This article is second in the series of GrowthDNA. The first article, Rethinking Business Growth, can be accessed here: https://www.breakthroughmaster.com/2018/09/rethinking-business-growth/. It describes the four intertwined strands of GrowthDNA that enable sustainable and substantial organizational growth. The chart below also depicts the four strands of GrowthDNA.
The four strands of GrowthDNA interconnect to achieve substantial and sustainable growth. All four are required to maximize results. In order to strengthen each strand it is important to understand how they work together to produce results. The strands interconnect in three specific ways:
- They are cyclical; there is a natural starting place and the cycle never ends.
- They are cumulative, with each strand building on to the one before it.
- They are diagnostic, as they provide the ability to diagnose the root cause of issues that limit growth.
Start the Cycle by Building Confidence through Market Intelligence
The initial engagement point for those wanting to build GrowthDNA is Confidence. Without it, other actions around the circle are typically more incremental in nature, with less impact, and often under-resourced. Leaders without Confidence may have too many irons in the fire or limit resources as they are uncertain about what to invest in and fear over-investing. What high growth leaders understand is that the right data helps mitigate risk while providing greater certainty that decisions and resulting actions are on the right track. It inspires bigger, bolder moves that can lead the industry instead of mimicking others.
Interestingly, most leaders start with Commitment. It is in this phase that operational execution is challenged, scoped and defined. They ask the question, “How can we be better?”. Without realizing it, leaders are asking a question that will perpetuate the status quo. Why? Because the word “better” implies that the current business model—markets, customers, and products—is on track and the focus becomes fixed on how to improve it, not whether to challenge or change it. That establishes limitations from the outset.
What happens when the question is “How do we make our existing our product better?” The solution is most likely to produce a product extension, like adding whitening formula to the toothpaste. But what if what is needed is a new way of offering toothpaste –say a variety of options depending on circumstances like freshening breath on date night, or whitening teeth before that vacation, or improving sensitivity before eating cold foods? What if you didn’t have to buy a whole tube of toothpaste and make a choice about what to use? What If you could have a Keurig-like dispenser for the right toothpaste at the right time? Pop in the cup for the right toothpaste for today. Does that come from asking what can we do better? Or does it come from collecting market intelligence about what is valued by customers, defining the problems customers want to solve, and the Confidence to develop new approaches to the market to do it?
Market Intelligence Focuses on Outside-In Data
Key decisions are only as good as their inputs. If those inputs are timely and relevant data points that represent the needs of the market served, chances of improving performance are greater than continuing on the same path, emulating the competition (who probably doesn’t have data either) or guessing based on antidotal evidence. The right time to invest in data is before key decisions—such as strategy– are made.
Most organizations tend to have more data in operational and financial data than market intelligence. They know more about what exists inside the four walls than what is going on in the market they are trying to serve. There is greater emphasis on cost containment, which is controllable, than market growth, which feels less certain. Having outside-in data, information about customers, their needs, their profitability, their view of competitors, and general market trends and conditions, enable leaders to think about solving customer problems rather than sell customers products. One approach is outside-in the other inside-out. Solving customer problems correlates highly with account growth. Further, Bain and Company released a study recently that reinforces the benefit of investing in market information that leads to growth. The rise in Intrinsic Equity Value from a 1% Increase in market growth for manufacturers is 18% while a 1% increase in pretax profit yields 4%. The right kind of data—market intelligence that helps identify growth opportunities– is essential to success.
The Cycle is Ongoing and Dynamic
As the organization works through the entire cycle and better understands the value of the data and how to deploy the data in decision-making, the more support there is for identification and development of data capture and analysis systems. This function will get more robust over time as the cycle continues and the strand strengthened further. And that is true of all the strands—GrowthDNA builds over time.
Organizations with a strong Confidence strand have an ongoing mechanism for data collection, dissemination, and decision-making. While each decision should be data-driven, setting up a market intelligence system is something that can be built over time. Thus, the concept of a cycle. It doesn’t have to start as a large effort. It just has to start.
