Sustaining top-line growth: The real picture

A historical view shows that beating markets is tougher than most leaders believe.

MAY 2011 • Bing Cao, Bin Jiang, and Tim Koller

Source: Corporate Finance Practice

https://www.mckinseyquarterly.com/Corporate_Finance/Performance/Sustaining_top-line_growth_The_real_picture_2807

Organic top line growth is really tough. This is a sobering summary of how companies perform:

"Many leaders set unrealistic growth targets. Often, they don’t properly consider how fast their underlying markets are growing and thus how much market share must be grabbed to meet ambitious goals. Or they ignore the likelihood that their competitors are doing many of the same things to grow. They also underestimate the ongoing need to find new products to replace revenue declines from current offerings as they mature….
 …The median revenue growth rate was 5.9 percent (large, non-financial companies from 1997 to 2007). About one-third of these companies increased their revenues at rates faster than 10 percent. But that one-third figure probably overestimates organic growth, since it includes the effects of acquisitions….…Over a longer time horizon (1965 to 2008), other difficulties come into view…The median was 5.4 percent a year. Although the rate fluctuated from 1 percent to 9 percent according to the economy’s health, there was no upward or downward trend and thus no rising tide to lift growth over the longer haul."

Yes, Everyone Can Be Stupid for a Minute

By ADAM BRYANT

Published: May 7, 2011

This interview with Dominic Orr, president and C.E.O. of Aruba Networks, a wireless networking company, was conducted and condensed by Adam Bryant.

http://www.nytimes.com/2011/05/08/business/08corner.html?_r=1&pagewanted=all

An interesting interview with insights into the corporate culture that drives and accepts failure!

Q. What were some early lessons for you as a manager?
A. The biggest feedback I had from my people is that I didn’t give them feedback.  I was running along.  I had a pretty high standard for myself, and I assumed that everybody who joined my team was operating at the same level. Good work was assumed, so I let them know only when something didn’t go well.  People started telling me it would be nice if I gave them a pat on the back rather than only telling them when things were not good.
  Another thing I distinctly remember is that I had trouble having a difficult discussion with employees because, as a young manager, sometimes you don’t really know how to tell somebody to their face that they’re not doing a good job.  I also struggled at first with this whole process of running a staff meeting. I remember bringing my H.R. person in to have her run meetings so that I wouldn’t take over, express my opinions and then everybody would sit there silently.
Q. What are some other important leadership lessons?
A. I have had a very good mentor — Wim Roelandts, who worked for H.P. for about three decades.  He rose to become the No. 2 executive of H.P. under Lew Platt. He is someone who embraced the old H.P. way.
Q. What were some lessons you learned from him?
A. I would say empowering people. Basically, he would push you and give you as much as you could handle until you started failing. He would encourage you to not be afraid of failing — because when you start failing, that’s when you know where your limit is, and then you can improve around that.  So he actually sometimes would reward failure because that means that you have pushed yourself.
That is an unusual approach, so people under him tended to be able to really find their limits. And once they do that, they figure out a way to overcome it, because they don’t feel that inhibition. I think that is a very big thing. The whole H.P. way of management kind of molded my approach to managing people in business.
Q. And boil that down for me. What is the H.P. way?
A. Fundamentally, the H.P. way started with the basic assumption that each employee wants to do well, and they are capable of doing well, so as a manager you have to give them that environment to flourish. When someone does not perform, the first reaction is not to get angry at them or assume that they are incompetent, but to question whether they have they been matched to the right assignment.  From the background, from the skill set, have you created a productive environment for them?  So the first question as a manager is, have you done something wrong?
Q. Tell me about the culture of the company you run today.
A. I use a simple principle of management based on intellectual honesty.  You try to be intellectually honest with yourself, meaning that you have to forget about all the face-saving issues and so on. I tell people that if you work for me, you have to have a thick skin because there’s no time to posture.
I also tell people that everybody can be and will be momentarily stupid.  I think that in many large companies, a lot of politics arise because somebody makes a statement in a meeting, and then it’s weeks of wasted time and effort because they have to dig in to defend that position, and then politics come into play because they now want to lobby for their position.
So when I interview key executives of my staff, I tell them that they need to accept that they can be, and will be, momentarily stupid. If they can accept that and be able to say, “Oh, I was momentarily stupid; let’s move on,” then you don’t waste time dealing with that.

 

 The New Voice of the CIO

Insights from the Global Chief Information Officer Study, IBM

http://public.dhe.ibm.com/common/ssi/ecm/en/cie03065usen/CIE03065USEN.PDF

Interesting insights in the changing role of the CIO

"The study demonstrated that, especially among high-growth companies,
the role of the CIO is changing. Today’s chief information officers report
spending 55 percent of their time on activities that spur innovation.

These can include: contributing to the development of business strategy;
generating corporate enthusiasm for innovative IT-enabled business
service plans; implementing new technologies; mitigating enterprise risks;
leveraging automation to improve competitiveness and reduce the costs
of business operations; and managing nontechnological issues.

CIOs also position themselves to expect the unexpected. An overwhelming 90
percent of respondents to the CIO Study expect moderate to substantial
changes for IT in the next three years,brought on through pressures
exerted by business model changes, budget constraints, macroeconomic
factors and evolving industry and regional conditions.

Respondent input shows that the CIOs of high-growth PBT companies
strive to meet three overarching objectives. These are making innovation
real, increasing the return on investment of IT and expanding the business
impact of IT. To accomplish these goals, chief information officers often
fulfill three sets of roles. These roles are:
• Insightful Visionary and Able Pragmatist
• Savvy Value Creator and Relentless Cost Cutter
• Collaborative Business Leader and Inspiring IT Manager"