Creating a sustainable growth engine

Citation

Rader, D. (2004), "Creating a sustainable growth engine", Strategy & Leadership, Vol. 32 No. 6. https://doi.org/10.1108/sl.2004.26132fae.002

Creating a sustainable growth engine

David RaderSenior Director at E. & J. Gallo Winery, Modesto, CA, USA (dave.rader@ejgallo.com).

Profitable Growth Is Everyone's BusinessRam CharanPublished by Crown Publishing Group, 2004

Many growth discussions center on ideas for a step-function increase in the size of the business – the big new product or expansion into a new geographic or demographic market. These goals are often pursued in an isolated fashion through acquisitions or R&D functions.

In contrast, Ram Charan encourages readers to reorient their thinking beyond "swing for the fences" home runs, silver bullets and discontinuities. He champions the idea of creating a sustainable growth engine that uses all the functions and capabilities of the enterprise. The components of a business growth engine include organization structure, management processes, customer focus and culture/behavior.

The ten ideas presented in this book are not a substitute for an effective core business strategy. Nor is it claimed that these ten ideas are an exhaustive or a mutually exclusive set of principles. However, each idea has practical value and can be implemented independently of the others. The ten rules are:

1. 1.

   revenue growth is everyone's business, so make it part of everyone's daily work routine;

2. 2.

   hit many singles and doubles, not just home runs;

3. 3.

   seek good growth and avoid bad growth;

4. 4.

   dispel the myths that inhibit both people and organizations from growing;

5. 5.

   turn the idea of productivity on its head by increasing revenue productivity;

6. 6.

   develop and implement a growth budget.

7. 7.

   beef up upstream marketing;

8. 8.

   understand how to do effective cross selling (or value/solutions selling);

9. 9.

   create a social engine to accelerate revenue growth; and

10. 10.

    operationalize innovation by converting ideas into revenue growth.

Much of the book describes ways to leverage the sales force, particularly the chapters on cross selling, upstream marketing and "revenue productivity" (set in juxtaposition to "cost productivity"). Since the sales force has the most direct contact with customers and has immediate feedback about competitors, the sales force can be the flywheel of the growth engine. The chapter on a social engine encourages companies to align all functions for customer service and satisfaction – not just the sales force.

The chapter on revenue productivity provides elements for assessing a company's growth engine. "Revenue productivity involves analyzing everything a business does every day ... includ[ing] examining the revenue-generating effectiveness of the sales force and its sales management, logistics, pricing structure, and the social system of product launches to obtain profitable peak market share faster."

This book provides a quick pre-read for the next strategy workshop.