In This Issue:
Right Risks and Right Analysis Drive Corporate Growth
Over the last several years, more and more studies have emerged that identify pieces of what it takes to achieve successful business growth. One study of corporate midlevel managers who led successful growth was in the July 7 Wall Street Journal article "In Search of Growth Leaders" by Sean D. Carr, Jeanne M. Liedtka, Robert Rosen and Robert E. Wiltbank, and it makes some good points about growth.
But, since my research was underway for 20+ years and looked at a wide range of business growth issues, its expansive breadth adds insights to help clarify and further explain newer studies like this one in The Wall Street Journal. These insights can help companies apply the studies more effectively.
The Importance of Small
The Growth Leaders study in The Wall Street Journal points out the importance of making small bets. Having studied these kinds of issues for over 20 years, my research agrees that successful growth comes via small steps. And, others agree as well. Whether you call them small bets, small steps, evolutionary steps, building on past foundations, pursuing adjacencies, or even sticking to your knitting, it is the same underlying principle that is so critical for successful growth. Giant leaps into the unknown generally don't yield strong growth. (To learn more, see my Winning MovesŪ Special Report "Evolution, Not Revolution," which explains how small, evolutionary steps drive successful growth.)
Right Kind of Analysis Reduces Risk
The Wall Street Journal Growth Leaders article recommends managing risk through action, rather than managing risk through analysis. My research does not agree. According to my findings, what this really means is that analysis methods companies rely on often may not work well. Thus, it's tempting to conclude that risk is better managed with action, not analysis.
But, my research finds that analysis should be used to manage risk, however, it cannot be solely based upon traditional methods. My findings reveal that the right kind of analysis can often keep companies from taking actions that are later identified as costly mistakes. Yet, the kind of analysis needed for this is frequently not the analysis that is done. So, companies must improve their analysis and learn the principles behind interpreting data more effectively, in ways that better reflect business success patterns.
The Myth of Huge Risks
One of the more interesting findings of The Wall Street Journal Growth Leaders study is that CPAs with an audit background often led successful corporate growth. Its authors suggest that auditors' exposure to so many diverse areas of a company may explain their success with growth. My take: it is true that diverse experience can sometimes make possibilities easier to see. And, it may be that people who see more possibilities are more likely to want and get diverse experience. But, according to my research, which finds that those small steps and building on past knowledge are of utmost importance, something else might explain why auditors would do well.
There is evidence that auditors are often Meyers-Briggs personality types STJ, types known for their stability. Additionally, traditional stereotypes also characterize auditors as highly risk averse. And, contrary to popular myth, successful business growth generally doesn't result from taking huge risks. It comes from those small evolutionary steps. Furthermore, my research indicates that many of those who led successful growth didn't necessarily have auditor-like exposure to diverse functions, but they did take those small, evolutionary steps.
I haven't studied auditors specifically and I don't know the personalities of the auditors in the Growth Leaders study. But, my research seems to imply that, due to their risk aversion, auditors may be more likely to take small steps than more hard charging types from other functional areas. And, those small steps spawn growth. In fact, The Wall Street Journal Growth Leaders study actually points out that minimizing risk is associated with greater growth success, yet the Growth Leaders study does not appear to connect auditors' risk aversion to their more frequent association with successful corporate growth.
Don't Rush to Apply Studies--Auditors Not Always the Answer
Rather than rushing to put auditors in all growth roles, companies should learn to apply the principles of successful growth. The small steps, small bets, or evolutionary steps are critical. Companies must work to better understand what they are, as well as when and how to take them. And, you don't have to be an auditor to do it.
In fact, although an auditor's risk aversion is a plus when it encourages those valuable small steps, it can also be a weakness. That same STJ trait of stability may mean missing highly suitable growth opportunities. For example, Henry Ford has been described as an STJ, and he'd give you any color auto as long as it was black, losing out to competitors offering colors.
So, more visionary leaders from other functions may often be better equipped to identify fruitful directions for growth. Many who have led successful growth are Myers-Briggs types NTJ, types known to be more open to new ideas. These types do have to watch out for risky growth derailing huge leaps. But, when they apply the principles and take small steps, as my research finds highly successful business building visionaries often do, they can be more suited to lead impressive growth than many auditors.
In conclusion, successful growth depends upon what kind of growth avenues you pursue
and how you pursue them. Small steps and non-traditional analysis are important. It is
essential to have a good strategy--one based upon small steps and the right kind of
analysis. And, this is true regardless of who it is that is applying the principles of
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