Robert Tomasko's speech for Arthur D. Little S.R.C.
Madrid, Hotel Ritz
20 May 1997
Grow or die is a challenge facing businesses in Spain and throughout Europe. The past ten years have been a time of painful restructuring, cost-cutting and internal improvement for many organizations. The decade ahead, though, offers many exciting possibilities for positive change, for growth.
Not since 1945 has growth been such a critical issue for Spanish companies.
Concerns about high unemployment, government spending, sluggish economic growth, and threatened industrial competitiveness are voiced throughout Spain. So too are concerns about the impact of labor laws on job creation.
The growth imperative
But the only way these critical concerns will be addressed in the long run will be for Spain to be a country with a healthy, growth-oriented private sector. In Spain, and throughout the world, the last decade has been one of internal improvement. It has been a time of downsizing, restructuring, cost-cutting and reengineering. Some business people say "Growth will come only when we fix all our internal problems." Or: "Growth will only come when government policies change and the economy starts moving." They are wrong. There always will be bottlenecks. There will always be problems, either inside or outside the company. The solution to one problem inevitably carries with it the unintended seeds of the next difficulty. A manager's entire career can be spent addressing upcoming problems. Or it can be spent growing the business.
Robert Tomasko's speech in Madrid urges its listeners to choose growth.
The new rules for growth
The rules for successful growth have changed since the post World War II era . Growth still implies forward motion, the achievement of a preset vision. But it does not always result in an organization getting bigger. Size actually often serves to slow a business' ability to grow. And in the complex, networked economies of the late 1990s, success does not always go to the companies with the best products.
Unlike other management writers, Mr. Tomasko does not offer one standard formula, one technique, set of steps or group of role models all business should follow. He does not single out the high performers of the moment and suggest we all be like them.
Instead he offers choices and alternatives, and guidance about
what frequently makes the best sense when. It does this because
that is the nature of real growth.
· the dynamics of their marketplace,
The five paths
Mr. Tomasko will describe five alternative paths to growth and indicate when each is most useful. He calls these the approaches of the:
· Rule Breaker
Here is a profile of each:
Rule Breakers, fast-moving entrepreneurial upstarts that grow through innovative products or services - with visions bold enough to destabilize entrenched competition and create new industries. Potential pitfalls: loosing touch with new customer requirements, founders who stay too long, lack of cost discipline, failing to mature with their market.
Examples in the U.S. : Federal Express and MCI in 1970s, Apple Computer and People Express in the 1980s, today's Silicon Graphics and Southwest Airlines.
European Rule breakers include: Banco Santander, Club Med in 1950-60s, Nixdorf, Carrefour (in 1960s),Virgin Airways, Adidas (in 1920s-30s), Marques de Caceres, SAP, Spanair, and Fielmann.
Game Players, businesses that excel at satisfying the marketplace desires that Rule Breakers are so good at creating. Game Players are rough-and-tumble competitors, masters at acquiring market share, and seldom shy about imitating another company's product success. Potential pitfalls: giving more attention to "sizzle" than "steak," excessive decentralization, violating ethical norms.
U.S. examples: MCI in the 1980s, American Airlines, Federal
European examples: Nestle, BMW, Airbus, Escanda, Freixenet, Accor, SMH, Bertelsmann, Heinekin, and British Airways.
Rule Makers, companies so good at doing all the right things that they come to "own" their industry. These are the standard-setters of business, companies that know how to stay on top by guiding the behavior of their customers, competitors and employees. Potential pitfalls: becoming too ingrown, being blind-sided by changes in the market, not sufficiently sharing the wealth, excessive centralization, doing too many things internally.
U.S. Rule Makers: IBM in the 1970s, AT&T until 1984, Coca-Cola,
European examples: every PTT before deregulation, Deutsche Bahn, El Corte Ingles, Renefe, Repsol, Sainsbury (before mid-1990s), many energy companies, and - in miniature - Eppendorf-Netheler-Hinz and Stabilus.
Specialists, masters of focus and stability, able to seal off and protect profitable market niches from all comers. Some lead in price, others in service or selection; all are "the place" to go for their particular product. Potential pitfalls: unwillingness to innovate, over-control, adopting a commodity-mindset.
American Specialists: Midwest Express, NordicTrack, Northern Trust, Solectron, and many defense contractors.
European examples: ABB, Gamesa, Freiremar, most German wine makers, and other members of Germany's Mittlestand (Prominent Dosiertecknik, Carl Jager, Winterhalter Gastronom), Rolex, Nokia, Hoechst, Telepizza, and parts of Siemens.
Improvisers, companies that survive and thrive
in chaotic and uncertain markets by rolling with the punches.
They make up for a sharp focus with speed, cunning and flexibility.
Potential pitfalls: whiplash from excessive reorganization, forgetting
the long term, losing touch with current reality.
European examples: Air France, Iberia and many other national airlines, Volkswagen, Daimler-Benz, Deutsche Telecom (soon), and EuroDisney.
Companies following any one of these paths tend to grow as long as their advantages out weigh their disadvantages. When the disadvantages predominate, growth disappears and it is time to choose another path.
Growth is driven by people
In his speech Mr. Tomasko will also stress that the real issue for many businesses is not to minimize the number of people involved in making a product, but to maximize each person's contribution to the value the enterprise provides. He will distinguish between the roles of "fixers" and "growers" in business, and will highlight the characteristic practices of people most able to contribute to their company's growth.
The current Spanish economic situation defines a strategic moment for many business people. It provides an opportunity to move beyond the mode of reacting to circumstances, responding to events. This is a time to move your business forward, to shape its future and yours. Many problems cannot be ignored - don't. Work on them, but realize that their solution only buys you time. Use this time to plot a course for growth.
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ROBERT M. TOMASKO's clients have included Coca-Cola, Exxon, Marriott, Toyota, and many U.S. regional telephone companies. He has advised French and Japanese chemical companies, a British retailer and food producer, as well as businesses preparing for free trade in Brazil and Venezuela. He has written three books and spoken about them to business audiences throughout the world. A former Arthur D. Little, Inc. consultant, he has also been a corporate director and an advisor to government agencies in Canada, Peru, South Africa, Thailand, United States and UNICEF. He is a graduate of Case Institute of Technology (B.S.) and Harvard University (Ed.M.) and lives in Washington D.C.