The timing of the cycle most often corresponds with an organization’s natural planning cycle. However, unlike strategic planning, is not event or process driven; rather it is dynamic and driven by strategic issues and opportunities facing an organization. For example, the first time through the cycle may be driven by a specific catalyst such as lack of growth or loss of a major customer or even the desire to create a strategic plan. That catalyst will determine what data is most needed initially. After that first cycle is completed, as progress against goals is monitored, leaders may choose to further strengthen each strand as they identify other data they would like to have to build Confidence, determine what further Clarity is required, establish deeper organizational Commitment, or define other behavioral changes needed for a growth-minded Culture. The more experience an organization has going around the cycle, the more they strengthen each strand; the better they get, the greater value derived.
Define What is Possible Rather Than What is Probable
After establishing the Confidence born of market intelligence, the organization is ready to challenge themselves to provide the Clarity that comes from charting the path of growth for the organization. That demands asking the question, “What is possible for this organization to achieve?” as opposed to “What makes us better or what is the most probable path for us?” Possibilities capture potential while probabilities yield predictable outcomes.
The latter tends to lead to operational improvements within a current business model. The former frees up thinking to pursue dramatic change when paired with the confidence of market intelligence. It is a common self-limiting belief that 10x is not in the cards and the company should be thrilled with a 10% increase. In fact, the case can be made that 10% may be harder than 10x.
When we think of 10% increases we try to stretch what already exists in product, distribution, and resources to get there. When 10x is the goal, the organization understands things will have to be dramatically different—maybe the core business becomes one of several divisions; a local company goes global; products are sold across multiple markets rather than one. New possibilities open themselves up when not restrained by the past. One question may improve the company; the other transforms it.
Clear Strategy Guides All Other Decisions
Strategy sets the course for the where the organization wants to be in the future. It answers the questions of “Where we will play” and “How we will win”. As can be seen from the chart below, while understanding the market in which the organization operates is the first step (and the biggest box), all other decisions in a company are subordinate to the strategy. While understanding the market in which the organization operates is the first step, all other decisions in the company are subordinate to the strategy. It is impossible to know where to invest, who to hire, or how to go to market without understanding strategy. Every person in the organization required to make a decision needs to understand the direction of the company so they can align their work to it. That is why Clarity matters. Having a direction is not enough. It must be clearly understood. That means it must be directional not theoretical, it must be specific not general, and it must be actionable.
Clarity Drives Growth Acceleration
Why is Clarity so hard to achieve? Getting agreement is easier when the concept is vague and each person can interpret it the way they like. More specific direction feels like greater risk if you lack appropriate market intelligence. It is not enough to say we have the best products, the greatest value, or the most satisfied customers. Those statements provide no direction and don’t define what attributes contribute to being best so most don’t know what to improve. While it may feel counter-intuitive, the truth is that the pace of acceleration of business growth is directly correlated to the clarity of the strategic concept that drives it.
Commitment Means Mobilizing the Organizational Brain-Trust
After establishing a clear focus, leadership can begin to drive Commitment. They have a common understanding of where the organization is going and the Confidence to commit—resources, money, and time. It is in this stage that the rest of the company needs to be brought on board. This step is called mobilizing the collective brain-trust. Strategy can be created at the top of the house but cannot be implemented there. For a company to have high growth performance, they must engage the entire work force with clear expectations and assignments, spawning a new energy and enthusiasm for producing value. The leadership team is responsible for providing that constant and relentless drum beat that motivates the rest of the organization.
The GrowthDNA Strand of Commitment Eradicates Organizational Silos
It is in this stage that value will be won or lost. Organizations that publish their vision and goals and then go back to their offices and resume doing what they did yesterday, don’t win. Leaders must spend a significant amount of time defining what needs to be done differently—specific programs, tasks, timelines, resources allocation and measures to be achieved– to educate and engage employees. Further, this work cannot happen in silos.
If each functional or department leader is assigned this task independent of the other, the opportunity for significant change is lost. All the leader can typically do at that point is maximize their own department’s function within the confines of current macro systems and resources. There are four common problems that emerge:
- The initiative they come up with isn’t on strategy; it makes the department better but doesn’t advance the overall organization closer to its desired future.
- The initiative isn’t properly vetted. Since you are asking functional experts to do what they do best, typically there is a Confidence born of experience rather than data. There may not be a set of established decision parameters that each investment must meet. That means decisions aren’t being made based on market data and a strong business case, leading to higher failure rates.
