Jana Matthews, In-Business
This edition of in-business showcases the fastest growing South Australian companies. In this column Dr Jana Matthews, one of the world’s leading business growth experts, provides her input on how South Australian CEOs can manage and accelerate the growth of their company.
According to a recent Deloitte Economics Access report, South Australia’s economy is expected to grow at an average rate of two per cent annually over the next decade.
While this is a steady forecast and takes into account the losses from traditional manufacturing in the state, I believe we can do much better than that.
South Australia is home to 146,000 businesses that employ around 800,000 people. We have great universities, bright people coming up with amazing innovations, and increasing levels of support for start-ups. This focus on innovation, commercialisation and start-ups should create more jobs in the long-run, but there’s an immediate need to create jobs now.
I think, as a state, we should set ourselves the goal of helping the 22,662 companies that employ five or more people create, on average, five additional positions over the next three years.
If we are successful in doing that, we will create more than 100,000 new jobs.
In June this year the University of South Australia’s Business School established the Centre for Business Growth to help CEOs and their executive teams learn how to lead and manage growth. Since then we have worked with 35 CEOs across Australia whose companies have revenues between $5 million and $50 million, helping them understand what they need to do, or stop doing, to grow.
We found three patterns:
1. Lucky company
Some companies had been in the right place at the right time. When the economy was growing, the CEOs had good networks and business came their way without having to do much. But when the economy began to slow, they had no plan or strategy in place to fall back on and began to falter.
2. Growing fast but afraid of losing control
Some companies were growing fast but the CEOs were afraid they would lose control, crash and burn. A few had already begun to step on the brakes, for fear of spinning out of control.
3. Protecting what they have
Because they were lucky and didn’t know what they had done to achieve their growth, some CEOs just wanted to protect what they have and grow slowly, if at all. They were making a decent living, they didn’t want to risk too much, and set minimal goals for themselves. One thought they might double to $25 million in five years – we challenged him to consider $100 million. Another thought he might sell at $35 million – we asked why not consider $350 million.
Here are seven lessons learned for South Australian CEOs:
1. The CEO role changes as the company grows
Many business leaders think their job is to make all the decisions and be in the centre of everything. They feel that they need to show their employees that they can do the work. One CEO ran a business that repaired roads. He and his team felt the real work was done by those who wielded the shovel, and he had a hard time explaining what he did to justify the title of CEO.
Another CEO of a manufacturing company found himself covering workers who failed to show up, sometimes staying up all night to make sure the product got out the door. Clearly he didn’t understand the role of the CEO either.
None of the CEOs had a good fix on their roles and responsibilities. Furthermore, none understood how those roles, and their behavior, needed to change as the company went from one stage of growth to the next.
When we explained the stages of growth, discussed how to delegate, analysed some communication problems and laid out a process for planning, most had a light bulb moment, and began to understand their role as leader and how it changes over time.
2. Don’t count on luck
When populations expand and economies grow, there’s a need for more infrastructure. Companies in these industries can be swept along and grow, even if the CEOs don’t know much about growth, marketing or selling.
However, to drive sustainable growth CEOs and their teams need to become business builders, not order takers. CEOs need to think about customer segments, the needs and wants of customers, new products and services, and understand the 10 strategies for growth.
If you depend on luck, then be prepared for your luck to change – and growth to stall. When that happens, there’s a risk that you won’t be able to recover and will lose it all.
3. Share your success
Unlike America, the CEOs of growth companies in South Australia have been reticent to talk about their successes and share their experience. Perhaps it’s because they can’t explain how they grew. Perhaps they are as surprised as everyone else that they have grown. Or perhaps they are afraid to talk about their success in case the company takes a downward plunge tomorrow.
But if successful CEOs don’t talk about how they grew, the strategies they used to grow, or the opportunities and challenges they mastered, other CEOs can’t benefit from their learning, and each CEO has to continue on a personal journey of discovery.
Communities contribute to learning. When CEOs can learn from each other, they get smarter, quicker. They don’t have to keep making the same mistakes over and over.
We need more South Australian CEOs to talk about their experiences, be role models, mentor and share what worked, what didn’t work, what they wish they had done differently and what they plan to do next time.
4. Be ambitious – think big
Most companies would have much greater capacity for growth if the CEO only knew how to lead. People aren’t born knowing how to drive a car, but millions learn how. The same is true for companies. Many more companies could grow if CEOs knew how to drive growth.
I am not sure why CEOs are constrained in their thinking. Perhaps it’s because they don’t know how to grow and aren’t confident that they know how to double or triple the size of their companies.
But since we challenged some CEOs in our programs, several of them have begun to think bigger and are now asking their staff to consider how to grow five-fold, rather than just double in the next few years.
5. Do things differently
There’s an old adage that doing the same thing and expecting different results is the definition of insanity. If you expect different business results, you definitely need to change business strategies.
Most of the companies we talked with plan to grow by continuing business as usual: selling more to current customers and hoping a few new customers will come along. They aren’t thinking about new customer segments, improving their sales skills, or building their brand.
If you want to grow you need to be willing to experiment, try new things, learn from failures, and develop new strategies for growth.
6. Keep the hunger
When companies get to a certain point, some CEOs turn on the cruise control. They have enough money to lead a comfortable lifestyle, own a beach house and take nice holidays. As one CEO said, ‘why should I put everything I worked so hard for on the line? Why not just be satisfied with what I have? Growth will bring more problems – more people to hire, more risk, and headaches’.
CEOs who talk like this have reached the ceiling of complexity. They don’t know what to do to take the company to the next level, so they try to pull up the drawbridge and protect their castle.
The fact is, when you learn what to do to grow, the risk of failure goes down, and the probability of enjoyment goes up. It’s like learning to drive. If you don’t know how to shift, you stay in first gear and your level of enjoyment is low. But when you learn how to shift gears and move your company to the next level, how to build a culture, hire the right people, lead and manage, and grow, it’s like driving a sports car – and a lot more fun!
7. Risk takers reap the rewards
I’m from Colorado and we have a saying ‘you either make dust or eat it’. If you try to stay in place, you will be left in the dust because other companies, and countries, will gallop by.
Markets are rapidly evolving and there are plenty of competitors willing to steal your lunch. It takes courage to change, try new things, and move into the unknown, but if you are courageous and willing to take those steps, you can learn to grow your company.
UniSA’s Centre for Business Growth has designed programs specifically tailored to the leadership teams of companies that are ready to grow. First we focus on product and market fit: are you actually offering what “ customers want? Do you even know what customers want? What else could you offer that your customers would value? What changes are needed in your organisation – its culture, people, planning and other processes?
We then help answer those questions. We look at the changes people need to make to their business model in order to be more profitable and grow more rapidly. We take a look at changes people need to make in their personal leadership. And finally, we look at what people need to do to maintain growth, continue to innovate, create jobs and contribute to a healthy community.
In order for South Australia’s economy to prosper, local companies need to create more jobs and the CEOs of those companies will need to kick start their growth plans.