vision blended from the expresso bar culture of Milan and the product savvy of Peets, a boutique coffee shop near the Berkeley campus. As the Starbucks formula caught on, rolled out in true Game Player fashion, the company assimilated established regional players like New England's Coffee Connection, and prevailed over would-be national rivals such as Brothers. Having succeeded at both category redefinition and ubiquity, Starbucks assumed the Rule Maker position. Starbucks Rule Maker growth was fueled by channel expansion (catalogue, internet and grocery), as well as becoming the brand-of-choice for airlines, upscale hotels, Nordstroms and even a Caribbean cruise line. Following the path of Rule Maker Microsoft, Starbucks also sought growth by sharing the wealth as it developed co-branded products with soft drink and ice cream makers - and even Red Hook Brewery. International expansion through licensing allowed for more control over operations than traditional franchising. At this point in its development, Starbucks self image had also changed. It was no longer selling a product line, or a distribution channel, but a brand, complete with its own customer-focused magazine celebrating the Starbucks life style.
The inflection point Few companies make as many shifts in growth orientation as quickly and effortlessly as Starbucks. Even fewer head Andy Grove's important warning: "There is at least one point in the history of any company when you have to change dramatically to rise to the next performance level. Miss that point and you start to decline." This is a lesson Grove learned the hard way at Intel. For years the company's base business was making memory chips. By the mid-1980s chips were under severe competitive assault from Japan. Intel's biggest business was slowly bleeding the company to death, and pressure was building for a new management to come in with a new vision. Grove and Gordon Moore, an Intel co-founder, knew all they had built was on the line. They met alone one afternoon and Grove asked Moore: "If we got kicked out and the board brought in a new CEO, what do you think he'd do?" Moore quickly responded: "He'd probably get us out of memories." After a moment's reflection, Grove suggested: "Why shouldn't you and I walk out the door, come back and do it ourselves?" They did, ultimately abandoning Intel's base business and essentially restarting the company as a microprocessor maker. Today Intel dominates the world market for microprocessors. Each of the five growth cultures has a life cycle associated with it. Sustained growth usually requires leaving one life cycle before it has started its inevitable downward spiral, and mounting another. But, Grove's example aside, few companies find this an easy change.
Success breeds failure Why? Ironically, the biggest barrier to renewed growth is the current, successful base business. The number one enemy of tomorrow's growth is not the pack of hungry competitors hoping to eat your lunch, but the array of past successes whose logic and assumptions are now hard wired into your organization. Often the easiest way to understand how a company was successful in the past is to look closely at today's organization. Executives and key decision-makers have usually earned the positions they are in because of past performance, not fit with the future. But what if the competitive environment has changed, customer preferences shifted, or new technologies emerged? These changes seldom happen all at once, obsoleting overnight the base business. Instead they co-exist with the logic driving past growth. It's hard to move in two directions at once, but that's what renewed growth demands, especially if the earnings from the slow growing base business are expected to provide seed money for the new ventures. Think about the competing logics at play. Every successful
business wrestles with two strong forces: - an urge to move forward beyond the business that currently exists. Each force is a challenge to the status quo. Operations and products constantly have to get better than they have been before; the business also has to keep abreast of changes in technologies, markets and customers. Meeting these dual challenges requires two very distinct roles.
Fixers and Growers Let's call them "Fixers" and "Growers." Both roles are vital. Growers help a company advance. Fixers keep it afloat. Few companies can survive for long by paying attention to only one and ignoring the other. Fixers like to see themselves as realists, practical people who deal with things as they come. Their world is one of cause and effect. They think linearly and make good analysts. Future happenings, from their perspective, are largely determined by what has already happened. They tend to predict the future by looking at the past. Change, if possible at all in their world, is incremental. Events are things to be responded to or reacted against. Fixers see themselves more driven by events than as shapers of their environment. They are often most content when all going on around them seems well under control. Fixers do a great job of getting value from an established business. The Grower's model of how the world works is different. For them, the future isn't fixed at all. Marketplaces are constantly in motion, fundamentally open to new influences, and full of possibilities. Growers believe that few trends keep going forever, and that small discontinuities in established patterns are all that's needed to change entire industries. For them, opportunities abound to create something new, and they are always alert for serendipitous events that can provide useful leverage for their plans. While Fixers seem driven by the circumstances around them, Growers are more motivated by a sense of what they want to bring into reality. Both inhabit the same world, but have contrasting assumptions about how to operate in it. Fixers are great problem solvers, good at taking action to make something go away. Success happens for them when the problem has disappeared. Taking action to bring something new into being - the process of creation - is more the standard operating mode of a Grower.
