Epilogue: How to use the ideas in this book
Excerpt from Go For Growth
By Robert M. Tomasko
Companies are a lot like sailing ships. Both are essentially vehicles that can take you from one point to another, in a set time frame, and consuming an allotted amount of resources. The integrity of the vessel - its ability to stay afloat and move forward in the desired course - depends on its ability to provide stability, propulsion and direction. Integrity also depends on how skilled the crew is at performing these functions in a well orchestrated manner. Different ships are appropriate for different seas, different crews for different ships.
This metaphor sums up many of the ideas in this book. Ships are only successful when out in the sea. Companies find success in the marketplace, not through cost-cutting or reengineering. Repairs at the dry dock are not what a ship is all about. Ships are meant to sail, businesses to grow.
The people who "crew" an enterprise have limited resources. They can spend time and money on repair and internal improvements, or they can focus attention on moving forward. Both, of course, are important. The real issue is one of balance, and in recent years many companies have tilted the balance far inward.
It's time to look beyond internal improvements, reengineering and downsizing. This is the time to go for growth.
A generation of cost-cutters
Kodak's George Fisher likes to say "Growth is what I am all about." He realizes that cost cutting and growth are two sides of the same coin. Going for one objective without simultaneously pursuing the other is pointless. He knows only growth can provide a path out of the doldrums for Kodak. "When a company ...[Kodak's] size doesn't grow," says Fisher, " a kind of atrophy sets in, and then costs become uncontrollable."
Fisher's wisdom is attractive, but putting it into practice won't be easy. The last decade has produced a generation of skilled cost-cutters. Can they - can you - shift gears? Can you become more of a grower, less of a pruner? What new skills need to be acquired, or rediscovered, and which old habits withdrawn from center stage?
The new rules of growth
- Real growth opportunities are those a business finds for itself - rising tides seldom lift all boats anymore.
· Find opportunities in places others aren't looking - mature and fragmented markets provide many possibilities for growth
· Growing a business means making it better, not just bigger.
· Rivals can be your best partners, if you assist each other make the pool of opportunities bigger for everyone. Growth does not always come at the expense of the competition.
· No-mistakes management eventually leads to stagnation; success does not always beget more success. Today's failures can be the seeds of tomorrow's growth, if properly nourished
Approaching business along these lines requires less of the mechanistic, lock-step mind set that worked when the world was simpler, and rising tides did lift all boats. The idea now is to operate more like a sailor in uncharted waters, less like a skilled technician running a complex piece of machinery.
Having a growth goal is important, but it is not enough. It is just as important to choose an appropriate path to reach the goal. In most situations, there is more than one way to be successful, but all paths are not uniformly appropriate. Sometimes features from several growth paths must be blended.
Real advantage comes from people
For many companies, the choice of growth path is predetermined by external conditions. The real edge many businesses have over competitors lies less in strategy than in people and how their talents are utilized. It is employees who make a company grow, not clever borrowed business ideas or fortunate market positioning. When a business is not growing the usual suspects are costs, price, overseas competitors or quality - but the underlying causes are invariably more human in nature.
This idea is given lip service by many companies, but taken to heart by those really good at growing. The headquarters offices of many supermarket chains have framed corporate mission statements with paragraphs of glowing prose about the importance of their associates. The walls of their conference rooms, though, are covered with photos of the newest and largest stores. In contrast a highly profitable and growing Los Angeles-area chain keeps the prose to a minimum ("We are here to make money and have fun"), but every available inch of wall space is crammed with photos of their people. You will see a similar pattern in the airline industry where offices are filled with models and photos of the biggest or latest jets. Southwest Airlines, the past decade's only consistent profit grower, reinforces its philosophy that front line employees are the customers of management by posting pictures of these "customers" where they will easily be seen by busy executives.
Decoding growth problems
1. Everyone needs to do what they are doing better, to try harder to resolve inconsistencies between what needs to happen for growth to take place and what the company is currently doing. These problems occur when the organization is sending mixed signals about how people need to behave.
2. The world has changed - and possibly the people within the business have changed- and it is now time to look for a new path.
Paths have beginnings, middles and ends
· The start of a path is where to get on - it makes little sense to become a Rule Maker in a markets favoring Specialization. Start by setting an appropriate direction and building the needed capabilities.
· The middle is the point of greatest prosperity - and greatest danger. This is where overly smug managers fail to set aside resources for future growth and are too content with the status quo to prepare the business for renewal.
· The end is the point where the organization needs to shift the business to another path. Successful change is very risky at this stage unless the groundwork has been already been solidly put in place.
