At the recent PRSA Counselors Academy Conference in June, I heard Steve McKee speak about what happens when a fast-growing business (his own advertising agency) stops growing.
Steve’s own company problems led to two research studies and ultimately a great business book called “When Growth Stalls”, subtitled How it Happens, Why You’re Stuck, & What to Do About it.
While external market factors – McKee calls them Market Tectonics – clearly can and affect the growth and health of a company (can anybody spell recession?), McKee’s research points out that external factors alone are rarely responsible for stalled growth.
Instead, his research identified four, what he calls, “subtle and highly destructive internal factors that conspire to keep companies down.” The four are:
• Lack of consensus among the management team
• Loss of focus
• Loss of nerve
• Marketing inconsistency
Lack of consensus among management is easy to understand. You and your partner(s) simply do not agree on direction, strategies, or actions. There is a loss of trust and maybe a loss of confidence. I have seen this almost destroy more than one agency.
Loss of focus often plagues agencies in recessions. Loss of focus does not mean not adding new services or even going after new markets. What it does mean is straying from the strength of the firm to pursue strategies or actions that distract management from what it does best.
Loss of nerve is an affliction that has plagued many a firm during this recession. McKee says that fear of taking a risk, resisting change, not investing in the business are all signs of loss of nerve. I have seen and spoken to agency heads that are almost paralyzed by economic uncertainty even though they know in their gut that things will be better. He goes on to say that loss of nerve is a common “wake-up call” but one that companies must heed to return to a growth mode.
Finally, marketing inconsistency. Pretty self-explanatory. Frankly most agencies don’t even have a real marketing plan to be inconsistent about. But, for the companies McKee researched, changing one’s marketing frequently is a sure sign of a company in trouble or looking for trouble.
There are plenty of lessons in McKee’s book for all leaders. It is well worth reading.