When Ray Kroc struck a deal with the McDonald brothers to scale their fast food burger concept, he didn’t limit his ambition to a few restaurants in the American Midwest. He thought big, and that’s what he got.
We work with many founders in high growth companies, and also with non-founder-led companies that consistently outgrow their peers. One leader asked me recently what the common thread was. What do the fastest growers have in common?
My initial reaction was that it was ambition itself, mixed with boldness and sheer impatience at the way things are. Agility (in the sense of being rapidly adaptable; scrums aren’t required), vision and a growth mindset were clearly necessary too.
But the more I thought about it, the more I realised that something important was missing. Ambition, boldness and the like are indeed necessary for consistent, sustained growth beyond the market, but they are also insufficient.
The forgotten ingredient: Execution
Good execution – the disciplined, consistent, efficient, ever incrementally-improving delivery of business as usual – is vital in a turnaround or for milking cash cows. It’s what distinguishes winners and losers in mature, competitive markets.
We rarely associate it with starting and scaling businesses, particularly those that seek to reinvent their sector, disrupt their market or drive breakthrough innovations. After all, concentrating too much on bread and butter work can easily limit expansion, for example by restricting risk appetite or lowering people’s growth horizons to ‘last year plus three or four percent’.
But it doesn’t have to be that way.
Entrepreneurial boldness and good old-fashioned business management are hardly mutually exclusive. Even when you’re starting a company, you need to be able to deliver against the opportunities and ideas you’ve created, and to do so without breaking the bank. And the companies that keep growing – the ones that capitalise on entrepreneurial opportunities repeatedly, and reach genuine scale – almost always exhibit both qualities to a high level.
Between 1989 and 2004, Wal-Mart increased turnover from $20 billion to $256 billion. Adjusting for inflation, that’s more than eightfold growth over 15 years, and it wasn’t by doing anything particularly radical. Wal-Mart just executed better, with great discipline, efficiency and quality management, and it used that as a platform for world domination: it is still the world’s largest company by revenue.
Finding balance: Growth architecture
The former CEO of 3M, Sir George Buckley, once said that the core of every business is dying. You need to change and seek new opportunities to survive as well as to grow. But at the same time you need to run the business as well as possible as it is today.
The most successful high-growth companies find a way of doing both at the same time.
Some do it by separating their more mature operations from their bolder bets on the future, running the former for efficient execution, while giving the latter sufficient slack to take more risks. You often see this ring-fencing approach in large businesses looking to reignite growth, for example with telecom companies (which are not exactly going anywhere quickly) launching cybersecurity and cloud services divisions (which are).
Others aim to blend fast-paced ambition with quality execution at every level of the company. Octopus Energy, which featured in last year’s Growth Index, comes to mind here, expanding horizontally rather than vertically to avoid bureaucratic ‘bloat’.
Which approach is right for you will depend on your circumstances, and it will have to go deep if it is to succeed. There needs to be alignment between your culture, your strategy, your organisational structure and the people you deploy to do the job, a holistic combination we call growth architecture.
For example, let’s say you have one senior executive who is relentless at finding new business development opportunities, who takes chances and pushes everyone to aim far higher than they otherwise would, and another who excels at making careful plans and sticking to them. As Wal-Mart proved they can both help grow your business, but you can hardly just plonk them together and expect it to work. Their roles and responsibilities within the strategy, their mutual boundaries and their team fit all need to be carefully considered and constructed.
This is perhaps the most important thing that high growth companies have in common: they have worked out their bespoke formula for growth. No one succeeds time and again by accident. Instead, they ensure that bold ambition and disciplined execution coexist, in partnership not in conflict. That way, they can reach for the sky while keeping their feet very much on the ground.
To find out more about our approach to growth architecture and how we can support your ambitions, contact us here.