Five Not So Easy Lessons on Growth Leadership

Most of us watched Superbowl 52 between the Eagles and the Patriots. Part of the charm of the

Superbowl and the parties we attend, relates to seeing the commercials. In fact, much time is used “rating” the commercials in terms of humor, appeal, and somewhere down the line the effectiveness of the advertising spend. As a piece of trivia, a Superbowl commercial this year costs $5 million for a 30 second ad PLUS the actual cost of designing, developing and shooting the commercial. Note that Nick Foles, the Eagles’ Quarterback and MVP, made only $1.6 million for the entire year. By the way, as a Giant’s fan I really liked the Eli/Odell Dirty Dancing commercial.

Last year, Coke eliminated the role of Chief Marketing Officer and reorganized around a new role of Chief Growth Officer (CGO) to integrate marketing with customer and commercial teams. Other consumer package goods (CPG) companies, such as Hershey and Kellogg, have also moved to a similar function with Kellogg instituting the function in mid-2015. How successful are those companies? It may be too early to tell. Kellogg’s results over the past few years have been passable and they might not be the best model to use. Their CGO was an advertising executive – albeit very smart and well regarded and their revenue the year after his appointment was DOWN.

We can argue that a title change may be necessary but it is certainly not sufficient for improving growth and making that revenue and growth profitable. The Chief Marketing Officer has significant issues in a corporate structure. I have seen many times that marketing is regarded as a function of planning more ads, designing creative billboards, winning the contest of the best Superbowl ad, and winning creative awards. This is more “fluff and stuff” vs the reality of hard marketing and on this basis alone, a change in title from marketing to growth officer seems warranted.

Let’s take a look at five (5) lessons that can be applied to what I call Growth Leadership.

1. Growth starts with the CEO. Without the CEO and his strategy, successful growth plans cannot be put into place. I keep reminding myself of the Alice in Wonderland quote: If you don’t know where you are going, any road will take you there. Companies who want to grow have to put a CEO with that objective in place and not all CEOs fit that bill.

2. The company has to have a growth mentality. While this may start with the CEO, the people he hires and the culture of the organization must be focused on growing. I know this may sound strange to some. Unfortunately, most of us have been in companies that believe growth is based only on EBITDA increasing. While that is important, EBITDA can be improved – at least in the short term – by cutting cost. I have never believed that you can shrink yourself into greatness.

3. Innovation must be a hallmark of a growth company. Without a solid business model and without good products companies will not grow. There is just too much competition and the internet and agile development around software puts many companies on an even footing. Think about companies you know. How many of them are growing? How many of them have a solid product line and product portfolio? Growing companies have solid portfolios and products in the wings – or a good acquisition strategy to acquire new products or partners that have these new products. A creative ad on the Superbowl is not sufficient. Recall the commercials you watched. Which ads pushed minor line extensions or existing product vs. new ones? I only recall two really new products: a Kia Stinger car and a new Lexus LC500. (BTW, I like both of these cars!!)

4. P=R-C. Let’s get to basics. Any officer in a company must recognize this fundamental equation and determine how they can affect the elements which create profit. Clearly, a Chief Growth Officer will be responsible for the revenue side as well as the investment which will be put to use in generating that revenue. As a correlate, growth officers must change their internal perspective of being cost centers to investment centers. They need to think about a concept called return on investment. Even good marketing officers that I have known, focus on a concept called ROMI or return on marketing investment, treating marketing as a business and not merely a creative channel. So, when we look at the Superbowl commercials, how many of these were merely “fluff and stuff” creating awareness for the company vs. a means to drive growth? Would the company be better off spending more than $5 million on alternative marketing activities that would directly drive growth? What is interesting is that small companies with lack of budget dollars focus on the bottom line and are tactically driven.

5. An integrated approach to growth can be achieved with forethought. Whether you call the executive a Chief Growth Officer, Chief Revenue Officer or Chief Marketing Officer, I believe this person is an integrative force within the company. This person, whether directly or indirectly, must be a linking pin between the outside world of the customer and the internal world of production and manufacturing. That person needs to connect and get different functions such as marketing, product, demand generation, social media, customer service, usability/user interface, and customer service to work together to a common end.

 

That person must be responsible for a) managing at least part of the investment in growth initiatives, b) managing or certainly influencing the innovation process relating to new products, line extensions, and processes to make the customer experience better, c) the overall go-to-market strategy and tactics that are broad to include all customer touchpoints. I call this Big M marketing where the company executives are aligned for a common purpose and focus on providing the best products and services to the customer.  Individual silos are eliminated and therefore a consistent brand image can be projected. And most, important, all these components need to have targets and be measured and reviewed as part of the business battle rhythm of the company.

