In the fall of 2012, I made a presentation at a seminar focused on high growth strategies and I was intrigued that most questions and comments were directed at the pitfalls encountered, or to be avoided, while implementing such strategies. In this context, I define high growth strategies as major new product or service introductions or moving into new business sectors or geographies.
This is the second article in the series and it follows “High Growth Strategy Pitfall #1 – Turning Your Back on Your Base Business”.
There is an often used analogy “You can’t build a house on a cracked foundation” and this applies very well to expanding into new fields of business when there are flaws in the existing operations. Bringing new clients and related volume into an operation that is ill prepared for it is likely to result in inefficiencies and errors that will frustrate both the new clients and employees at the same time resulting in unpleasant consequences.
A friend of mine had accepted a position as CEO of a professional services business and after a few months had elapsed he engaged me to facilitate the annual senior management offsite meetings where the focus would be on the vision for the future and related new business streams.
I have found that engaging meeting attendees in confidential one-on-one consultations prior to the offsite session is a great way to develop an understanding of both the business and the views and opinions of these key individuals. Gathering perspectives from non-attendees is also valuable; and in this situation I held some employee group sessions. This process is invaluable in creating the agenda for the upcoming sessions.
Following the consultations, I will always remember walking into the CEO’s office and calling a “Time-Out”. I said that we should not be talking new growth strategy but rather working on business fundamentals. Unbeknownst to me prior to conducting the interviews was that the company was losing clients and employees and morale was low. People were spending time putting out fires as client delivery dates were missed on a regular basis. Employees stated that they hoped no additional volume would be coming in because they could not cope with what they had.
As a result the offsite and resultant action plans were focused on meeting client needs and expectations, employee satisfaction and on fixing business processes. We then held monthly follow-up sessions on the action plan and within a few months all action plan items had been implemented.
Over the following year, I conducted confidential interviews with a selection of key clients and these have been repeated on a regular basis and satisfaction levels have risen sharply. Likewise we conducted employee satisfaction surveys with similar results.
The offsite session the following year was focused on vision and high growth strategies, held with the comfort that the foundation was solid and employees were once again excited about facing the challenges that new clients and business would bring.
High growth strategies include acquisitions and the same foundational problems may be present in addition to the expected issues based upon different processes and different cultures. In the case of strategic purchases there is most often an expectation for savings associated with business synergies.
Prior to the creation of Halifax Global, I had been working with a large corporation that had recently purchased a value added reseller that had revenues of over $200 million from operations throughout North America and Europe. I was asked to join the newly acquired subsidiary as the Senior Vice-President Finance and one of the tasks was to help deliver on the operational synergies that had been identified during the acquisition process.
What I found was that there was a myriad of operational problems that had to be addressed before we could implement synergistic measures. The process was one of problem and solution identification with a well-communicated and distributed action plan.
An absolute key to success was to solicit and receive the proactive involvement of the acquired company’s employees and the elimination of the “We/They” syndrome.
Accordingly, the timeframe for implementation was extended from one to two years which provided time to solve the foundational issues from which we were then able to deliver the promised savings.
An important, but often unrecognized, element of the foundation is having a culture that will support aggressive revenue growth.
I was working on an initial assignment with a client that was going through transformational change with aggressive growth plans. Through my consultations with senior management and selected staff members, it became obvious that the existing culture in the organization was not conducive to bringing on new business in an effective manner. The decision-making process was too centralized at a very senior level and employee involvement with the planning processes, including budgets, was minimal.
Working with the leadership team, an action plan was created that included employee training that would enable enhanced employee empowerment. The planning processes were revamped with greater employee involvement in setting plans and objectives which generated heightened commitment, buy-in and accountability to the plans.
The engagement of and input from all employees in the planning process helped to identify the skill gaps that existed in the company that would curtail expansive growth. Filling those identified critical positions in various departments throughout the company not only provided the skill sets required but also demonstrated to all employees that their voices were being heard.
The overall outcome was that a culture shift occurred that strengthened the foundation of the company.
Two critical elements of an organization’s foundation are its people and processes. There must be the good people in the right positions with both an appropriate culture and with positive morale all supported by strong business processes. The stories are examples of pitfalls and shortcomings that have existed and been eliminated thus providing for the ability to enjoy new business growth.
Later in January, I will be writing about Pitfall #3 – Faltering Commitment to support High Growth Strategies!
In the meantime, additional insights related to growth pitfalls can be found in the first article in this series plus a previous blog article that I wrote called “The Ten Keys to Customer Satisfaction for Services Businesses” that you may find of interest.