Managing Past Stall Points

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Wednesday, April, 23, 2008

Title: Managing Past Stall Points

Reference: Olson, Matthew S., van Bever, Derek, and Verry, Seth. “When Growth Stalls”. Harvard Business Review. March 2008, pp.51-61.

As a senior manager I believe that is important to understand the big picture, the key drivers of your business, cultural drivers, and to look for the root cause of execution breakdowns. This often requires an insistence on innovation, an application of nimble strategic thinking, and a multi-disciplinary approach to avoiding obstacles. Despite this approach the thing that keeps you up at night is the unforeseen, the unexpected and the unplanned turn of events that leaves you blindsided. When it happens the rapid shift can cause a loss of momentum and turn business forecasts upside down. In the referenced article the commentators do a fantastic job of laying out the momentum frontier and identifying some critical points where business stalls. They studied over 400 companies from the Fortune 100, and 25,000 years’ worth of data. From that they discovered the “root causes of stalls”. The information boils down into two salient points: “The first is that revenue growth, more than any other metric, is the primary driver of long-term company performance. The second premise is more mundane: It’s hard to manipulate the top line over time, and market value and profit measures are much more variable.” The root cause of stall points includes things like board inaction, failed acquisition, premium position captivity, and premature core abandonment. “One culprit in all our case studies was management’s failure to bring the underlying assumptions that drive company strategy into line with changes in the external environment-whether because of a lack of awareness that the gap existed or was widening, or because of faulty prioritization.” To counteract these things the commentators recommend things like conducting pre-mortem strategic analysis, building a core belief identification squad, and getting feedback from venture capitalist. This is a really good article that offers great insight to executives everywhere. The information is applicable to privately held companies as well. Certainly, the failure to manage revenue growth for privately held companies can be just as devastating. Executive management has the responsibility to avoid stall points, continue growth, and innovate for success. This article makes it clear exactly where that responsibility breaks down. I will use this information in my strategic planning and adjust my radar for stall points identification. I’d like to hear your thoughts on this subject as well.

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3.23 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."