Rules for business survival, methods to grow and leadership fundamentals characterized the 2016 Business and Economic Resilience Conference, held at the University of Virginia Darden School of Business and sponsored by Darden’s Institute for Business in Society. With the theme “Creating Growth and Resilience in Business: Helping Local, Post-Startup Companies Scale and Grow,” it was a day of problem solving, practical tool kits and networking for organizations looking to take their businesses to the next level.
The Expert’s Advice and the Truth About Growth
Myth: Bigger is always better. In fact, bigger is frequently more bureaucratic and complex.
In a special workshop session with Darden Professor Edward D. Hess, an authority on business growth, participants worked through their real-life business challenges and opportunities and learned that “grow or die” is not based in science or business reality. “Improve or die” is a far wiser adage. The session insights drew from Hess’ book Grow to Greatness: Smart Growth for Entrepreneurial Businesses.
Before sharing best practices and risk assessment tools, Professor Hess explained why not all growth is good. Too much of it without the proper preparation can lead to a “tsunami effect,” in which growth may stress quality and financial controls, dilute a company’s culture and customer value proposition, and put the organization in a different competitive space it’s not ready to handle.
Should a business leader analyze the risk and determine the business is ready for growth, there are four ways to bring it about:
- Improvements: Being better, faster, cheaper
- Innovations: Doing something new or different for the company that drives revenue or profit growth
- Scaling: Doing more of what you’re already doing
- Strategic Acquisitions: Buying someone else’s customers or products and services to sell, or buying new capabilities to develop new products and services
Perhaps even more importantly, there are four essential Ps that go into successful growth, whichever of the above tactics a business leader chooses:
- Prioritization: The growing-business leader will deal with daily prioritization (what’s the biggest fire to put out first?) and strategic prioritization (what am I going to sell, to whom, and why are they going to buy from me?).
- Process: Operational excellence depends on clearly communicated instructions (which should be written down!) to ensure 99 percent defect-free, timely delivery to the customer.
- Pacing: Growing too fast can lead to huge losses; leaders should be sure to have the right people and processes in place, walk before running and have clear lines of reporting and authority.
- People: Growth requires the hiring, training and retaining of high-performance employees, and the building of a high-performance management team.
If a leader has been successful at inspiring employees and embracing the change inherent in growth, he or she will eventually need to build a management team. Research shows that hiring senior managers is hard, and there are a surprisingly large number of bad senior management hires. Much of the time it takes three to five hires to get the right person for technical positions, such as CFO, which is both costly and bad for morale. While it may be difficult for entrepreneurs to evaluate technical competencies, a key to successful hiring is finding people who fit the company culture.
While consistent, good leadership is hard, it is based on four simple fundamentals:
- The Golden Rule
- Take Care of Your People
- Lead by Example
- Do What’s Right
Most leadership failures are those of execution, not of intention. But when it comes to employees, good intentions are not enough — what matters is how a leader behaves. Leadership successes come from clearly communicating what you want from employees, measuring it and rewarding it.
“Good growth businesses are like ice cream,” Hess said. “They come in many different flavors, but there are some common principles.”
The Factory Man’s Five Rules for American Business Survival
John Bassett III is on a mission: Help American business owners survive, thrive and keep jobs in their communities.
Made famous by the book Factory Man, which details Bassett’s crusade to save his company against an onslaught of inexpensive imports that nearly wiped out the American furniture manufacturing industry in the 1990s and early 2000s, the Vaughan-Bassett Furniture Co. chair delivered the conference’s keynote address. He distilled the 12 points from his own book, Making It in America: A 12-Point Plan for Growing Your Business and Keeping Jobs at Home, down to what he called the “five real rules” for building a resilient business that can succeed against the competitor down the street or the one overseas.
Rule 1: Establish the right attitude.
“If you think you’re going to lose, you’re going to lose,” Bassett said.
As American furniture manufacturers began to rapidly shutter factories, cheered on by Wall Street and business experts for making the right tough financial decisions, Bassett said he instead chose to invest in his factories and buy new equipment. He did this, he said, because he expected his company to win.
Rule 2: Look and act like a leader.
“Do not think that everybody in that company is not looking at you. You have to carry yourself as a leader,” Bassett said. “Leadership will change an attitude.”
Rule 3: Change and improve “again and again and again.”
“You have to drive change and constantly push people to get better,” Bassett said. He knew his company couldn’t beat the foreign manufacturers on price, though it did fight to price competitively. He realized there was more to buying furniture than simply price, so the company created VBX — Vaughan-Bassett Express — with a guarantee that it would deliver any furniture order to the door of any customer east of Denver within seven days.
Rule 4: Don’t panic.
“The easiest battle you’ll ever face is when the other side surrenders before the first bullet is fired,” Bassett said. Because of the panic that spread throughout the American furniture manufacturing industry, competitors built tremendous momentum walking over their American counterparts without much fight.
At Vaughan-Bassett, the focus was on creating a plan that would allow them to survive the onslaught, even if just barely. Bassett said he directed Vaughan-Bassett supervisors to “never let people see fear in your eyes.”
Rule 5: Communication creates teamwork.
Bassett said the sense of teamwork needed to compete is developed through constant communication.
Using lessons learned from his time in the U.S. Army, Bassett said he sat down with his supervisors and employees and was shocked to learn that they didn’t understand why the company was investing in new equipment. They didn’t believe in the strategy, so Bassett began a process of changing their attitude to believe they were going to succeed. The company created buy-in among employees to figure out ways to increase efficiencies and productivity, and found a way to get through the darkest days.