We have discussed the first two keys to organic growth. Now, the next three keys to a company's organic growth are explored.
3. 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.
Best Buy, one of the study’s twenty-two winners, started relying on measurements as a key to growth more than ten years ago. The company provides its retail store managers with in-depth financial training so they understand store return on investment (ROI) and can recognize which customer segment produces the most profit - not sales - profit.
Each store manager receives thirty 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 customer needs.
Think about it. 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.
4. Build a people pipeline. Organic growth companies have a deep bench of engaged employees. Employees of these companies have generally 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 is 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 Tiffany & Company. Tiffany’s employee satisfaction surveys are outstanding, employee retention is over 90 percent, and the company generally promotes from within.
In our study we found that 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 promotions 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 will work hard for companies where they believe they have a future, and where they know they have an impact.
5. Make sure leaders are humble, passionate, focused operators. CEOs at high-performance organic growth companies don’t fit the stereotype of the high-flying, bigger than life, charismatic, all-knowing corporate leader. Like the leaders of any major company, they face intense challenges, manage thousands and tens of thousands—or, in one case, millions of employees, and struggle to maintain their competitive edge.
Yet there is something special about organic growth CEOs. These leaders value their employees. There is a sincere respect for line workers, and no wonder: many such leaders began their careers on the factory floor. In fact, of the twenty-two corporations profiled in the study, fifteen of their CEOs have each spent twenty years or more climbing the ladder to the top of their company.
Clearly organic growth leaders want their companies to operate as teams. At Best Buy, all executive offices are modest in size (barely big enough for a desk and two chairs) and windowless. (The company founder’s office is the one exception.)
The company reserves windows for team spaces, showing that teams are a higher priority than management. Wal-Mart uses an Open Door program, whereby employees can directly contact the CEO about anything they’re not satisfied with.
The president and CEO of Tiffany’s pride themselves on being humble representatives of the company. When asked to describe the Tiffany culture in one word, President Jim Quinn replied, “Humility. There is only one star here and it is Tiffany.”
The study makes it clear that organic growth leaders believe the essence of business is the ability to relate to, to communicate with, and to engage on a deep cognitive and emotional level with employees and customers. Business is done through and with people. These companies constantly fight the deadly killers of corporate cultures: elitism, hubris, arrogance, and complacency.
Find the final key to growing your company organically.
