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The "Secrets" of Enduring Business High Performance Genworth Financial ALM January, 2011 Ed Hess Professor of Business Administration Batten Executive-in-Residence.

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Presentation on theme: "The "Secrets" of Enduring Business High Performance Genworth Financial ALM January, 2011 Ed Hess Professor of Business Administration Batten Executive-in-Residence."— Presentation transcript:

1 The "Secrets" of Enduring Business High Performance Genworth Financial ALM January, 2011 Ed Hess Professor of Business Administration Batten Executive-in-Residence 1

2 WHAT DO WE KNOW? The DNA of HPOs- We know the “secrets” Consistent HP requires the RIGHT kind of leadership, internal System, and processes Growth results from behaviors NOT strategies Growth results from experimental learning HPOs build 2 X 2 X 4 Growth Portfolios HPOs distance the competition in bad markets and tough times 2

3 GROWTH INHIBITORS Individuals : Corporations: Cognitive blindness Failure to experiment Cognitive dissonance Standardization/No variance Legacy thinkingShort-termism Hiring & promotion biasesLow employee engagement ArroganceROE-it is Fear of failurePunishment of mistakes Product centricity Group think 3 A

4 HPOS: 30 YEARS OF RESEARCH The “best” 8 studies: 1982, Peters &Waterman, The Search for Excellence 1994, Collins & Porras, Built to Last 1997, DeGeus, The Living Company 2000, O’Reilly & Pfeffer, Hidden Value 2001, Collins, Good to Great 2003, Joyce, et. al., What Really Works 2007, Hess, The Road to Organic Growth 2009, Simon, Hidden Champions 4

5 HPOS Sysco UPS Starbucks Southwest Airlines Wal-Mart Best Buy Tiffany Costco USMC San Antonio Spurs McKinsey Room & Board Ritz Carlton Outback Walgreen Chick-fil-A Levy Restaurants SAS McDonalds Corning Danaher 5

6 9 CONSISTENT FINDINGS The “Not so secret sauce”: 1. Simple focused strategy- an “elevator pitch” business model 2. Structures that enable entrepreneurial behavior- “Small company soul in a large company body” 3. Higher purpose than shareholder value/profit- Money is not enough 4. Culture of relentless constant improvement- the DNA of growth 5. High employee engagement- an implied social contract – an accountable “family” 6

7 7 6. Customer centricity & closeness- Being better is more important than being bigger 7. Humble passionate operators who are servant leaders- devaluation of elitism 8. Execution & service champions- excellence everyday every way by everyone 9. An Internal aligned consistent self-reinforcing System ( strategy, culture, structure, HR policies, leadership behavior, measurements, rewards, communications) that enables, motivates, and rewards desired behaviors 9 CONSISTENT FINDINGS (CONT.)

8 NOTICE WHAT IS MISSING Diversified complex best strategies Unique products or services Visionary or charismatic leaders Lowest costs Most innovative Best talent 8

9 WHY SO RARE? Short-termism: mentality, tenure, comp Easier to be external facing Focus on financial metrics not behaviors Alignment is hard to create and maintain Hypocrisy Leaders fail to role model desired behaviors 9

10 COMMON GROWTH PROGRESSION 2 Studies: McKinsey & Hess 1.Geographical expansion 2.Complimentary products to existing customers 3.New customer segments w/existing products 4.Complimentary services for existing customers 5.Cost efficiencies 6.Technology productivity in creation &delivery 7.Small strategic acquisitions 8.Move from selling products to selling solutions 9.All of the above continuously 10

11 11 Darden Growth/Innovation Model New S Curves (5) (7) (1) An Enabling Internal Growth System (2) Strategic Ideation (3) Ideation Communication and Evaluation Processes (4) Learning Launches (5) LL Project Tracking and Portfolio Management System (6) A Growth Initiatives Portfolio (7) Growth Portfolio Management/Review Process (6) (3) (4) (2)(1)

12 2 X 2 X 4 GROWTH PORTFOLIO HPOs create and continually manage a diversified portfolio of growth initiatives: 2: both short-term & long-term initiatives 2: both top-line & bottom line initiatives 4 Ways to Grow: Improvements: better, faster & cheaper Innovations: something new Scaling: doing more of what works Strategic acquisitions 12

13 3 KEY GROWTH PROCESSES Strategic Reframing: Illuminating & challenging your underlying assumptions “givens” about your industry, business model, customers, distribution channels Customer Experience Mapping: A granular charting of every step in a customer or channel distributor experience - “in their shoes” Learning Launch Experiments: Uncovering and testing key CV and execution assumptions to generate better data to make investment decisions 13

14 HOW DO HPOS DISTANCE THEMSELVES IN TOUGH MARKETS? They keep doing what they do everyday but with even more resolve and intensity by focusing on: 1.Becoming even closer to existing customers 2.Aggressive acquisition of key customers from weaker competitors 3.Being even better & faster & cheaper 4.Continuing to invest 5.Becoming even more easier to do business with 14

15 15 6.Focusing on helping their customers survive hard times- “in their shoes” 7.Taking care of their people- leaders are on the front lines even more 8.Expanding judiciously into the right customer segments and geographies where growth is likely by leveraging existing capabilities 9.Creating new “bundles ” or offerings and new distribution channels MORE OF WHAT THEY DID BEFORE !!!! More “farming” not magic HOW DO HPOS DISTANCE THEMSELVES IN TOUGH MARKETS? (CONT.)

16 HPOS CONSTANTLY QUESTION & DEBATE The following slides are intended only to spur more “growth thinking” HPOs continuously engage in critical and constructive debate about their business assumptions 16

17 QUESTIONS FOR YOU? Do you have a culture of constant improvement? Do you have a servant stewardship leadership model? Do you have a highly engaged workforce? Have you defined the right behaviors to drive growth? Do you measure and reward the right behaviors? 17

18 18 Are you structured to maximize growth behaviors? Is being better & faster part of every employee’s job and measurements? Do you- the leaders- spend meaningful time listening to customers and line employees? Do you have an experimental learning process? Do you proactively review quarterly your Growth Portfolio? QUESTIONS FOR YOU? (CONT.)

19 IN TOUGH TIMES, YOU SHOULD 1.Deepen competencies & capabilities 2.Improve your Internal System 3.Experiment more 4.Rethink how you market, position & sell your products in this psychological environment 5.Become even more customer-centric 6.Become even much easier to do business with 7.Challenge & rethink the basic assumptions underlying your industry & business 19


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