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.

Leading the Clevers

Clever people are famous fast. Their impact is more profound and spreads more quickly than ever before. The global economy amplifies their influence.

Being clever isn’t just about being smart. While in many cases your organization’s most clever people may also be on the smarter end of the IQ scale, there are many other components to be on the lookout for. Not only do clever people add value, they seek it out. Clever people are always looking for new and exciting things. They are self-motivated, and this is one of their key differentiators.

What Clevers Want

Clever people need to work in clever environments and, if possible, for a clever boss. They respond to expertise, not hierarchy, and that is something mangers and leaders have to understand. For this reason, your position alone isn’t going to get you anywhere with clever people. In the end, though, this leads to a two-fold benefit to having a Clever-friendly culture – you get innovative and creative thinkers, and your managers must constantly develop themselves in order to keep one step ahead of the Clevers.

Another cultural expectation Clevers have is freedom. At Google, a Clever-haven, their corporate culture has been developed in a way that enables Clevers to spend a percentage of their time working on anything that is of personal interest to them. This freedom fulfills a fundamental need in the Clever and, therefore, results in a greater ability to focus on other corporate driven initiatives.

Leading Clever People

Herding cats may seem like a perfect analogy for Clevers. The immediate picture is a room full of self-absorbed, creative thinkers with high ambition.

As a manager, it may seem virtually impossible to approach them, let alone lead them. However, they, as with all other people, are just that – people, and they need you.

In terms of specifics, the first thing they need is context setting. Clever people may have a great ability to solve a problem, but leaders must be willing to spend time ensuring that the Clevers understand the context in which to solve the problem. In other words, tell them the What and the Why of the problem, let them come up with the How.

Secondly, and probably more importantly, is the fact that Clevers need rewards and recognition for their accomplishments. While they may be self-motivated in terms of picking up the next project, they need the satisfaction of knowing that they impressed you, and that you value their contribution.

Bottom line – take of your Clevers, and they will delight you.

Egonomics

You have no idea how it happened.

One moment, you are on top of it all. The next thing you know, both you and your organization are irrelevant. You have become the organizational equivalent of Latin.

You gather your team together in a desperate effort to figure out what happened. One by one, now that they have nothing to lose, they begin to open up. They tell you your own arrogance and overconfidence led the organization to stray from its path. They tell you that, essentially, you are the reason the organization has fallen over the cliff. They tell you how you ignored the warning signs, how you vetoed their decisions and replaced them with your own. They tell you how your charisma blinded the employee population until it was too late.

They go on and on, and you begin to get the message. You are an egomaniac.

The Fact is trust, candour, and alignment are only a pipe dream in many organizations. Far too often a leader, driven by ego, creates a workplace that is dysfunctional, ineffective and, ultimately, heading down a very destructive path.

The Problem is everyone in these types of organizations is a co-conspirator by allowing this type of behaviour to persist. Nobody questions the logic behind bad decisions, nor are they willing to fight for their own point of view.

The Outcome is many organizations are full of thick-walled silos, unhealthy disputes, and bad decisions based predominantly on subjective grounds.

The Solution is to understand that your organization’s egonomics are out of balance.

Egos and your P&L

It’s amazing there’s any room left for ego in the modern workplace. However, according to recent research, there is still plenty to go around.

  • Over one third of all failed business decisions are driven by ego.
  • Nearly two thirds of executives never explore alternatives, once they make up their mind.
  • 81% of managers push their decisions through by persuasion or edict, and not by the value of their idea.

Ego. It’s there – in fact, it’s everywhere.

They key is knowing it, and then learning how to manage it effectively.

Ego is not totally bad, it does have benefits. It drives ambition, instils confidence, and builds courage. In order to be successful, and ultimately unstoppable, organizations must have a certain amount of ego.

The problem arises when the organization’s ego (which can be driven by a single person in a position of power) gets out of control. When this happens, the organization starts to ignore hard data, distort market realities and make bad decisions.

Is ego in balance in your organization?

The Intersection of Ideas

The “new economy” is a term coined over 15 years ago and yet, despite its monumental impact and importance, it is a business concept and point of view still not very well understood. Almost assuredly, its scope is significantly misunderstood and its essential premise confused and diluted.

Simply put – the rules have changed.

Size and scale no longer matter. The current belief is that ultimate “victory” will go to those who understand that speed, agility and originality are what will create sustainable performance in the 21st century.

The bottom line?

Watch what you watch.

Watch what you measure.

Watch what others are watching and measuring.

Yesterday is gone and will not return. Even large doses of nostalgia will not help your organization thrive or survive. The drivers of business success have changed with the times.

Choose your battle:

  • Share of market – leads to an ever smaller piece of the pie
  • Share of wallet works – so long as there is a wallet to open.

The future of business rests in improving your share of opportunity.

Opportunity to produce new products and services. Opportunity to meet new customers. Opportunity to make mistakes, and fix them. Opportunity to re-invent your organization, always outpacing the competitors.

The key today is to understand the new order – the new economy. To capitalize on a strategy that focuses on increasing your share of opportunity, you must understand that opportunity runs on one type of fuel. Opportunity runs on a single, high-octane, unleaded, rocket fuel.

In the business world this fuel is called – ideas.