The title of a function is important just as a brand and its meaning is important to a company. I am not a huge fan of marketing as it is implemented in many companies because in my opinion current Chief Marketing Officers have failed with regard to helping a company grow their revenues profitably. I have argued this many times before. I believe I am correct in my assessment, as the tenure of a CMO is approximately 4 years, lowest tenure in the C-suite and approximately half as long as their CEOs. But I also believe that there is an opportunity for companies to improve their top line growth and margins by following these 5 prescriptions. We, at C-Level Partners, are focused on helping small to mid-cap businesses improve their growth and margins. Write to me at dfriedman@clevelpartners.net to see how we can help your company grow.

The 7 Cornerstones of StreetSavvy℠ Leadership

The topic of leadership has come up more and more in the past month through articles in the popular press and streams on my LinkedIn page. I have commented on several articles – and even commented on the comments – because I think some of the information and concepts are either too simplistic or incorrect. For example, I read one article that relayed the one leadership skill that could change a company from good to great. It was click bait to me but I clicked …….. and commented about its incompleteness!!!!

Leadership has many facets. When you read the leadership gurus like Peter Drucker, Warren Bennis and John Maxwell, they talk about leaders having influence and followers. That is certainly true. For a more current view, I like John Maxwell’s thinking on leadership because he has a more integrative approach covering 21 indispensable qualities of the leader, and 21 irrefutable laws of leadership. He, too, touched on many components of leadership and his insights are excellent. But I don’t believe even he goes far enough.

I want to add to this thinking by talking about StreetSavvy℠   Leadership. This is my take, not from merely studying others and codifying what I observed, but also because I lived it and had both successes and failures as a leader. Regardless of your position in the organization, you will have both success and failure as leader. Witness the rise and fall of luminary leaders such as Jeff Immelt who took over GE and is struggling with the growth of the company. And let’s look at leaders who were successful in one company but failed to capture success in their next company … or vice versa. 

I am a NY Yankee fan and remember when the Yankees hired Joe Torre. Torre was not a good manager with the Mets, Braves and Cardinals and compiled records marginally below .500. But with the Yankees, who saw something unique, he was able to win 4 world championships and 2 additional pennants. Granted, they had great players (competencies) in that era as well but Torre was the leader and a lesser manager might not have been as successful.

StreetSavvy Leadership blends theory with reality and execution to garner results. It is leadership within the context of the company and the environment in which the company operates. Leadership without positive results in business is being a pretender. StreetSavvy Leadership means doing things differently than before to grow your business and protect against mediocrity. StreetSavvy Leadership looks at data and transforms data into knowledge and gives that knowledge to the right people closest to the decision point and trusts them to make the right decision. It means setting the right vision and ensuring alignment among all members of the exec team and throughout the organization to execute effectively and efficiently.

Here are the 7 Cornerstones to StreetSavvy Leadership:

