Profitable Growth Is Everyones Business - A Book Summary
The days of ruthless downsizing and drastic cost cutting are long gone. Nowadays, companies have realized that the best way to earn profit is only through growth - profitable growth. In this book, author Ram Charan provides 10 tools anyone can use to hurdle obstacles and achieve profitable growth.
These tools are:
1. Revenue growth is everyone's business, so make it part of everyone's daily work routine.
2. Hit many singles and doubles, not just home runs.
3. Seek good growth and avoid bad growth.
4. Dispel the myths that inhibit both people and
organizations from growing.
5. Turn the idea of productivity on its head by increasing
6. Develop and implement a growth budget.
7. Beef up upstream marketing.
8. Understand how to do effective cross-selling (or value/solutions selling).
9. Create a social engine to accelerate revenue growth.
10. Operationalize innovation by converting ideas into
revenue growth. One of the most critical points discussed
is the need for re-orientation of thinking. Most
businessmen and executives think about growth as
"home-runs" and more often than not disregard the "singles
and doubles". Managers often look forward to the big
breakthrough or the grand new product without realizing
that home runs don't happen everywhere - sometimes, they
don't even happen in a decade.
Instead of aiming for that one grand home run, aim for singles and doubles. This is a surer and more consistent path. Of course, it is important to note that while aiming for singles and doubles, one should not exclude home runs. These singles and doubles come from an in-depth analysis of ALL the fundamentals of a business.
Another factor to be considered is the difference between
good growth and bad growth. Managers should dispel the myth that growth in whatever form is a victory. Although growth (both good and bad) builds revenue, only good growth increases not only revenues but also improves profits and is sustainable over time.
Bad growth, on the other hand, lowers shareholder value.
Unwise mergers and acquisitions are examples of bad growth. Price cutting to gain market share without cutting costs can also be detrimental to your company's health.
Here are some questions that can help you diagnose whether or not you are part of a growth business:
1. What percentage of time and emotional energy does the
management team routinely devote to revenue growth?
2. Are there just exhortations and talk about growth or is
there actually follow through?
3. Do managers talk about growth only in terms of home runs? Do they understand the importance of singles and doubles for long-term, sustained organic growth?
4. How much of each management team member's time is devoted to making effective visits with customers? Do they do more than listen and probe for information and then try to "connect the dots"?
5. Does the management team come into contact with the final user of your product?
6. Are people in the business clear about what the specific
future sources of revenue growth will be? Do they know who
7. Would you characterize your company or business unit's
culture as cost cutting or growth oriented? If the answer is one or another you need to start doing both. Do people in leadership positions have the skill, orientation, and determination to grow revenues?
8. Does the company practice revenue productivity? Does it
think through whether there are ways to more effectively use current resources to generate higher revenues?
9. How well does your sales force extract intelligence from
customers and other players in the marketplace? How well is
this information communicated and acted on by other parts of your organization, such as product development?
10. How good are the upstream marketing skills- that is, the ability to segment markets and identify consumer attributes- in your business?
About the Author:
Ram Charan is coauthor of the landmark Fortune article
"Why CEOs Fail" and an adviser on corporate governance, CEO succession, and strategy implementation. He was named as Best Teacher by Northwestern's Kellogg School and as a top-rated executive educator by Business Week. He is author of Boards at Work, coauthor of Every Business Is a Growth Business, and a frequent contributor to Harvard Business Review. (6/2000)
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