Business Growth is an Outcome, Not an Objective
Because growth is a process, not a project
Growing for one year is luck. Growing for two years straight is expertise. Growing every single year is mastery.
Inside the Club today:
1. When your growth machine stalls
2. Growth Metabolism
3. The fight for change
4. CEO Uncomfortable Questions
A powerful engine running in neutral
A year ago, a subscriber to this newsletter—let’s call him John—reached out. He was facing a business challenge and thought I might have the right perspective to help.
Two weeks later, I found myself in John’s office in one of Europe’s major capitals. John told me his story. We kicked off a collaboration that lasted several months. Looking back, we both consider the project a success.
John has kindly allowed me to share our journey as a case study for this post.
John’s father founded the company thirty years ago. John has worked there his entire adult life. He started as a sales rep and worked his way up through several promotions. The only break he took was while getting an MBA at a prestigious business school.
Four years ago, when his father retired, John took over. He had many ambitious ideas, and becoming CEO finally gave him the chance to implement them.
One of those ideas really took off, and the business doubled in size within three years. But then, growth stalled.
“That innovation has run its course,” John admitted. “We have many other ideas, but most of them are still just on paper.”
John had discussed this issue with his team many times. His executives complained that as the business scaled, they had become bogged down in day-to-day operations. This left them with no capacity for innovation.
John’s response was to hire more staff to shoulder the workload, but it did little to solve the problem.
“We’ve stalled,” he said. “We’re like a powerful engine running in neutral.”
I knew what he meant. When I was nine, my father bought me a geared bike—all my friends were green with envy. When I learned to ride it, I noticed that in first or second gear, I had to pedal very fast while moving very slowly.
Decades later, during my years as a CEO, I often recalled that experience. At times, I felt like an exhausted rider pedaling like hell, while my bike—my company—was moving at the speed of a drunk turtle.
When a company stops creating its own Patrons, it stalls.
Growth metabolism
I took a look at John’s situation through the lens of my Customer-Axis Framework: Design for Inherent Growth. Specifically, I focused on one of its core pieces — Growth Metabolism.
Mission
The principle: A company needs a mission that clearly defines the headaches it fixes for people. That’s the only way to know who your future customers actually are.
The roadblock: John’s mission was blurry and years out of date.
Growth is a process
The principle: Growth is a process, not a project. Companies must continuously decode latent customer needs, amplify customer value, and hone the product.
The roadblock: John’s team tackled growth only once a year, in the fall, during the ‘crazy planning season.’ For the rest of the year, the execs just tried to stick to the plan and avoid changing a thing. Realigning the plan was just too much of a headache, and the CEO frowned on any deviations.
The planning system was too rigid.
Feedback loop
The principle: A company needs a solid feedback loop on the ‘customer-company’ axis. It’s the engine you use to sharpen your product and get quick input from your customers.
The roadblock: John’s company didn’t have such a system.
Engagement
The principle: The leadership team has to be hands-on with this. To make that happen, you need a strong middle management team that’s got your back on the day-to-day stuff.
The roadblock: Middle managers in John’s company were more like sergeants than officers.
Customer value
The principle: Customer value, not just profit, should be the ultimate filter, the axis for every decision. If a decision boosts customer value, it is, more likely than not, the right decision.
If you create customer value, turning it into profit is purely a matter of execution.
The roadblock: Because the leadership was so fixated on profit, they never really delegated.
Assets and Processes
The principle: Your assets and processes should be tightly wrapped around the customer-value axis.
The roadblock: In John’s business they were wrapped around net profit.
Goal Cascading
The principle: Strategic goals shouldn’t just be cascaded down. They must also be tied to your processes. In plain English, executives must be able to answer the question: ‘What processes do we need to change to hit this specific objective?’
The roadblock: I saw an impressive goal tree in John’s office, but the goals were not actually tied to any specific processes.
The whole thing reminded me of Communist countries in the late ‘80s. Bold slogans about the triumph of Communism were plastered everywhere—on the walls, in the newspapers, and in every official speech. But the people on the ground were indifferent. They were just busy with their own daily struggles.
At John’s, growth was the official party line, but somehow, the leadership could never quite get around to it.
Been there, seen that.
We’ll dive into specific aspects of Growth Metabolism in future issues. Stay tuned!
The Fight for Change
The toughest roadblocks we face are the ones we build ourselves.
Clearing those roadblocks wasn’t exactly a walk in the park. We had some pretty intense, frank debates in John’s office with him and his team.
They told me I just didn’t get their business.
They insisted their situation was unique. So unique, in fact, that no framework could ever work for them.
“Forget frameworks,” I said. “Let’s arm ourselves with logic instead.”
Logic is my weapon of choice.
We stripped every single Growth Metabolism principle down to the nuts and bolts and applied them to the company’s issues.
And since logic is powerless in love and politics, but devastatingly effective in business, we finally hammered out a roadmap for change.
This process isn’t a quick fix, and it doesn’t deliver results overnight. But from what we’ve seen so far, it’s clear that the changes are starting to pay off.
John’s business is growing. But more importantly, it’s making his customers happy. That’s what gives us the confidence that this growth is here to stay.
CEO uncomfortable questions
1. Is your company’s growth metabolism working properly?
2. Do you actually wrap all your processes and assets around customer value?
3. Are your executives engaged enough in growth and development?
4. Is growth a process or a project in your business?
Conclusion
Every company has only one source of growth—new customers.
The only source of new customers is customer value.
When your company becomes a value-generating machine, growth becomes inevitable.
Next week will discuss the No Strategy Approach. Stay tuned!
In the picture: I run strategy retreats all the time, but when a client chooses the Maldives (like they did this week), it’s a real treat.
Strategy quips of the week
Many CEOs smile when their kids believe in Santa and the Tooth Fairy. Then they go to work and draw up an annual budget, refusing to deviate from it by even a millimeter.
Planning to build a shed and scaling a business are totally different animals. Hammers, boards, and screws follow orders. Customers, competitors, and employees don’t.
I absolutely support the ambition to improve and achieve greater things. However, I've increasingly found myself wondering whether we might need to come to terms with the idea that perpetual growth may not be possible—or at least no longer meaningful. Do we really need a fourth car or a tenth pair of pants? The more people who achieve prosperity, and the higher that prosperity becomes, the lower the potential for continued growth seems to be. What are your thoughts on this?