- They expect too much too soon. Post strategy, initial enthusiasm often incents leaders to work on multiple projects simultaneously. None of them may feel too large or out of reach. But when implemented together, collectively those projects stretch resources too thin, don’t have a significant impact, and die a slow death of resource starvation.
- Priorities aren’t clear. When each department has its own list of priorities, it becomes unclear what really matters. Particularly for areas that support multiple departments like IT. Whose project is most important? That should be decided in the strategy phase to ensure Clarity of direction and guide action.
Leaders Leverage Departments to Serve Enterprise Goals, Not Maximize Functional Performance
It is imperative that leaders determine how their functional area contributes to achieving the organization’s strategy rather than maximize department performance. For example, maximizing operational efficiency isn’t adding value if it compromises the ability to deliver high quality products and quality is a competitive advantage. Investing heavy R & D in developing a bells and whistle gadget doesn’t fit the strategy of an organization who is pursuing price sensitive customers. Each senior leader, rather than be responsible for maximizing their department performance, must ask and answer the question, “How can our work maximize the performance of the company?” A good test to use is whether priorities are so clear across the organization that there are no disputes during the budget process.
How senior leaders behave, what and how often they communicate, and their ability to encourage two-way dialogue about the direction of the company will determine the success of the strategy.
Sustaining Momentum Requires Internalization of GrowthDNA into Culture
Once leadership has been successful in communicating the strategy with Clarity and developing Commitment through the collective brain-trust, it is time to look at how to sustain the engagement and the initial results company-wide programs generate. It is not uncommon to see an initial uptick in revenue only to have it settle again at historic levels when the “phase” passes. Many longer-term employees call it the “flavor of the month” or “shiny thing” syndrome.
To sustain high performance over time requires a growth mindset to permeate the organization. This high growth Culture incorporates new ways to work, new ways to make decisions, and new ways to communicate. It knits the organization closer together while demanding more of each employee in terms of problem solving, creativity and value contribution.
This “C”, of the 4 GrowthDNA “C’s”, may be the most challenging of all. It requires leaders to operate in a constant state of consciousness to avoid falling into historical habits. After lack of Confidence, this is the second biggest inhibitor to growth. It is so easy to believe that the answers to business challenges should be known given the depth of experience with the category but in fact, past knowledge is suspect if it isn’t from the end customer—and their needs and expectations are constantly evolving. Admitting you don’t know (without new market intelligence) after years of industry experience is a humbling act yet absolutely necessary for future success.
For the new Culture to take root, employees must be encouraged to contribute to the future of the organization through their daily actions. To do so, they must:
- Understand how to contribute. One client provided a simple and focused expectation: Each employee was to find ways every day to make their customers more productive.
- Be encouraged to find ways to contribute. Whether they are offered special project assignments or required to report their contributions in performance reviews, employees must recognize the value the company places on their contributions to the company’s future.
- Have two-way dialogues. Leaders need to not only hear employee’s questions and ideas but respond to them.
- Have decision-making capability. The only way to engage everyone is to give them authority to act. Companies need to think carefully about what employees need to know to make good decisions consistent with company priorities and resource allocation—and then provide it. That might be decision-making criteria, the sharing of market intelligence, financial performance, and other closely held company information.
- Have regular, consistent, and authentic communication from Leadership. If leaders aren’t on the same page, employees won’t be either. Cultures that work best are the ones where leadership is aligned and make it clear that they are committed to staying the course.
No Rose-Colored Glasses
No company is perfect and it is not leadership’s job to protect employees from mistakes or vice versa. Leaders need to be open to hearing bad news and what isn’t working just as employees do. It is in this open exchange of information that new transformative ideas are often discovered.
If an organization wants to maximize the speed and extent of their growth, it requires every employee to make value-adding contributions. That means that employees have to feel empowered and encouraged to make decisions that improve company performance. In creating that type of environment, leaders multiply the bandwidth of what can be accomplished. Leaders end up with more time to focus on the issues that only they can address, which is turn powers up the strategic growth opportunities of the company.
How do you empower employees? Start by training leaders to “ask, not tell.” Too often business executives tell employees what to do. It is faster and easier than taking the time to develop the employee. But it does nothing to develop a growth mind set. By training leaders to ask employees what they think should be done, rather than provide answers, leaders get to hear new ideas while coaching employees on strategic, financial, market or operational inputs important to the decision. A true win-win.
