“We will have no growth or depressed growth” Is that your wine sales story?
Mr. McKee further says, the externalities that lead to stalled growth can be placed into three major categories that he collectively calls market tectonics. The label fits, because just as shifting plate tectonics in the geological world can cause everything on the ground to shake, market tectonics affect all companies.
The tectonics most often blamed for causing growth to stall are economic events (no surprise there), aggressive competition, and changing industry dynamics.
But market tectonics don’t discriminate; the realms of economics and innovation march relentlessly on and don’t play favorites. The real key is how companies affected by market tectonics respond to them.
And there are four critical internal dynamics with which stalled companies struggle that tend to keep them down:
1. They argue
When things are going right, company leadership can do no wrong. But when things go wrong, everyone thinks his or her way is right. A lack of consensus among the senior management team ensures that nobody’s recovery strategy can be effectively implemented, regardless of who has the best plan.
When Ed Zander and Carl Icahn fought a public battle over the future of Motorola, the company simply continued to drift. It didn’t matter who was right or wrong—as long as the rift went on, Motorola was rudderless.
2. They lose focus
When growth stalls, a pall can be cast over what once was thought of as a surefire strategy. It’s easy for struggling companies to abandon, often unintentionally, what brung ‘em to the dance. Sometimes a loss of focus causes the problem, as successful companies let their egos overcome brand discipline.
Gateway computers effectively used a quirky identity to build trust in its affordable PCs but then began changing its management team, distribution strategy, and product mix so often you couldn’t tell where the company was heading. As a result, it headed down.
3. They get scared
Courage isn’t the absence of fear; it’s doing what you know you should do even when you are afraid. But when growth stalls, it’s easy for a company to lose its nerve. Advertising messages get “safer,” capital investment seems more dangerous, and the marketing that fuels the engine of growth slows to a trickle (and is sometimes cut off entirely).
Larry Young, CEO of Dr Pepper Snapple Group, says, “Even though the majority of Americans are still working, the fear factor that has gripped the nation is having a significant impact on consumer psychology.” It’s also having an impact on corporate psychology.
4. They can’t commit
Everyone understands the myth of the silver bullet, but that doesn’t keep worried leaders from seeking one. At precisely the time when patience is warranted (BMW isn’t going to sell a lot of cars this year no matter what it does), expectations on Sales and Marketing actually rise. When something “doesn’t work,” it’s time to try something else. And then something else. In a slippery environment, you need to carefully allow your strategy to gain traction. Otherwise, all you’ll end up doing is spinning your wheels.
Those destructive internal dynamics are common among struggling companies, and their impact is made worse by how often they go unrecognized. Like varying symptoms of a disease that no one recognizes are related, internal dynamics conspire to keep companies in a negative feedback loop. Inconsistency feeds the loss of focus, which perpetuates the loss of nerve, which only creates more internal tension, which fuels more inconsistency.
Without intervention, this vicious cycle can take a company down before anybody inside knows what happened.
But there is good news. Companies that recognize the symptoms and take steps to overcome them can be surprisingly successful at healing. It begins in the boardroom, with an honest assessment of management differences and a commitment to achieving strategic alignment. This, by definition, has to be Step 1, as overcoming stalled growth takes the fortitude and teamwork of all involved. CEOs who recognize that they can’t do it alone—and who won’t tolerate petty disagreements and turf battles—can set the tone for the foundation of a recovery plan.
Steve McKee discusses the path for that return to growth in When Growth Stalls: How It Happens, Why You’re Stuck & What to Do About It. What it looks like for any given company will, of course, be unique to the organization and its circumstances. But by fostering internal alignment around a focused strategy and committing sufficient time and resources to it, any stalled company can increase its chances to mount an effective recovery.
The wine industry is in a state of flux. Several companies are looking at the present economy as a purchasing opportunity. Others are making quick judgements, rash decisions and not thinking about partnerships for the long term and making very short sided decisions that will cause failure on their ability to scale when the economy rebounds. We are strongly encouraging our clients to step back and think for the long term and discuss options with us. Is your services provider stable, providing opportunities for growth in sales and opportunities or ideas for savings? They may not be fully aware of the needs facing your business now and longer term as many clients are hunkered down and afraid to face the reality of business today. Have you discussed your business plans with WTN Services leadership and account team and what your projections, expenses and needs are for the remainder of this year and into next year. Are there opportunities where we may assist you now in margin savings opportunities and make some longer term plans growth optimization.
Please set aside some time to review your next 6 month, 9 month and 2 year projections, plans and needs with Matt, meyself and the account managers and let’s ensure that WTN Services is doing what it can to ensure your long term sustainability in wine sales growth and partnership.
Steve McKee is a BusinessWeek.com columnist and author of When Growth Stalls: How It Happens, Why You’re Stuck & What to Do About It (Wiley/Jossey-Bass, 2009). Learn more about him at www.WhenGrowthStalls.com.
Chris Edwards
Vice President & General Manager
WTN Services™
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