Here is a rigorous analytical foundation for understanding growth and the architecture needed to manage it
I read this book when it was first published (in 2008) and recently re-read it, curious to know how well its key insights have held up since then. If anything, they are of greater relevance and value now than they were then.
The co-authors – Patrick Viguerie, Sven Smit, and Mehrdad Baghai – wrote this book in response to a key question that most C-level executives now ask themselves and others at least once a day: “Where will profitable growth come from and how can we sustain it, if not increase it?” I recently conducted a workshop for a Fortune 100 company’s senior management team and that is what most of them identified when I asked them which question do they find most difficult to answer.
Whatever their size and nature may be, most organizations face many of the same challenges although, obviously, there are differences in terms of extent or scale. Viguerie, Smit, and Baghai explore the particular challenges faced by large organizations in driving and sustaining growth. “The first of these is a basic numbers problem: the bigger you are, the harder it is to drive the next quantum of growth…The second challenge facing large companies has to do with longevity: the longer you’ve been in business and the larger you are, the more likely it is that your business is maturing. As it does so, it will almost certainly encounter the problems of aging: innovation starts to slow and returns gradually decline. What’s more, the sheer size of a mature organization can produce inertia.” Viguerie, Smit, and Baghai share their thoughts about how to prepare for and then respond effectively to such challenges.
These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of this book’s coverage:
o Value creation (Pages 2-10, 214-215, and 220-224)
o Company categories: Challenged, Growth Giants, Performers, and Unrewarded (4-8 and 214-217)
o Granular issues (33-36 and 105-106)
o Direction of growth (68-69)
o Balancing acquisitions and divestitures (92-96)
o Growth map (112-121)
o Low momentum companies (124-127)
o Architecture of granularity (138-143)
o Procter & Gamble (144-151)
o Growth and company architecture (153-161)
o Scale platforms (176-185)
o Granular and cluster-based growth (188-202)
o Deloitte (193-200)
o Key performance indicators (194-2002)
As I worked my way through Viguerie, Smit, and Baghai’s lively as well as eloquent narrative, I was again reminded of Jack Welch’s comments at a GE annual meeting many years ago when he was chairman and CEO and explained why he thought so highly of small companies:
“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”
Why is granularity the central theme of this book? According to Viguerie, Smit, and Baghai, it refers to the components within a larger system such as GE’s. “A description of a system is more granular (or ‘fine-grained’) if the description involves a larger number of components. For example, planet Earth could be described in terms of continent s, countries, states and provinces, cities, towns, and villages, in order of increasing granularity.”
So what? In fact, a great deal. Patrick Viguerie, Sven Smit, and Mehrdad Baghai offer an abundance of valuable information, insights, and counsel that will help prepare business leaders, especially in large organizations, to identify sources of growth that can drive enduring company performance. They would be among the first to agree, however, that it would be a fool’s errand to attempt to apply everything they suggest for consideration. Shrewd readers will focus on what is most relevant to their own organization in terms of its resources, values, and strategic objectives. The challenge remains the same for both organizations and individuals: grow or go. To paraphrase Marshall Goldsmith, what got them here won’t even allow them to remain here, much less get to there, whatever and wherever “here” and “there” may be.Tags: GE, Here is a rigorous analytical foundation for understanding growth and the architecture needed to manage it, Jack Welch, John Wiley & Sons, Marshall Goldsmith, Mehrdad Baghai, Patrick Viguerie, Sven Smit, The Granularity of Growth: How to Identify the Sources of Growth and Drive Enduring Company Performance, “Where will profitable growth come from and how can we sustain it [comma] if not increase it?”