Arnold Toynbee was a "big picture" historian. He spent most of his career charting why major civilizations all seem to go through similar patterns of emergence, growth, plateauing and decline. Many of his insights apply to businesses as well:
New paths require different thinking
One hundred fifty year old Connecticut Mutual Life Insurance Company understands this truth very well. Recently David Sams became the first chief executive this company had ever brought in from the outside. To prepare for a much more hostile growth environment than Connecticut Mutual has ever faced, Sams, in turn, put everyone in the company through a radical break with the past. The duties and pay scales for every job in the company were changed. Every one of these new positions was then declared "open," and each employee allowed to apply for up to three jobs, including their old one, if still offered.
It's amazing how many businesses attempt to make radical shifts in strategy, but assume they can leave the team that provided past success in place. In rapidly changing industries, attempts to clone past growth are seldom successful. Amoco, like most major oil companies, realized the limits of cost-cutting driven growth. Its current focus is to move more products through its efficiently managed system, while selling proportionately more of those commanding higher mark-ups. Robert Rauscher, Amoco's marketing vice president, realized that this path to growth was not one that managers born and bred in the insular oil business knew much about. So he boosted growth by hiring brand managers from consumer product companies instead. At Amoco, ex-Miller Brewing and Quaker Oats managers are crafting new ways to sell gas, such as applying the cross-branding idea: Amoco now shares sites with Burger King and McDonald's restaurants.
Sometimes sustaining growth requires more than just non-conventional thinking. The job of finding a new growth path for Sony has been given to Nobuyuki Idei, a product design whiz located several rungs below the president whose job he was given. Sony was willing to disappoint several key contributors to ensure it found the right growth path. A.T. & T. had to bite a different kind of bullet. This company paid a heavy price to keep its growth focus on opportunities in telecommunications when its accepted the resignation of Paul Kahn, one of its superstar managers. Kahn built the Universal Credit Card business from nothing to become the second largest charge card issuer in the U.S., winning a Baldridge quality award on the way. He wanted A.T.&T. to further diversify into other financial services products, something the parent company feared would divert its attention from the growth path it chose.
The five growth paths
The important point is that there is more than one way a company can grow. It is critical to get beyond the "there is one right way for everyone" school of management. Growth is not just a matter of doing the "right" things and "avoiding" the wrong. The real world is never that simple.
Five alternatives are ofered here as a way to emphasize there is more than one. There is a long, well-meaning-but-dangerous pattern in business literature to point out a new direction that we all need to travel. And then to provide the three, five, or seven key characteristics of the direction. These formulas may make for a quick read, and on the surface appear quite logical, but in the end they insult too many managers' intelligence. They serve an important purpose in helping get across the results of complex research efforts - we all are impatient for the bottom line - but they are dangerous when we start to take them as our sole guides to action.
The purpose of the five is to provide a common language, a vocabulary to label what path is being taken to growth - as well as a way to indicate what is not being done. The idea is to move beyond the simplistic slogans, or exhortations to be "more entrepreneurial" (especially in situations where risky, bet-the-company behavior may be exactly the wrong things to do).
The paths provide a way to type-cast some situations, indicating how companies that are seemingly dissimilar actually have a lot in common.. The path-idea makes it easier to see how Boston Market (formerly Boston Chicken) is following a Game Playing approach to growth similar to that of Blockbuster Entertainment, and doing it with a top management team that got to know each other when they all worked on the Blockbuster staff. These managers honed their skills on one growth path, then fueled their personal growth by migrating this know-how to a different industry where their experience was equally applicable.
Use the five types the way a builder uses scaffolding, as a support to put in place before erecting the actual structure. These are aids in planning growth strategies and in in developing the kinds of people and organizations needed to support growth. Like a good builder, never confuse the scaffolding with the actual building. These concepts are supports, not substitutes, for your own thinking. Each path is a caricature, a line drawing. You need to flesh each out from your own experience and sense of what your business needs. When they cease being useful, put them aside. Or even better, invent a set of categories that best fit your own experience.
It all depends
The practice of requiring all employees to reapply for their jobs may make sense at Connecticut Mutual, but its was disastrous when tried at the World Bank, and led to a great deal of disruption at McDonnell-Douglas. Look hard for the pros and cons of potentially useful techniques. Both are always present. Then look hard at where the practice worked and understand why it worked in that particular situation. Never try something until you find an example of it failing. Be sure you know what was behind the failure. Then ask how similar - or not - is your business' situation to these others. Finally, list the adjustments you will need to make to the new idea to increase its likelihood of success.
The idea of "contingency" is one of the most important concepts in management. You have mastered its essentials if you can say "it all depends" without sounding wimpy because you can also describe exactly what the right solution depends on. What management practices are most effective in your particular businesses? Why? Which are overused or have lost their luster? Why? Which have been neglected, but have some promise?
