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The "Secrets" of Enduring Business High Performance
Genworth FinancialALM
January, 2011Ed HessProfessor of Business AdministrationBatten [email protected]
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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
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GROWTH INHIBITORSIndividuals : Corporations:
Cognitive blindness Failure to experiment
Cognitive dissonance Standardization/No variance
Legacy thinking Short-termism
Hiring & promotion biases Low employee engagement
Arrogance ROE-it is
Fear of failure Punishment of mistakes
Product centricity
Group think
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A
HPOS: 30 YEARS OF RESEARCHThe “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
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HPOS
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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”
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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.)
NOTICE WHAT IS MISSING
Diversified complex best strategies
Unique products or services
Visionary or charismatic leaders
Lowest costs
Most innovative
Best talent
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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
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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
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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)
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
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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
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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
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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.)
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
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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?
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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.)
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
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