This is an article I found to be a valuable read for anyone leading companies today:
Full Article from Tech Wire, By Edward D Hess, Prof. of Business and Administration, Darden School of Business. More of his work can be found at www.EDHLTD.com.
Edward Hess Writes:
I have spent the past six years studying why consistent, industry-leading growth is hard to produce over long periods of time. And I have tried to understand the “DNA” of companies that have been able to put together an impressive string of industry-leading growth. Among others, these companies include SYSCO, Best Buy, UPS, Stryker Corp., Total Systems Services, Tiffany & Co., Outback Steakhouses, American Eagle Outfitters and Walgreens.
My work has focused on who seems to create earnings the old fashioned way — more customers, more products/services, more operating efficiencies — in contrast to earnings created by serial acquisitions or generated by financial engineering, currency gains, or accounting elections or reversals, etc.
What I found was that consistent, organic growth is much more than a strategy — it is both a process and an internal system. This system is aligned in that it is seamless, consistent and self-reinforcing. The critical components of the system are one’s strategy, structure, culture, execution processes, employee policies, leadership philosophy, and measurement and reward procedures.
These systems are designed to drive desired behaviors and seek to measure much more than just financial returns. Likewise, these systems are aimed at getting every employee emotionally engaged in growth, not just the executives. The “magic” or beauty of these systems is that line employees take “ownership” and act more entrepreneurially, leading to higher loyalty, emotional engagement and productivity, which results in incremental growth.
When I began my research, my hypotheses were that consistent growth companies had:
(1) differentiating and diversified strategies;
(2) the best talent;
(3) visionary leadership;
(4) unique products or services;
(5) outsourced non-core competencies;
(6) the lowest labor costs; and
(7) the best innovation.
To my surprise, I found none of those hypotheses to be necessary for creating a consistent, high organic-growth company. Instead, I discovered the six keys to organic growth, which are discussed in my book “The Road to Organic Growth” (McGraw-Hill, 2007).
High organic-growth companies had an internal system made up of:
(a) simple, focused strategies;
(b) high employee engagement leading to an ownership mentality and high levels of execution excellence;
(c) humble operators as leaders committed to being better each day;
(d) best of class technology to drive efficiency, productivity and measurements;
(e) an iterative, incremental improvement culture and process mentality focused on being better, faster, and cheaper; and
(f) a resistance to complacency, executive elitism, and in most cases, an avoidance of big-change initiatives and big acquisitions.
Leadership was focused inward on the details of execution and outward on customers. There was less emphasis on industry trends, the competition or Wall Street. The leaders understood that, no matter how good a strategy is in theory, it still has to be executed, and execution happens on the front lines, not with consultants or by executives. Complete Story