It’s not your imagination: corporate growth is more elusive than ever. “There’s an increasingly ephemeral ability for businesses to maintain even a modest level of sustained, profitable growth,” says Chris Zook, co-head of Bain & Company’s Global Strategy Practice. The culprit, he believes, is the sheer complexity of contemporary business operations. In a study conducted for his recent book Repeatability: Build Enduring Businesses for a World of Constant Change (co-authored with James Allen), “only four in ten people [in corporations] would say they had any idea what the priorities and strategies were.”
The most successful companies, on the other hand, exhibit what he calls a “founder’s mentality” – harkening back to a clear understanding of where they excel. “When you look at businesses that seem to have retained an essential simplicity and have a high success rate and growth rate, they look and feel like a business run by a founder,” says Zook, citing examples such as Nike and IKEA. “There’s a clarity of vision, an ability to see to the front line and customer, and a restlessness to constantly improve. Having the imprint of the original principles of the founder gives the company an inner stability, strength, and simplicity that allows it to see areas to adapt faster.”
In practice, says Zook, the best companies focus on identifying and leveraging their core strengths, rather than chasing random new acquisitions and opportunities. (See my previous article on “Why You Should Kill Your Ideas.”) “We found that an extremely large number of businesses that stalled out moved too far away from their core businesses prematurely,” he says, and ultimately become convoluted, ossified bureaucracies.
So how do you identify your core? “Management teams should ask themselves what the epicenter of their business is,” says Zook. “Where do we beat competitors most often? Why do we win in that particular zone? Most businesses have two or three things that are right at the epicenter.” Your core strengths also need to be measurable, he cautions, and recognized (and appreciated) by customers. “We talked to executives,” he says, “and 80% thought their products were differentiated, but only 10% of customers agreed. You have to test the concept of ‘are we really unique?’ and ‘how does the customer feel about it?’”
It’s easy for business leaders to get sucked in by the lure of a new product line or acquisition. Driven by aggressive profit targets, they may not see another way. But it’s often a recipe for failure. “There’s a well-documented tendency for businesses to underappreciate the potential of their core, and feel compelled to diversify into hot new markets,” says Zook. “But they discover they’re more complicated than they realize, they take more of their time than they thought, and maybe it means they have to withdraw resources or become distracted from their core – so they get even further behind, need more growth, and they sink into a deeper and deeper hole.”
If you’re looking for sustained, profitable growth, radical reinvention usually doesn’t work. Instead, focus on your core and grow incrementally from there. “What you really want to be repeating,” says Zook, “is the application of your greatest strengths.”
How have you identified your strengths? And how are you leveraging them?
This post originally appeared on the Forbes website on July 5, 2012.
Dorie Clark is CEO of Clark Strategic Communications and the author of Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press). She is a strategy consultant who has worked with clients including Google, Yale University, and the Ford Foundation. Listen to her podcasts or follow her on Twitter.