Last week I set out the three pillars of sustained business growth, which I called the 3Ps – pace, precision and persistent prototyping. One of my reflections is that all three of these factors need to be present if your business is to sustain profitable growth.
As set out in the attached chart, even where two of the three factors are present, it is insufficient for success. Let’s look at these three possibilities:
- Knitting Stickers. In his book, In Search Of Excellence, Tom Peters argued that companies should ‘stick to the knitting’ and in Good To Great, Jim Collins made a similar argument with his ‘hedgehog concept’. But sticking to the knitting is only good as long as everyone still wants knitted products. As soon as people prefer something different, it doesn’t matter how good a knitter you are, you are going to struggle to thrive. First Direct is an example of this kind of organisation. When it was launched in the 1980s, this telephone-only bank offered innovative levels of service and customer care, and delivered on its promise effectively. Over the years, however, it has struggled to adapt to the rise of on-line banking and maintain its differentiation. Rather than developing and doggedly pursuing alternative business models, it has, instead, stuck to its original call centre model as the basis of the business.
- Promise Breakers. In position 2, these companies fail to offer the levels of precision that customers demand. They promise a lot, but struggle to meet the standards they set themselves. Many writers have argued that modern businesses should move from a Ready, Aim, Fire! philosophy to a Ready, Fire, Aim! approach. But these businesses employ a Ready, Fire! Ready, Fire! culture that misses out on the aiming element to its cost. Microsoft, for instance, has acted with pace to launch new operating systems such as Microsoft XP and, more recently, Windows 8, have been developed and launched at pace, but have failed to take account of user concerns and issues and have ultimately paid the price with poor revenues and profits.
- Tortoise Developers. Many of the most successful businesses recognise the need for excellence and precision and the need to develop new offerings and business models. The factor they fall down on is pace. Their leaders fail to spot the dangers to their business quickly enough, and, when they do, fail to act quickly enough. Kodak, Olivetti, HMV and Blockbuster are all examples of one-time market leaders that have failed to change in time with technology, their competitors and their customers. They believed that ‘slow and steady’ would win the race and took solace from Aesop’s fable, The Hare and The Tortoise. They should have realised that Aesop’s story was only a story because, 99 times out of 100, the hare would win!
It is only in position 4, where all three factors are present that you are able to drive rapid and sustainable business growth. Which position is your business in, and what do you need to do to ensure that your company achieves and stays in position 4?
© Stuart Cross 2013. All rights reserved.