Executive Focus: Three Keys to Growing Your Company the Old-fashioned Way

Recent corporate financial scandals have called into question the quality of corporate earnings. Just because we don’t often hear about companies that thrive via positive, healthy, organic growth — by growing their customer base, creating new products and mastering operational efficiency — doesn’t mean they don’t exist. They do. What’s more, these companies convincingly demonstrate that you can be a high-performance organic growth company without resorting to accounting and earnings manipulations and without commoditizing and devaluing your employees.

So what’s necessary if you want to grow a successful big business organically? Below are the three keys to successful growth and a few examples of how companies make them work:

1. Live by an elevator-pitch business model. Companies that grow organically have a simple, easy-to-understand strategy and business model that easily can be related on a short elevator ride. These strategy models can be understood by employees at any level. These companies are disciplined and focused. Big innovations and new business models are not prevalent. Examples of these elevator pitches are:

Best Buy: Best Buy sells and services branded customer electronics, appliances, home office equipment and entertainment products.

Harley-Davidson: Harley-Davidson manufactures and sells motorcycles, motorcycle parts, and related apparel and accessories.

Tiffany & Co.: Tiffany designs, manufactures, and sells fine jewelry and luxury goods.

With simplicity comes employee understanding and engagement, because employees know where the company is headed, how it will get there, and what their individual roles are in that growth. Employees understand why their jobs are important and how they fit into the big picture. Simplicity is the key.

2. Measure everything. Without measurements, companies have no way to gauge performance. That’s why organic-growth companies measure everything, not just financial results. Operational and behavioral metrics make accountability more transparent, fair and objective. They are mission critical to long-term organic growth. These companies are measurement maniacs. What do they track? Metrics include people behaviors, detailed customer metrics, logistic/distribution chain metrics, supply chain metrics, customer satisfaction metrics, quality metrics and basic financial metrics, to name just a few.

Multichannel electronics merchant Best Buy started relying on measurements as a key to growth more than 10 years ago. The company provides its retail store managers with in-depth financial training so they understand store return on investment and can recognize which customer segment produces the most profit — not sales, profit. Each store manager receives 30 operational metrics daily. They are coded green (good), yellow (caution), or red (problem). Managers are coached on how to eliminate red problems and mitigate yellows. The company has five key customer segments — named Jane, Buzz, Barry, Ray and Jill — that are profiled in great detail, and store salespeople are trained to identify, qualify and meet those individual customers’ needs. If there is a task that you want your employees to focus on, all you have to do is measure and reward it. We’ve all heard that line from “Field of Dreams,” “If you build it, they will come.” Well, in business, if you measure and reward it, it will get done.

3. Build a people pipeline. Organic growth companies have a deep bench of engaged employees. Employees of these companies generally have bought into the system in a committed way. And in business there is no greater advantage than committed, loyal employees. You lose time and effectiveness when you have to continuously train new employees. If you have high turnover, it’s hard to build a “be-better” entrepreneurial culture. The opposite of employee turnover is an engaged workforce, one that is focused, committed and continuously trying to be better, with a financial and emotional stake in the outcome.

One example of a well-built people pipeline is jewelry marketer Tiffany & Co. Tiffany’s employee satisfaction surveys are outstanding, employee retention is over 90 percent, and the company generally promotes from within. The company rarely hires a vice president-level candidate from the outside, and at least 50 percent of its managers and 65 percent of its store directors are promoted from within.

With high-performance organic growth companies, there is an implied social contract between the corporation and its employees that the rules of the game will not change mid-stream. Employees work hard for companies where they believe they have a future, and where they know they have an impact.

Edward Hess, B.S., J.D., LL.M., is an adjunct professor of organization and management, and the founder and executive director of both The Center for Entrepreneurship & Corporate Growth and The Values-Based Leadership Institute at The Goizueta Business School, Emory University. He is the author of “The Road to Organic Growth: How Great Companies Consistently Grow Marketshare from Within” (McGraw-Hill, 2007, $22.95). He can be reached via his Web site, www.EDHLTD.com.