Stall Points: Most Companies Stop Growing, Yours Doesn’t Have To

What are stall points?

According to a study conducted by the Corporate Executive Board, a “stall point” is the moment in time that best represents a downturn in corporate revenue growth. As it turns out, of the Fortune 100 companies who have failed since 1955, only 13% can point to uncontrollable factors as the cause of their stall. The remaining 87% should have seen their stall coming, and done something about it.

What Happens When you Assume?

How do stall points happen? How did we not see them coming? The reality in most organizations is that mental models take hold. The longer these models go unchallenged, the more rigid they become. Organizations develop an unrealistic view of the world, and this “filtering” causes the organization to misread changes in their environment, and ultimately to stall.

To avoid stalling, therefore, organizations must keep a close watch on key strategic factors, including key customer dependency and strategic diffusion, as well as organizational factors including talent bench shortfalls, organizational design and incorrect performance metrics.

Against All Odds

There is no question – the odds are against you. In the study of companies on the Fortune 100, it turns out only 13% of companies will avoid stall points all together. The other 87% aren’t so lucky. Of that 87%, only 11% will actually pull out of a stall point, and return to significant growth. That means that an overwhelming 76% will stall, and never recover. The key to being at least somewhere in the top 24% is to constantly challenge your organization’s mental models, and develop a series of long-term projections that include a number of contingency plans to help you in the event that the gauges on the dashboard start to act up.

Keys to Reversing a Stall Induced Free Fall

Re-orient the plane – Getting control of your organization is key. This involves remarkable levels of communication. Everyone has to know exactly where they’re headed, and fast – even if it’s down. Alignment is critical.

Power-up – It takes a tremendous amount of energy to turn an organization around. The leader can’t do it alone. Everyone has to know what their role in the turnaround is, and they had better get on it.

Adjust the trim – Keep your eyes on the gauges. Once the organization is moving back in the right direction, be vigilant in your monitoring. Otherwise, history will repeat itself – and you might not be as lucky next time.

Re-plot the course – With the stall point in the rear-view mirror, you must refresh the organization’s view of its true business environment, by removing the out dated mental models and inward focus that caused the stall in the first place.