What do Nokia, Kodak and HMV have in common? The answer is that they are all major companies that have failed. Not only that, but they are excellent major companies that have failed. Their failures weren’t a result of poor operational performance, but instead resulted from poor leadership. Each of these businesses failed to change and evolve in response to rapidly changing markets and that problem is, at its heart, a leadership issue. And, in turn, the poor leadership decisions made by each company’s executive teams reflected the invisible beliefs that each leader carried around with them.
In my 25 years working with businesses of all shapes and sizes across different geographical markets I have identified 10 common self-limiting beliefs that kill companies’ growth potential and prevent organisations from achieving their potential.
- Our goal is profit. Profit is not a goal; it is a constraint. The sustained success of a business is not achieved by pursuing profits but by creating products and services that customers can’t get enough of in a cost-effective way. Without the customer demand there is no company, and that should be the goal of every leadership team.
- The customer is always right. They’re not. In particular, customers are seldom right when it comes to creating innovative new products and services. When Renault was planning the launch of its unusual Twingo car in the early 1990s over 75% of customers tested gave the concept negative ratings. The car’s design took some getting used to and it required a collective leap of faith before the company made its most successful launch ever. If the directors had just listened to its customers the car would have never seen a production line.
- We want an organization of happy, satisfied workers. Wrong. Instead, you want an organization of productive colleagues. I once worked with a grocery chain that was investing $ millions on a new staff satisfaction scheme. The only problem was that when we did a bit of research we found that the happiest, most satisfied staff worked at the least productive stores. The busiest, fastest growing and most profitable stores were staffed by colleagues who were far less satisfied, mainly because they were under pressure all day to deliver.
- Strategy is long term. The creation and delivery of a strategy needn’t take years to achieve. In fact a new strategy can be envisioned in a matter of hours and its delivery can be achieved within months not years. At one business I worked with, we established a new strategic ambition and direction in a two-day session, including a 4-year goal to profitably double its level of production. Immediately following that meeting managers and executives began making decisions consistent with the new strategy and the business had delivered a 30% performance improvement on its new #1 goal in less than 12 months.
- 100% quality is mission-critical. Pursuing 100% quality is self-defeating in three ways. First, it is likely to cost too much. Second, it takes too long to achieve. Third, it inhibits you from taking the risk of launching 90% quality products with the potential to inspire, engage and attract more customers. The only mission-critical factor you need to consider is your ability to deliver innovative new products and services faster than your rivals.
- Only implement what your organisation has the capability to deliver. If that was true no company could ever truly innovate. Let the strength of the new ideas you’re your business direct the capabilities you need, not the other way round. Find new people with the skills and talents you need, partner with other organisations, and use the innovation process to build the capabilities you need. Even Procter & Gamble, the consumer goods giant, now aims to source over half of its new product ideas from outside the company.
- Fail to plan and you plan to fail. I much prefer the army’s adage, “Plans rarely survive contact with the enemy” or, even better, Mike Tyson’s quoate that “Everyone has a plan – ‘till they get punched in the mouth!” In other words, success doesn’t go to those companies with the best plans, but those that are able to repeatedly act, learn and adapt quicker than their competitors.
- Reward success. Everyone wants success, but if that is all you ever reward you are unwittingly reducing the level of risk-taking in your company. Your people will only ever do anything if they know it will be successful. Instead, you need to reward behaviours, rather than simply results. Have a reward for the best idea that failed, for example, or talk about a glorious failure that brings to life the attitude and behaviours you are trying to embed in your organisation.
- Downturns are dangerous. When markets decline and times get tough the natural reaction is to batten down the hatches, cut costs and reduce investment. Yet, the evidence shows that a totally different approach is required. A study of 1,000 businesses clearly demonstrated that the companies that performed best in the years following a 1990s recession were those that had continued to invest in marketing, maintained their appetitie for acquisitions and continued to innovate. The winner of the Tour de France doesn’t build a lead going downhill – all the cyclists go at a similar speed on these stretches. Instead, the winner makes his move on one of the tougher climbs in the race. Similarly, it is in difficult market environments that you can move to accelerate the growth of your business.
- Only operate in attractive markets. Business leaders are attracted to high growth, profitable markets. This seems natural, doesn’t it? Who wouldn’t want to expand their business operations into China. The only trouble is that you are far more likely to make profitable returns if you are advantaged in an unattractive market than if you are disadvantaged in an attractive market. The critical success driver is building and exploiting your sources of competitive advantage, not merely investing in supposedly attractive markets. Vodafone pulled out of China and Tesco exited the US market, for instance, after both companies had invested £ millions without creating any clear advantages. Compare that to Ryanair’s ability to consistenly deliver profits in the tough, unattractive European airline business. The difference is Ryanair’s business model is based on a series of distinct competitive advantages rather than the hope that involvement in a strong market will lead to success.
Which of these beliefs do you and your company’s leaders hold? And what new growth ideas could you identify and deliver if you challenged and removed these self-limiting beliefs and growth killers?
© Stuart Cross 2015. All rights reserved.