The statistics paint a bleak picture:
- From 2001-2011, only about 10% of companies actually met their growth targets, Bain & Co. find.
- Only 13% of Fortune 100 companies were able to sustain as little as 2% annual real revenue growth from one decade to the next over the past 50 years, reports CEB Inc.
Well, that’s enough to make many leaders go back to bed and pull the covers over their heads. But for the ones willing to fight through such a tough environment, Leonard Sherman advises they channel their inner cat.
Sherman explains that in such a competitive dogfight, it’s the companies that are clever, bold and independent – like cats – that will be the ones to survive and thrive.
“The market doesn’t stay still. You go back hundreds of years, and you’re going to see one evolution after another,” Sherman says. “If companies try to stop the clock, they will wind up being left behind.”
Companies like Kodak and Blockbuster failed because they were defending current market positions and didn’t differentiate themselves with new products or services, he says. If companies fail to constantly renew their competitive advantage with innovative ideas, then the market becomes saturated. Competitors will begin attacking current products with comparable or better products – often at a lower cost, he explains.
Sherman, executive in residence and adjunct professor of marketing and management at the Columbia Business School, also has worked as an Accenture senior partner and J.D. Power and Associates managing partner.
He says that experience has shown him that the pace of change is more rapid than ever before, and those “that go with the flow will be left behind.”
One of the biggest problems, he says, is that many companies don’t seem to know their own strategy. “There is so much going on when managing a complex company, and every day people are throwing out suggestions and bombarding the leader. That’s when action can be confused with progress,” he says. “It’s a rare CEO that can cut through the noise and distraction. That’s why you hear it at all levels that people just aren’t sure where the company is headed.”
He says that Amazon’s CEO Jeff Bezos has the right idea when he says that “We are stubborn on vision. We are flexible on details.”
In his book, “If You’re in a Dogfight, Become a Cat!” Sherman uses Yellow Tail wine from Australia as an example of how company made critical strategic decisions that helped it become a success in a crowded wine market.
Among the things Yellow Tail did right that others should emulate for sustainable growth:
- Continuous innovation. Innovation doesn’t always mean a big technological breakthrough. In this case, there was innovation by Yellow Tail in recognizing that there was a unique, untapped opportunity to serve a large number of U.S. consumers being ignored by thousands of other wines that were expensive and overly complex for this population.
- Meaningful differentiation: Yellow Tail wasn’t so expensive that it turned off consumers – it was an affordable choice for everyday consumption that could be enjoyed by both experienced wine drinkers and new consumers. They also had a different design: one bottle shape for every kind of wine they offered, featuring a kangaroo.
- Business alignment. This means that all corporate capabilities, resources, incentives and business culture and processes are aligned to support a company’s strategic intent. In Yellow Tail’s case, there was an alignment of all business practices of Casella Family Brands in Australia and Deutsch Family Wine & Spirits, which joined with Casella in a bid to diversify the company’s wine portfolio.
Finally, Sherman says it’s also important that employees at every level feel empowered to “feed back information” as they receive it from customers.
“Top leaders have shockingly little perception of how products are received in the marketplace,” Sherman says. “It’s key for employees to help them understand.”
Posted in Digital Transformation, Process Improvement | Tagged business alignment, culture