Strategic Discipline Blog

Would it surprise you to discover most of the challenges with profitable growth are internal factors versus external factors?

This graph, from Chris Zook’s The Founders Mentality at the San Antonio Scale Up Summit, shares only 15% of CEO’s cite external factors as their failure for growth.

In Understand Your Core - The Founders Mentality we shared Domino’s Pizza’s five dominate capabilities which make Domino’s the best performing pizza chain.  We shared the challenges of understanding your Core, what your Core is and the first pitfall to profitable growth.

Today we share pitfalls #2 and #3, acknowledging the greatest barriers to growth are largely in your control.

Understanding your Core is challenging.  This blog and The Founders Mentality should give you the confidence, with enough due diligence, conviction, discipline, and commitment you can discover your Core to achieve profitable growth.

PITFALL #2

2. Follow the “Wrong” Theory of Growth; Failure to Leverage the Power of Repeatable Model; Fall Prey to Complexity as a Result
   1. Repeatable Models - Zook shared NIKE as an example. Nike focuses on performance grown through a relentless repeatable growth formula, sport after sport, arena after arena, basketball, football, shoes tailored to type of player, then tennis.  Nike continued to apply it to surf, musicians, etc.  Everyone in the company knows how they grow. It used to be by product, now by sport. It was country, now cities.  They know how to watch their core and grow it.
      1. REEBOK - Zook cited Reebok as the dreaded pattern of no pattern. They never figured out their core, yet in 1995 they were in the same place in terms of revenue as NIKE
   2. Most important decisions are what you say no to. The simplest business faces many adjacency choices. Example: Starbucks 70-100 adjacent moves it can make. Look at the chart Zook shared on Starbucks.
   3. Pursuing adjacencies is not trivial and the odds are not high. How many steps is it away from your core?  87% of executives indicated that adjacency moves are more complex than anticipated.
      1. Customers
      2. Geography
      3. Products

1. (OLAM) In Nigeria, 1989, OLAM started with cashews. They’ve expanded now to 50 products from $2 Billion to $19 Billion with a hermetically sealed supply chain. Talent management, supply chain, expansion each was a one step away from their core move.
2. Define Your Key Capabilities – Drive Learning. If you can learn faster than your competitors you can stay ahead of them.  Learn from customers.   Outdistanced in learning, you fall behind.  This is another Core Principle we coach our customers on consistently.  As pointed out in Happy Employees – Happy Customers - The Future Workplace Experience, there are more corporate university (4200) than colleges. (Jeanne Meister)

PITFALL #3

3. Failure to Maintain The Founders Mentality As You Scale (Ben Hogan’s Five Rules Of Golf – simple but hard to do) See Understand Your Core - The Founders Mentality for Domino’s Pizza example.
   1. Most barriers to growth are traceable to deep internal factors - See the graph at the front of this blog. Only 15% of executives cite external factors as barriers to growth. Zook noted that the #1 selling sports book is The Inner Game of Tennis/Golf – Business needs to recognize the need for this focus.
   2. Zook shared Starbucks as an example of losing this Founders Mentality. In 2008 Howard Schultz retired, same store sales dropped, new stores didn’t perform.  The board begged Howard to come back. There were many cited reasons for Starbuck’s fall off. Could have been people sick of Starbucks, wanted tea, or juices, more coffee shops emulating Starbucks, the competition getting better.  Howard Schultz assessment, “Victims of self-inflicted wounds.”  Starbucks is now worth 4x what it was worth at its peak.
   3. FOUNDER LED COMPANIES CONSISTENTLY OUTPERFORM 3.1x SHAREHOLDER RETURNS Even when Zook took out Silicon Valley Company’s influence, (as his coworkers at Bain & Co. urged him to do) outperformance was still 3.0
   4. Elements of The Founders Mentality – (3) See The Founders Mentality Outperforms for more details on these three elements with company examples.
      1. INSURGENCY –
      2. Front Line Obsession – Customer Intimacy
      3. Owners Mindset

Building a profitable growth business requires discipline. It requires tools for Four Decisions, People, Strategy, Execution, and Cash.  Positioning Systems Strategic Discipline creates the proper foundation on Priority, Metrics, and Meeting Rhythms to propel your business to profitable growth.  Contact dwick@positioningsystems.com.

Mastering Leadership – Next Blog

What traits make for great leaders?  Would you like to discover which characteristics provide better leaders?  Get an accurate track on who on your team leads well, and more importantly how they can improve?  Bill Adams and Bob Anderson Authors of Mastering Leadership: An Integrated Framework For Breakthrough Performance And Extraordinary Business Results shared their book and the Leadership Circle Profile to discover all this.  Two definitive characteristics I learned from their presentation next blog.