Managing Growth Mark T. Schenkel, Ph.D.

Courage: Risk and the Dimensions of Work Life Cycle of a Business Venture

Success Often Breeds Failure? How to fail in business without even trying (Treacy & Wiersema, 1996)? –Why is it that Casio can sell a calculator more cheaply than Kellogg’s can sell a box of cornflakes? Does corn cost that much more than silicon? –Why is it that FedEx can “absolutely, positively” deliver a package overnight, but Delta, American, and United Airlines have trouble keeping your bags on your plane? Do they think you don’t care? –Why is it that you can get patient help from a Home Depot clerkl when selecting a $2.70 package of screws, but you can’t get any advice when purchasing a $2,700 PC from IBM’s direct ordering service? Doesn’t IBM think customer service is worth its time?

Seven Challenges of Growth Strategic –The growth myth –Vision drift –Disjointed strategies Organizational –Cultural drift –Resource crises –Systems crises –Muddled structure

The Growth Myth The Myth Success = Sales... BECAUSE…Sales = Profits The Reality Success is defined by goals of each entrepreneur (ME) No matter what, profits matter, not sales BECAUSE…Profits create income and wealth (and means for further resource acquisition)

Vision Drift Vision is the leader’s view of what the business can become. This vision can become forgotten or off-track during growth... loss of “value discipline”

Disjointed Strategy Market demands should shape strategies Strategies should shape structure, culture, and systems When these are all out of alignment, growth suffers and becomes difficult to manage

Strategic Connection: Growth Decisions Penetration Product Development Market Development Diversification Market Product Existing New New Existing

Culture Drift Common Beliefs, Assumptions, Behaviors Begins Day 1 from Entrepreneur’s values However, it is shaped by all who come into the business Culture can eventually look very different than entrepreneur intended Can be changed, but change is difficult

Resource Crises Management Crises Financial Resource Crises Time Crises

Systems Crises Administrative systems crises Management systems crises

Muddled Structure Structure shaped by specific decisions at critical points in time Decisions shape organizational structure over time Structure that evolves may not fit strategy, culture and market demands

Leadership and Growth Relentless and consistent focus on vision Provide inspiration for company potential Serve as “emotional shock absorber” Adapt to change and learn from failure Focus on results Lead by example for ethical standards

Growth Strategies

The Discipline of Market Leaders Michael Treacy and Fred Wiersema “Value disciplines”... Based not on industry, but on what type of value proposition (VP) is pursued. –Operational Excellence (VP: best total cost – reliability, competitive price, minimal difficulty or inconvenience) –Product Leadership (VP: best product) –Customer Intimacy (VP: best total solution) Good-to-Great bus metaphor: Where’s the bus headed, who needs to get off/on, and are they in the right seats?

Courage: Risk and the Dimensions of Work OPERATIONAL EXCELLENCE PRODUCT LEADERSHIP CUSTOMER INTIMACY Core Business Structure Management Systems Culture

Courage: Risk and the Dimensions of Work OPERATIONAL EXCELLENCE PRODUCT LEADERSHIP CUSTOMER INTIMACY Core Business Efficient distribution StructureCentral authority Management Systems Standard procedures CultureOne size fits all

Courage: Risk and the Dimensions of Work OPERATIONAL EXCELLENCE PRODUCT LEADERSHIP CUSTOMER INTIMACY Core Business Product innovation StructureFlexible Management Systems Reward for innovation CultureExperimentation

Courage: Risk and the Dimensions of Work OPERATIONAL EXCELLENCE PRODUCT LEADERSHIP CUSTOMER INTIMACY Core Business Provide solutions StructureEmpowerment close to customer Management Systems Measure: Cost of service/Return Culture“Have it your way”

Courage: Risk and the Dimensions of Work OPERATIONAL EXCELLENCE PRODUCT LEADERSHIP CUSTOMER INTIMACY Core Business Efficient distribution Product innovation Provide solutions StructureCentral authorityFlexibleEmpowerment close to customer Management Systems Standard procedures Reward for innovation Measure: Cost of service/Return CultureOne size fits allExperimentation“Have it your way”

Key Takeaways Systems  entropy with growth Central growth management challenge = simultaneously: –Reducing involvement time, while –Maintaining focus & control over key issues Strategic Organizational