Growth: It Has To Be Understood Before It Is Achieved
James Carville, a political strategist, participating in a TV show had famously said “It's the economy, stupid!” He should have instead said “It's about growth, stupid!”.
The economy grows when value is created.
Every bit of any corporate transition - innovation, enhanced sales, cost containment, quality enhancement, reduction of cycle time, faster adaptation – must lead to growth.
Is it simple then? No, it is not.
Growth is amongst the most used but also the most misunderstood concepts in business life. I owe it to my training at Hindustan Unilever that I was taught the real value and meaning of targeted growth. I was a summer intern, management trainee, sales manager, customer marketing manager and category head in HUL, and at every stage the focus was on sustained growth.
Many seasoned business leaders, economic theorists and market analysts presume that each category will grow in some formulaic correlation to the GDP growth rate. This is a belief that will lead to abandonment of responsibility and eventual collapse.
A management that focuses on macro factors alone or thinks of only operational excellence neglects growth. Incremental market gains won’t secure a future for a company. Corporate growth leads to economic growth. Hence it is vital.
That's where the first principle comes in. Growth is imperative but not all growth is good. Only sustainable, margin accretive and capital efficient growth ought to be celebrated. Just because volume surges do not mean all is well. In fact, this may deplete earnings, erode margins, or steal from the future.
Secondly growth de-risks business. There is no point rearranging the furniture on the deck of a Titanic! Growth must be based on tightly defined customer needs and unique capabilities and advantages.
A growth culture emphasizes the ability to learn and relearn, tool and retool. Growth doesn't jump from the PowerPoint slide to the shop floor. It demands meticulous attention to costs, quality, product innovation, turnover time, productivity, asset utilization, efficient capital structure, strong brand pull, innovative supply chain and above all, customer satisfaction.
These are the ingredients that make the ‘growth masala’.
Lastly, I learned that growth needs humility. It needs creativity. Pre-conviction and hubris destroy growth. Those managers who walk in consumer shoes, stay curious, apply imagination and have more emotional energy, win. The biggest retardant is inertia. When successful, the question is “Why fix it if it isn’t broke?”. Then conditions change and the valley of degrowth appears right up ahead.
But the road to growth is paved with tombstones of failed projects.
Understand the difference between what you make and what the customer needs.
Those who are on the needle of the Consumer True North, don't lose their way to growth. The essence it to ask many questions such as:
- “What's happening in the marketplace?”
- “What's happening in consumer lives?”
- “What are the change agents?”
- “How are needs being addressed?”
- “Can I address these needs, viably?”
- “How can I benefit from the resulting opportunities?”
- “What are the advantages we need to create?”
- “What's the gap between our present and future?”
- “What do we need to de-emphasize vs. re-emphasize?”
Before I conclude, you may be thinking I am only stating the obvious and that this is common sense. That’s a fact. But you should remember that in business, common sense is the most precious and the most elusive thing.
Growth requires imagination with disciplined execution. The greater the change, the more we need to explore possibilities beyond currently served markets/categories to achieve growth. Wealth creation demands expanding the category and enlarging the market. Those who are invested in the past don’t want to change it. Old reflexes defy the change impulse. Careers, rewards and identities that get fixated to past success don’t allow the growth accelerator to be pressed.
Above all, leadership promotes growth by setting a pattern for everyone. It guides how all stakeholders interact and determines which ideas get adopted. Critically, it sinks show boats and promotes those who deliver results.
Talk is cheap. Growth is tough.
Let growth talk.
