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Wednesday, September 12, 2012

Thinking differently about construction marketing and business growth

As a somewhat prolific blogger, I receive plenty of invitations to receive review copies of books, proposals for link exchanges, and the like.  Most land in the trash can, but a few stand out.  Today, a proposal for a review copy of The Growth Gamble: Why Business Leaders Need a 
Vegas-Mindset to Successfully Grow landed in the in box just as I experienced a classic test of small business flexibility and organization.

Writers Ed Hess and Jeanne Liedtka advocate that growth requires risk, and many different adventures and experiments, from where you learn about what works.  Since the failure rate of new innovations is so high, it is important to plan for this -- by playing your cards right (the authors use the poker analogy a lot.)  Conventional business management seeks to reduce errors, to systematize processes, to standardize things so the risk of operational failure is reduced.  This is deadly for innovation.

Fair enough.  Late last night, a person I knew well sent out an announcement for a new publication which might be seen as a direct competitor to my business.  I forwarded the announcement to our most effective sales representative.  The salesperson emailed me back:  "Why don't you offer him a job?"

Seemed far fetched to me, initially -- I knew this individual values his independence and he doesn't function well in large, bureaucratic organizations.  But wait . . . we are NOT a large bureaucratic organization, but we have some things to offer a potential employee that might appeal to someone who wishes a bit more security and stability, including a decent benefits program.

So I emailed and then called the person.  I explained our general hiring compensation model.  We discussed his non-competing business activities and how we could manage these in the context of an employer-employee (with benefits) relationship.  Within a couple of hours of our conversation and my brief email, he sent me a comprehensive proposal which involves some "asks" but sets a reasonable negotiating position.  

I don't know if we will reach an agreement, but there is a good chance we will.  If we were rigid and overly structured, trapped in processes and protocols, this sort of decision could never happen.  Yet the new employee, if we hire him, will still work within the framework of responsible operating business systems and processes.  

I'll ask the publicity people for a review copy of this book.  Here is a bit more from the promotional materials:

Growth, and particularly innovation, is a probability game. When large organizations pursue growth, their mindsets are often completely out of sync with the reality that guides professional gamblers and VCs. Chances are that these organizations expect ten out of ten projects not only to win, but to win big. They demand that their managers and employees produce growth, inadvertently thwart their attempts, and uphold a system in which pulling the plug on a failed growth opportunity is a career-threatening act. Would-be growth leaders in this environment are like professional gamblers who are unable to act independently but instead receive instructions from on high—from a source that has little information about what is happening this minute in this particular game. Not a formula likely to win in Vegas—or in business.
“The reality is it takes on order of magnitude about 1,000 growth ideas to produce 100 good growth experiments,” explains Hess. “And doing 100 growth experiments may produce 10 viable growth initiatives worth investing in. Growth is an iterative learning process characterized by detours, zigzags, and remakes.”
Growth is a learning process. Good growth companies understand the realities of growth. Growth requires the right mindset—a learning mindset—and the right processes designed to make small bets, learn critical information quickly, and then assess next steps.
“We call that process Learning Launches,” says Hess. “Not only is the right learning mindset needed, but also the right attitude is needed individually and organizationally about failure. When you are exploring growth—when you are entering areas where you have not played before—by definition you will make mistakes and have failures. Remember, so long as you make small bets and use the right rigorous process, there is no real failure so long as you are learning.”
Growth can be messy and inefficient. Most companies can’t stomach the uncertainty that comes with growth. It violates their dominant no-variance operational mindset. Well, guess what—growth and innovation are high-variance processes by their nature. If you do not accept that fact, then your growth initiatives will be limited to small incremental improvements, which at some point will not produce enough growth to keep your stakeholders happy.
“Operational excellence strives for 99 percent defect-free performance,” says Hess. “Contrast this to growth experimentation that can result in failure rates of 90 percent. In operational excellence environments, managers are rewarded for stamping out variance. Yet, in growth environments, variance is the norm.”

From The Physics of Business Growth: Mindsets, System, and Processes (Stanford University Press, 2012, ISBN: 978-0-8047753-4-2, $12.99, 

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