This title came to me when thinking about Jack Welsh challenging his senior managers, in the very early days of the internet, to develop a business case for running their businesses incorporating the internet and then asked them to implement the business case. This was an example of identifying a disruptive technology and changing the business to incorporate it.
For example, rather than building jet engines and selling them to Boeing to install on their jets, the internet allowed GE to lease the engines to airlines, communicate with the engines over the internet to identify any issues and provide maintenance as required. Quite a different business model and very successful. He called this initiative ‘DestroyYourBusiness.Com’ which referred to destroying your existing business model before someone else did it to you.
My musings have been on the dangers of fast growth and how often businesses have been destroyed by trying to grow faster than they are capable of. I have experienced this more than once and it can occur when a company takes on significant overheads to grow the business and the sales and/or execution are not able to ramp up sufficiently. Even more commonly, businesses on a fast growth track do so by buying other businesses which they fail to integrate due, in no small part, to the difficulty in incorporating the invariably very different cultures. This is hard work.
Distinguished author Jim Collins, wrote a wonderful book, ‘Great by Choice’ which chronicled companies in the same sectors, one of which went on to become ‘great’ while the other declined, failed or had to sold after a number of years. One of the defining differences was that those that became ‘great’ consciously turned down opportunities to grow faster to ensure they were able to sustain their growth while the others went all out for maximum growth. Think Intel compared with AMD.
A local company director of a successful engineering business which was later sold to an Australian corporate, agreed that whenever they had close to 20% growth per annum, the company had the speed wobbles.
It can be difficult to turn down seemingly great opportunities when they arise but the consequences can be far greater.
Below is a link to an interesting 2016 update on GE’s strategic thinking in an interview with the current CEO, Jeff Immelt.