Be wary of bandwagons and exemplars
Management-by-zig-zagging-around will eventually leave you and your company victims of terminal whiplash, an inability to maintain focus on any growth objective long enough to achieve it.
Successful benchmarking and borrowing is largely a process of customization and fine-tuning. While it is not always necessary to reinvent the wheel, frequently the hub, spokes and rim need some adjustment.
Many examples, with company names, have been cited here. This is a useful way to communicate and validate new ideas. But these companies' experiences must also be considered with caution. Remember how quickly so many of the In Search of Excellence standouts went into the tank. Don't put any company too high on a pillar. Examples are used most effectively when they serve to raise questions in your mind, not provide answers. Boeing is a good place to see organizational learning in practice. I'm less certain they have a lock on the best wisdom about cost-cutting.
Think of the corporation you admire the most. What does it do so well that is worth the time to plan how to adapt the practice to your business? Then set aside your favorite company's halo. Find two or three areas in which its performance is not so exemplary. How can you keep these problems from migrating along with the practices worthy of elulation?
Take the time to get it right
A "what-to-do" book
A clear direction is a good tool to motivate others to join in. Most people are willing to make an extra effort, even up-root old habits, provided they have some idea about where they are headed and what they are likely to find when they get there.
Norman Mailer observed: "There is that law of life so cruel and so just, which demands that one must grow, or else pay dearly for remaining the same." At some point, as the late Mike Walsh of Tenneco put it: "You either get on with it or you don't." Ask yourself these three questions:
1. Do I need to change myself to meet the requirements of the path I'm on?
Answering this requires absolute candor with yourself. Inputs from others who know you and your work are also essential.
As you read through the descriptions of each of the five paths you may have felt something that many first year medical students experience. These doctors-to-be often think they are acquiring the symptoms of each new disease they study. Take this as a clue that the elements of what is needed to thrive on each growth path are present in varying degrees in all of us. The broader your repitoire of skills and behaviors, the less you need to feel condemned to one path when it stops taking you where you want to go.
2. Can I change the company to better match my vision of where it needs to go?
· Employees who demonstrate loyalty by their willingness to challenge the status quo., and
· Managers who understand that the ability to lead business growth is almost completely dependent how open they are to these challenges.
A variety of tactics are available for effective challenges:
· "Head-on assault": a good approach when the business is in a crisis and doors that were once firmly locked are at least half open.
· "Guerrilla warfare": the tactic of shifting the business direction a little each time an opportunity arises. There are often at least two ways to get something done: one is likely to reinforce old habits, the other to promote change and growth.
· "Create an enclave": when it is not feasible to change the entire business it is still possible to build islands of growth, parts of the company that can serve as beacons for the rest of the organization. When enough of these exist, they can be interconnected to reach a point of critical mass.
3. Do I need to go elsewhere to find a growth path I am more compatible with?
If your answer leads to considering a job change, or to saying no to a great offer, at least you are in excellent company. Before he came to Kodak, George Fisher was approached to become IBM's chief executive. He considered the opportunity, then declined, realizing IBM's situation would require more cost-cutting that he wanted to spend his time doing. He knew his strong points were elsewhere. So did George McKerrow, founder of the Longhorn Steaks restaurant chain. He fired himself as chief executive, and brought in a team of seasoned industry veterans to take the business to the next level.
All change requires people to change
AlliedSignal's former chief executive, Larry Bossidy, knows this well. When necessary, he changed executives with frequency that Abraham Lincoln shifted generals during the Civil War. Bossidy believes that companies operating in drab markets like Allied's auto parts and chemicals need to avoid the "mature market" mentality if they want to seek growth opportunities According to Bossidy, there are no mature markets, only mature executives. Growth fuels the bottom line, but even more important, Bossidy feels, it is the best way to attract and motivate the talent every business is built on. Growth is the only way to guarantee a company's future. It becomes hard wired in a company through the bets the business places on its people.
Companies sustainably grow only when the people who work in them do. Growth happens when you integrate what you are , what you want to become , and what the realities are around you. It is a process that begins with introspection, then requires information gathering and rolling-up-the-sleeves-style planning. Many choices are likely to emerge. Some will involve hunkering down and clinging to fleeting hopes for stability. Others will involve change and new directions.
Every day thousands of harried commuters rush by a commemorative plaque in the main corridor of Washington D.C.'s Union Station. It honors Daniel Burnham, the architect of this imposing structure. The plaque includes one of his most famous admonitions: "Make no little plans... they have no magic to stir men's souls." Bold growth objectives can energize business people in ways few goals can. But growth is not something that is driven by an autopilot - it only happens when you deliberately go for it!
© Robert M. Tomasko 2002