GrowthDNA is Cumulative
The four intertwined GrowthDNA strands are cumulative, each reinforcing the other. Much like in weaving, where threads intertwine to produce strong cloth, GrowthDNA relies on all four C’s to build the strongest result. Woven fabrics are some of the strongest due in large part to the over/under weave of the various threads. There is not just one thing that dictates the strength of the weave; factors that go into creating the strength of woven fabrics include yarn count, fiber density, and tightness of the weave.
In weaving, the lengthwise or longitudinal warp yarns are held stationary in tension on a frame or loom while the transverse weft is drawn through and inserted over-and-under the warp. If there was not adequate tension on the loom, the weft could not be drawn tight and provide the necessary fabric strength. With GrowthDNA, if there is not adequate data to generate leadership-wide Confidence in growth strategy, it is unlikely that there will be agreement and the default is to focus on departmental operational improvements, thus sub-optimizing performance against potential. If there is not sufficient Clarity of direction, people won’t understand what they are committing to and will find it difficult to offer value-adding contributions even if they want to. If Commitment is lacking, results will be limited. If a Culture of growth-mindedness isn’t created, it is likely that results will be moderated or less likely to be sustained.
While strengthening any one of the four GrowthDNA strands can have a positive impact on the business, all four are required for sustainable high performance year in and year out.
GrowthDNA Diagnoses Growth Limiters
Every organization has business gravity. Gravity is created by habit, those things that are routinely accepted as given—whether it is how we think, how we work, or how we behave. These are established over time and absorbed by new employees until they become the standard. They are usually self-created but they are very difficult to change. Just like gravity, they tend to be invisible, and without conscious thought.
GrowthDNA can help organizations correctly diagnose growth limiters. It isn’t uncommon that when undesirable symptoms or behaviors are identified, the root cause of the problem is misunderstood. If you review the GrowthDNA wheel, note the outcomes produced by each strand (along the outer edge of the circle). If one of these outcomes is the issue, then that is the strand that needs to be strengthened. Following are some examples of “gravity” and the corresponding GrowthDNA strand that needs to be treated to resolve the issue:
- Does your company lack leadership alignment? Do managers tend to thrive running their departments but lack the interest or effort to lead their area in supporting the broader enterprise strategy? This isn’t necessarily a Commitment issue. They may be very loyal to the company and believe they are acting in its best interest. Rather, they lack Confidence in the vision and are not aligned. The case for change hasn’t been built and they revert to where they have the most Confidence—their own back yard.
- Does your company have a strategic plan but struggles with execution? Chances are leadership has not translated the plan into an actionable set of initiatives, not funded them properly, or most likely of all, not communicated them adequately to motivate the troops. Commitment is lacking.
- Is there an issue sustaining momentum? Culture may not be inclusive and growth minded, with too few people involved in trying to transform the organization.
One way to determine which strand is limiting growth is take the DNA Scorecard Assessment. It will give you a score for each strand in your organization so that you can discover which may be creating your limitations. It is available here and takes just a few minutes and provides immediate results. Take the GrowthDNA assessment
Strengthen Your Organization’s GrowthDNA
GrowthDNA is what separates those organizations able to achieve sustainable results year after year from the rest. To be clear, the “DNA” isn’t the function or skill, like market intelligence or strategy. Rather it is the “C” connected to it—Confidence, Clarity, Commitment, and Culture. These C’s are organic characteristics that are embedded in an organization. They are not skills that are taught. They are there as a result of how leaders lead.
Every organization has the opportunity to strengthen their GrowthDNA by changing how the organization thinks, decides, and acts. It requires a conscious approach that starts at the top of the company and weaves its way through every action, every decision, and every communication. And the kicker? Cultivating GrowthDNA is not a big financial investment like installing a new ERP or hiring more sales people. It is simply a change in how organizations work every day.
Interested in knowing what your organization’s GrowthDNA is? Take this simple assessment and find out instantly. Take the Assessment
Have questions about how GrowthDNA could work for your organization? Contact Margaret Reynolds, Master Growth Catalyst, and founder of Breakthrough Masters Unlimited at firstname.lastname@example.org or 816-622-8843.
Margaret Reynolds is an author and champion of business growth. Her book, Reignite: How Everyday Companies Spark Next Stage Growth, is available on Amazon.