Many people look at high-growth companies worth millions or billions of dollars and think "Wow, how did they do that?" There is an air of mysticism attached to breakthrough business growth, and many executives wonder if there is a secret formula behind scaling a business into a high-growth company.
The answer is "Yes" — and what's even better — CEOs can learn the art and science of business growth.
For 20 years, I've worked with hundreds of CEOs of growth companies in Australia, US, Europe, China, India, Singapore, and New Zealand. Last year I was recruited by UniSA to establish the Centre for Business Growth to help CEOs and their executive teams learn how to lead and manage growth. Since then, we have worked with over 75 companies across Australia with revenues between $5 million and $50 million, helping the executive teams understand what they need to do, or stop doing, to grow.
From my experience, there are several reasons why companies don't grow or have stopped growing. Here are the five most common mistakes CEOs and executive teams make growing a company and how they can overcome them.
1: Not defining the company's mission, vision and values
It sounds simple, but having a clearly defined mission, vision and set of values can help achieve alignment in a company. The mission statement is the core of the company's purpose – the raison d'etre for the organisation. Leaders need to keep the mission simple and make sure it defines what the company does, for whom, and the desired outcome. The values are the common principles and behaviours that describe how the organisation does business and how the CEO wants employees to interact with each other, customers, suppliers and vendors.
Creating a shared vision for the company is powerful – it is incredibly important for engaging staff, it keeps people motivated, provides meaning and makes each person's job significant. It is the CEOs role to create the vision of where the company is going, engage the team in estimating what it will take to get there, and then make sure employees really understand how what they do contributes to the achievement of that vision.
2: Not understanding the roles and responsibilities as CEO
Too many business leaders think their job is to make all the decisions and be at the centre of everything. They feel that they need to show their employees that they can do the "real work" by involving themselves in the day-to-day operations of their company. The fact is, too many CEOs find themselves working "in the business" rather than "on the business".
CEOs need to understand how their roles and responsibilities change during the various stages of growth and how their behaviour impacts their company's growth from one stage to the next. It's important for CEOs to delegate, communicate effectively and plan ahead in order to prevent themselves from becoming the bottleneck to their company's growth.
3. Super-sizing is not the best path to growth
Many executives choose a "super-size" growth strategy; to sell more of their current products or to ramp up the value of existing customers. If executives are serious about growth, they need to think about identifying new customer segments, developing new products or selling new products to new customer segments. As Steve Jobs and Apple implored people: "think different" – CEOs need to create a culture that encourages trying new things, learning from failures and being willing to experiment in order to grow.
4. Relying on "luck"
It's too easy in times of plenty, when the market is sending business your way, to turn into an order taker not a business builder. Some companies are in the right place, at the right time and experience growth because the economy was growing, the executives had good networks and business came their way without having to do much. If executives are going to keep their business moving up the growth curve, they need to be prepared for a market change and have a growth strategy that targets various customer segments. Executives need to plan for the future, develop the infrastructure to their support growth and take advantage of today's momentum to build the solid foundations to overcome tomorrow's challenges.
5. Failing to keep the hunger and think big
When companies get to a certain point, some CEOs and leaders put on the cruise control. They have enough money to lead a comfortable lifestyle, own a beach house and take nice holidays. A lot of CEOs think "why should I put everything I worked so hard for on the line? Why not just be satisfied with what I have?"
CEOs who talk like this have reached the ceiling of complexity. They don't know what to do to take the company to the next level and aren't thinking big. They pull up the drawbridge and want to protect their castle.
One of the most important changes executives need to make to build a high-growth business is their mindset. As soon as business leaders start to open their mind and think about how their company could be a $100 million business rather than a $10 million business, they start to challenge themselves and their team and set the company on the path to success.
For CEOs and executives who are ready to make change, growth requires vision, courage, knowledge, teamwork and execution.
This article was originally published on The Conversation.