The upward trajectory of growth is exciting, challenging and at times mystifying and elusive. Growth happens due to a group of factors, some of which are dependent on timing and luck. You can put all the pieces in place for a growth strategy and execute well and still not achieve the planned growth. At other times, the simplest adjustment in color, price or promotion generates significant new sales. If you are embarking on a growth strategy the odds of success are in favor of assembling the pieces, hiring well, executing well and a bit of luck. However in a pinch, just luck can work.
Growing fast is like catching lightening in a bottle, it is not easy and is risky. But once growth has begun it is imperative that you don’t screw it up. Like Bull Durham’s Nuke LaLoosh, a superstitious baseball pitcher, you must respect the streak. You must respect the thing that is bringing the customers to your business. Too often managers will want to implement changes without regard to how that effects the very thing that drives customer acceptance. I get that the lead engineer wants to tweak the product for more performance and the head of operations wants to reorganize (again) and the stores team wants to update the prototype. All of these things will eventually get done, but don’t let them come before sales.
I once worked with a company posting solid 6% comps in an industry that was lucky to get 2%. Overall sales growth was high teens. The management team kept trying to change the formula, seeking to compete against bigger companies. What they didn’t see is that the strength of the business was the very product and service lines they were de-emphasizing. At another company the culture was very gung ho and entrepreneurial, which had been a big part of the strategy. The new CEO saw his role as professionalizing the team, which mostly consisted of adding bureaucracy and purging the company of all managers who weren’t loyal to the new CEO. Disaster ensued.
Although it is seems hard to believe, management teams often do not understand what drives incremental growth or short term sales slumps. They speculate, hypothesize and test, but often don’t know if the change in trend is short term or long term. Management teams are paid to take action, and often they take action prior to diagnosis. Tom Peters used the term “ready-fire-aim” to coach big businesses to move faster. For small business this is a bad strategy. You already pull the trigger plenty fast, you just don’t hit many targets.
John Tukey put it “Far better an approximate answer to the right question, which is often vague, than an exact answer to the wrong question, which can always be made precise.” A great strategy based on the wrong question is far worse than an ok strategy to the right question. Doing nothing is a better result than doing something wrong. Doctors take an oath to “first do no harm” as the cure can be worse than the disease. Managers should take the same oath. Before messing with a product line that is working or with a company that is killing it, make sure that your changes don’t impact the reason that customers are choosing you over your competitors. And when in doubt, test and test again.
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Dr. John Zott is the Principal consultant at Bates Creek Consulting. John is the chair of the Careers Committee at FEI Silicon Valley, a senior adjunct professor at Golden Gate University and comments regularly on issues that affect consumer businesses. If you are looking for a CFO for your e-commerce/retail/consumer company, or are a former student, colleague or would just like to connect – reach out. And remember quidquid Latine dictum sit altum videtur (whatever said in Latin, seems profound).