Match the role with the situation Both roles require employees that are hard working, highly skilled, motivated and committed. But few organizations thrive unless they give proportionately more emphasis to one role than to the other. Which one deserves to be in center-stage depends on the state of the outside economy as well as the internal health of the business. Economic downturns are usually best weathered by Fixers; the advantages offered by better times are capitalized on by Growers. Severe problems inside a business require Fixers - it's hard to grow out of near-bankruptcy without first putting in place a viable economic platform. But attention to cash flow and orderly operations is no guarantee of real success in a growth market. We have all lived through a quarter century of oil price shocks, intense global competition, deregulation, sharply segmenting marketplaces, diminished customer loyalty and militant shareholders. This was a period that called-upon, and rewarded, the many skills of the fixer: o cost-cutting Demand for these abilities will never completely disappear - though, in industries such as consumer package goods, priorities are beginning to shift. Markets, and the opportunities in them, have the potential to expand rapidly. Information technologies have created platforms like the internet upon which many new businesses are emerging. Advances in bio-technologies promise to keep the technology-push trend alive well into the twenty first century. Raw material costs are stabilizing, markets have become more global than ever before, and some overseas competitors are stumbling because they tried to do too much too fast. The net result: an escalation of opportunities unlike what most of us have ever seen in our careers to date. Capitalizing on these opportunities demands abilities that go beyond the making-the-most of whatever's-in-place style of the Fixer. What is needed is a mindset less oriented toward problem-solving and more in the direction of opportunity-seizing. In short, more of us need to be in Grower roles. Fixers are not destined to disappear - they still have many important contributions - but what needs to change is the relative emphasis placed on each role.
Where are the growers? That's a real problem in companies where past success has been driven by belt tightening, consolidation, and attention to internal improvement. Outward-looking Growers have been laying low. Some, attuned to which way the winds have been blowing, have acquired the Fixer's toolkit. Others may have just gone elsewhere, voluntarily, or the result of downsizings. Many positions of power and influence have been awarded to those who best accomplished past Fixer-related priorities. Growers may be in short supply - or are to be found hiding in the woodwork, in out-of-the-mainstream jobs. Where are the Growers to be found? This is the question I asked my headhunter friend at the close of our dinner. Wanting to preserve his trade secrets, he answered obliquely. He said when he takes on an assignment to fill a Grower position, he always asks for permission to look for inside candidates as well as ones working elsewhere. Insiders know the culture already, and don't have to be lured with high sign-on bonuses, he said. The trick, he went on, is identifying them. That's when he clamed up, only noting that many high potential Growers are already on the payroll, but often in marginal positions, and usually flying below the radar.
Choose growth This is an exciting time to be making or distributing grocery products. New entrants are in the wings: the pharmaceutical industry sees a path out of its own stalemated growth in the food business, and distribution-oriented companies are discovering they also have the ability to create branded-products. American manufacturers are busily embracing the ethic of global business, while European accents abound in many supermarket boardrooms. The old distribution channels are consolidating almost as fast as new ones are being created. Customers don't have time to shop anymore, and everyone is seeking more control over their life. Consumers are wildly embracing one technology (internet) while harboring deep fears about another (genetic engineering). The baby boomer bulge is turning AARP-age and craving products that promise fitness and longevity. And consumer-goods-executives, in an era of shareholder value, live anxiously under the shadow of soaring dot.com market valuations. The industry is at one of the inflection points Andy Grove alerted us to. We can choose the path of the past, hoping to derive security from what worked well once. This is the road of the Fixer, riding the roller coaster of acquisitions, mergers, and consolidation - followed by the inevitable downsizings that generate savings to fund the deals. Or we can choose growth. My recommendation is to go for the growth. And I hope some of these ideas will help provide directional pointers to guide your way.
© Robert M. Tomasko 1999, 2002 |
|
|