Why Do Great Winners Have the Discipline to Leave Growth on the Table? Jim Collins - Dallas Growth Summit
THURSDAY, OCTOBER 29TH, 2009
Is it important to control growth? With our Gazelles growth clients we reinforce that growth sucks cash. However Jim Collins pointed out a number of reasons why leaders who succeed recognize when they should leave growth on the table.
There are times when I wish I could take short hand. Jim Collins provided us with a scenario of two companies in an explosive growth industry, small entrepreneurial businesses, technical field with long term growth potential, in an exciting market place with lots of changes happening. He gave us growth rates – one 25% [Company A] the other 40% [Company B] and asked us quickly which would you rather own. Then he provided their standard variation [A +/- 7%, B +/-323%], high and low range for growth [A 44%/20%, B 1028/-397], and finally what a dollar invested in 1978 would be worth in 2002.
Can you tell from the numbers which company provided a better return? Company B would return by 2002 $14 for every dollar invested in 1978. Company A would provide $290 on that same dollar.
The key to growth is discipline. If there ever is a valid reason for strategic planning this is a good example. Stage two in How the Mighty Fall is “Undisciplined Pursuit of More.“
Collins asked our group to answer why do great winners have the discipline to leave growth on the table? At our table the responses varied from too much of a good thing, to not having enough resources to fulfill customer needs, losing focus, unable to maintain culture, have right people in the right seats, to human and monetary capital.
In your strategic planning sessions you should be asking:
1. What should be our primary constraints on growth?
It should be specific. And it possibly should be subject to a condition. Nucor constraint as an example is that they must be profitable every single year. They understand what drives their flywheel which is their culture and they are not going to grow beyond their ability to sustain that culture. So what should your primary constraint on growth be in your company?
2. What will we hold ourselves to achieve no matter what world does?
This should be a specific minimum performance level that you hold yourself accountable to. It may be an accounting standard, cash or money position, or perhaps an inventory level.
Winners think differently, however they have one common characteristic. They are disciplined in their approach. The four decisions we teach our clients as gazelles coaches requires the leader and the executive team to create a disciplined approach to People, Strategy, Execution and Cash. If you wish to get on the path to greatness, it’s time to acknowledge the absolute critical need for you and your team to have a disciplined approach to operating your business.
Aubrey Daniels gave a tool to determine PIC’s in his presentation. If you played basketball you may be familiar with picks, as a block to prevent a defender from getting through to guard you or one of your teammates to help your team score. Whether you are aware of it or not, PIC’s are either allowing or preventing your company from performing. I’ll discuss what a PIC is and why it’s so important in every business to get high performance.
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