We believe too many organizations today are spending far too much time searching in vain for the next “home run” concept or business proposition. They seem single-mindedly obsessed with discovering a new concept that will completely redefine who they are, what they do, and how they do it.

Instead, they should be looking at ideas, and how they might support and augment each other. Author and social observer Frans Johansson suggests there is a much different and more effective way of finding new ideas. His theory is based on the belief that it is two existing concepts or ideas which meet at what he calls an “intersection” that have the tremendous potential to be combined into that elusive breakthrough concept.

The Seed of Innovation

One can picture a time – back in the early 1800’s, in a small rural town, perhaps in Canada, Australia or India – when a farmer would wake before dawn, and set out to the fields. He would grab a bag of seed and, by the handful, he would toss the seeds onto the land. He would let nature take its course, and hope that enough rain would come and that the seeds would produce enough food for the family, as well as some to sell in the town.

Today, farmers rely on the latest technology. Seeds are planted with precision, accurate to the centimetre. Irrigation allows for just enough water, and the seeds are constantly monitored, fertilized, and cared for. The resulting crop is bountiful, and even surpasses the demand.

When it comes to innovation, unfortunately, many organizations are still acting like primitive farmers, randomly scattering seeds, hoping for anything. This approach often creates a sense of panic for employees who believe the only innovation worthy of praise is a “breakthrough” innovation.

The reality is – breakthrough innovations are one in a million.

Today’s successful organizations, on the other hand, use well thought out and proven methods and processes that have a better chance of yielding top quality ideas, and then they have an ethic of discipline to carry these ideas through to fruition.

Nice Innovation

The situation in far too many organizations today is that somewhere along the line “out-of-the-box” thinking was actually placed in a black box, and moved to a store room in the basement of Head Office. Goofy brainstorming sessions, and too many PR speeches about how the organization must innovate, have reduced innovation to the business jargon equivalent of the word – nice.

The passion is gone.

The excitement is gone.

The organization didn’t take it seriously, and it died.

I read a book several years ago by Elaine Dundon entitled “The Seeds of Innovation” in which she breaks innovation down into 3 types:

Efficiency Innovation – developing new ways of using and improving what already exists

Evolutionary Innovation – developing “new and improved” ideas

Revolutionary Innovation – developing paradigm shifting new ideas

Your organization will be well served if you are able to focus on the efficiency and evolutionary innovations, and take the pressure off the idea of revolutionary innovations.

Confidence in Organizations

Overcoming obstacles, leaping over hurdles, and recovering from fumbles can strengthen a team that has the discipline not to panic under pressure – so says Rosabeth Moss Kanter in her book “Confidence”.

For many of us, there is one story from our childhood that stands out in our memories. We may forget stories of bears or castles or animals, but none of us forget the little engine that could.

“I think I can, I think I can.”

This essence of perseverance sticks with us throughout our lives. Overcoming setbacks, clawing our way up through adversity. We think we can, we think we can.

Once we reach the top, the mantra changes to – “I know I can.”

This level of confidence is one crucial element that must be in play in order to ensure an organization’s future success. The role of the leader must ultimately be to help instil a sense of confidence in their organization. Confidence helps people take control of circumstances, rather than be dragged along by them. It is a self-propagating mixture of accountability, collaboration, and initiative.

Confidence is based on a cumulative set of events. As a leader, the focus of your effort should be to look at the “wins” and the “losses” in a historical context. Many times, leaders focus on the next win only and, while this is important, they must also consider their team’s overall track record – especially in crucial games.

The most important goal is to develop a series of wins, to be able to create serial success. This “winning streak” mentality is what ultimately translates into higher confidence for the team which, in turn, helps “psyche” them up for the next event. The resulting confidence not only enhances your team’s self-starting ability and sense of empowerment, but also allows you to look further out into the future for even more challenging goals.

In the same way, when your team is in the midst of a losing streak, your focus must be on analyzing missed opportunities, and developing a strategy to keep them from happening again.

Remember that momentum can shift either way with respect to confidence. In sports and in business, winning teams have temporary setbacks to be sure, but they are able to keep the overall momentum moving in the right direction because they have an ability to recall the taste of confidence.

Confidence is self-propagating. It is contagious. Once an organization gets it right, there can be several benefits that ultimately lead to enhanced levels of confidence, including:

– an emotional climate of high expectations

– positive, supportive, team-oriented behaviour

– organizational structures and routines reinforcing accountability, collaboration and innovation

– a network to provide supportive resources

The cycle goes on and on. Winning builds confidence and this confidence builds more winning.

Archive

Igniting Champions
Embracing New Mindsets
Become an Influencer
How the Mighty Fall
Followership
Managing Mental Models
GRIT…
the beacon group …
why CEO’s fail
thoughts on thinking
#PrimeDayFail
this idea must die
“I don’t know!”
leading a winning team
Opportunity Sensing
Faint Signals Matter
It’s About Choices
The Coach as Leader
Opening Our Minds
The Human Dynamic
Caution or Courage?
The Evil of Compromise
Karaoke Capitalism
Lies We Tell Ourselves
Shifting Relationships
Mastering Complexity
Breakthrough Strategy
Early Warning Systems
Banishing Dependence
Book Launch Party
Navigating the Future
Disciplined Thinking
No Time to Waste
leading to the future
Mastering Pivot Points