1. Set actionable vision. The vision has to be credible and recognized to be eventually achievable even if there is no clear path to that end. Recall when President Kennedy said: our vision is to put a man on the moon by the end of the decade. Vision is achieved by looking at the 3 Cs – customers, competitors and competencies – and ensuring that the company knows the best way to grow relative to these three components. The vision may be such that one or more of the three C’s must change over time.
2. Keep a mindful eye on the environment and adjust. Within this construct is a concept called PEST – political, economic, social and technology changes. The leader needs to watch for changes in all of these factors and be prepared to manage responses relative to the shifts in some or all of these factors. Clearly the leader doesn’t do that on his or her own, but tasks different groups or select individuals to keep a watchful eye.
3. Build a sustainable team.  Unless you are a one person company, leaders have to hire, train, manage, and motivate people in their organizations to achieve success. I recall one definition of leadership is to get ordinary people to extraordinary things. That is partially true. The StreetSavvy Leader understands that a strong team needs to be built and that employees want to see a solid career path. That encourages loyalty and ensures that the top employees rise to the top. However, there is a time and place to hire from the outside and not merely from the competition. If every company in the industry hired from a competitor, eventually all companies will regress to the mean, ceteris paribus. However, the StreetSavvy Leader might hire from an entirely different industry or for entirely different skills to ensure that the company doesn’t become too internally focused and can challenge its own prevailing wisdom. Training, shadowing, mentoring and other assignments make the employees well rounded. A formal program for top 10% of the execs should also be in place as both a reward and expectation of future success. IBM for many years and GE have successfully established internal programs to supplement the training of the top tier executives.
4. Establish the right culture. Would you want to work for a leader who sets a punitive culture such that if bad news is given the leader goes ballistic? Or work for a leader who fails to recognize the success of individuals in the company yet accepts the kudos for him/herself? I worked for one boss who liked to yell at people who brought bad news to the executive meetings. I realized many years ago that I would rather meet that bad news head on and ask the executive who brought the bad news for prescriptions to manage the impact of the bad news. That reinforces the concept of responsible management and ensures that each person in the organization has the obligation to find solutions to problems.
5. Practice open book management. People need to feel part of the organization. Ideally they should feel like part owners and have the opportunity to own a stake in the company. To do that I am a firm believer in sharing the financials and metrics that the company uses to determine success. Once these metrics and financials are shared, it would be incumbent for the executive and managers down the line to work with their people such that each person in the organization understands their role in creating revenue or managing cost. By doing this, each person can see how their job affects the success or failure of the company.
6. Live the 5F Factors. There are five factors that characterize the StreetSavvy Leader. They are Focus, Fast Afoot, Fluidity, Flexibility, and Fast Failure. The business world shifts quickly and these five F factors enable the leader and the company to be nimble and take advantage of opportunities.
7. Seek self-improvement. I personally have never been satisfied with who I am and what I can be. Executives have to continue to improve functional skills but also should improve in their understanding of business issues. Unfortunately, in the business world, I have seen too many CEOs and other high ranking executives believe that once they hit that lofty pinnacle, they can stop improving. Self-improvement takes place on many levels. Executives can and should continue learning by participating in peer groups, reading various business journals and biographies of successful leaders, and even self-improvement books. Having an executive coach and advisor can help as an external sounding board and someone who is not fearful telling the emperor so to speak – that he or she has no clothes. Three sixty and employee survey results which should be shared with the team can be used to help the executive understand his/her style of communications which may affect the organization’s growth. And to understand the business, what better way to do that than becoming an undercover boss or walking the production line or working as a customer service rep or front desk employee or even a bellhop or maid. I don’t believe these are radical ideas and they should be considered if you want to improve to eventually be a StreetSavvy Leader.

Jimmy Dean said: You cannot change the wind but (a leader) can always adjust his sails to reach the destination. How true. StreetSavvy Leadership reflects the Jimmy Dean quote. It is something that can be learned and if used correctly I believe it offers the best chance of success for a company. I would be glad to hear your thoughts. Feel free to comment, share and repost and let’s continue this dialog. My email is dfriedman@clevelpartners.net.

4 Strategic Tools for the StreetSavvy Business Executive

In my last blog we shared some power tools that StreetSavvy Business Executives can use to help find the path for profitable revenue growth. I used this information in a talk I gave at UCI Applied Innovation to 100 plus budding entrepreneurs and sitting executives.

Now, I want to provide 4 additional tools to help with the direction and management of strategic initiatives which will help StreetSavvy Business Executives find their true north and set the stage for executing their plans.

Scenario Planning and Visioning

Scenario planning and visioning is a tool that has less structure than some of the other tools in this compendium. Yet is a powerful tool to be used by executives, department heads, and teams to construct the vision of where that organization is heading and the outcomes to be achieved. I started using this tool in the 90s when I was heading marketing at a wireless company. Given the competition that was coming about due to changing regulations and changing technology and due to the increasing use of the internet, it was time to think about where we needed to be heading.

Our visioning exercise was used to determine not only where we wanted to go, but also to ensure there was alignment among the executives in carrying out the strategic and business plans.

To do this correctly, each executive or team member has to address different questions including some of the following questions. They do this by visualizing a future state as if they walked in the shoes of their customers, their board, or other constituents.

1. What does the company look like in the next five or 10 years?
2. What kind of products will it sell and how will they be sold?
3. What will the customers look like?
4. What competencies will you need to put in place?
5. Who will the competition be?
6. What messages would you want to get across to the board of directors, to an investment group and to your customers?

Scenario planning and visioning is a tool that has less structure than some of the other tools in this compendium. Yet is a powerful tool to be used by executives, department heads, and teams to construct the vision of where that organization is heading and the outcomes to be achieved. I started using this tool in the 90s when I was heading marketing at a wireless company. Given the competition that was coming about due to changing regulations and changing technology and due to the increasing use of the Internet, it was time to think about where we needed to be heading.

