Virtually all corporations stagnate at some point in their lifetime, and their stall typically follows the period of their highest growth. Why?
That’s the question that Matthew Olson and Derek Van Bever of the Corporate Executive Board attempt to answer. I’m going to cut to the chase on this one so I can get to the good stuff:
- This is an absolutely exhaustive study of over 600 companies, on par in level of depth with Good to Great.
- Because of how exhaustive it is, I had a hard time reading more than 10 pages in a sitting (very atypical for me). There’s just SO much information to soak up that it hurts your brain to read any more without giving it some time to set in.
- This book is written for – and is in turn best suited for – C-level executives at Fortune 500 size firms. Still a good read for a small business owner, but don’t be looking for a lot of practical solutions for your business unless you’re the CEO of GE or the CFO of Xerox.
Now, to what really makes this a great book. I learned two very important things from this study that I did not previously know:
- Most companies don’t fail/stall due to outside factors. In fact, of the companies who “stalled” (defined as a significant downturn in revenue growth) only 13% were due to “external factors”. In short: business owners who blame the economy, or claim market saturation, or the government for failing are usually full of shit. Most of the reasons companies fail are because they have internal strategic or organizational issues. Stop worrying about the economy or the competition and start focusing on making your company great.
- The overwhelming reason that most companies have internal failures is because of the poor business assumptions that they make. In the beginning, something worked. Then it worked again. Pretty soon it was etched into everyone’s mind that “our customer only want X” or “the market will always react positively to Y”. Years pass, times change, technology changes, people change, but everyone still holds the assumption to be true. Unfortunately it isn’t. The authors do a great job discussing how to test and measure the impact of the primary assumptions about your business. This is very applicable to any business owner. Take us for example. We have always needed George and Greg to interact regularly on car forums for DI sales to be high. George took a week business trip – and consequently did not post – and we had our record days of sales. Now we’re realizing that maybe we don’t need to have such a strong presence on all of our forums, especially after we’ve become established and have other members posting on our behalf with affiliate links, as we do on many forums now.
Bottom line: if you love business, this is on par with Good to Great and should be considered “must read material” for any entrepreneur. If you’re a C-Level executive, this should be your freaking handbook for how to not screw up your company.