Our visioning exercise was used to determine not only where we wanted to go, but also to ensure there was alignment among the executives in carrying out the strategic and business plans.

To do this correctly, each executive or team member has to address different questions including some of the following questions. They do this by visualizing a future state as if they walked in the shoes of their customers, their board, or other constituents.

The best parts of this exercise are listening to the answers, debating the vision, and then coming to a singular purpose and vision.

Product Innovation Charter

A product innovation charter is a format used by companies to determine the company’s (or team’s) product management or development strategy. What risks and returns do they want to take? What type of innovation will they consider- a new-to-the-world product will have substantially more risk than a line extension. It is used for products, not processes and sets the charter, i.e. the conditions under which the company or team will operate in making decisions.

The format of the charter is straightforward and simple, yet the end result is very powerful.

                                              Product Innovation Charter

Background: What the reason for this charter? What problems are you trying to address?

Goals: What are the specific goals that can be met? SMART Goals: specific, measurable, actionable, responsible party, and time frame should be defined.

Objectives: What is the overall objective of the charter? Is it to increase dominance in one area or to play catchup? Is the goal to develop breakthrough products or provide a specified risk/return ratio?

Guidelines: How does this charter fit into the corporate strategy? How much money is funded by this charter? What are the decision making capabilities of the leaders of this charter?

Boundaries: What are the rules of implementing the charter? For example, is this an entirely internal team approach or should partners be considered? Are there certain companies that are off limits to partnerships? Is this for consumption in the US or the entire world?

Balanced Scorecard

The Balanced Scorecard can be construed as a complete management system as originally conceived by Kaplan and Norton in the mid 1990’s.   The original structure of the balanced scorecard pointed to four elements as shown in the following diagram where each of the elements supported the vision and strategy of the company. 

Over time, the balanced scorecard has evolved and in our interpretation it provides a structure for companies to use and modify according to the priorities and needs of the company. In some companies, there is less “learning” and more growth oriented actions. In other companies, especially in the Internet world, the focus may be on replicable processes, or maintaining a specialized workforce, or even implementing strategic initiatives to maintain an edge in the market.

Such thinking doesn’t detract from the structure and use of the tool, yet the tool can to be modified to accommodate different companies.

Analytic Hierarchical Process

The analytic hierarchy process (AHP) was developed by Thomas Saaty, a professor at the University of Pittsburgh in the 1970s at which time, as a mathematician and engineer I fell in love with the methodology and have adapted it to fit my needs in corporate America and in our consulting practice.

It is a structured technique for organizing and analyzing complex decisions such as funding different product development efforts, selecting a leader of a cross-functional team, or determining which investment or partnership makes the most sense. The “most sense” is based on a combination of mathematics and beliefs – some supported by data – of different people and teams evaluating several options. What I like about it is the fact that by expressing answers in mathematical terms, you almost take out the emotion of decisions and can better evaluate disparate options. For example, you can use it for the classic guns v. butter decisions.

The strength of the process is that it helps decision makers find solutions that best suit their goal and their understanding of the problem. It provides a rational framework for structuring a decision problem, for representing and quantifying its elements, for relating those elements to overall goals, and for evaluating alternative solutions.

The users of the AHP first decide on the elements upon which decisions are based and the comparative weights of those elements. That would be a one-tier hierarchy. But the power of the system extends when each of the primary elements has a subordinate structure. Let’s say financials was one criteria and that weight was 25% as shown below. A second level hierarchy could be developed based on cash flow, capital and margin.

To us, the important part of the exercise is to give the different team members or decision makers the opportunity to debate and determine the correct elements, the hierarchy and the weights. Then, once complete, each case can be analyzed and an ordinal ranking can be determined based on a score. It still enables flexibility by the team to make final adjustments. What it prevents, though, is one dominant player swaying the votes of the others. Sometimes, in organizations, that is easier said than done.

Here’s what a two level system looks like for a company that was analyzing different product development opportunities. It can be applied in any business or industry or functional area.

With these tools, the executive can determine the direction of the company, ensure the executive team is in alignment, determine priorities and execute the plan. Of course, we at C-Level Partners are glad to help. Call me at 949 4394503 or write to me at dfriedman@clevelpartners.net to see if you qualify for a complementary one hour discussion of your business issues.