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Kelly Odell

- A blog for leaders
28 Mar 2006

The Path to profitable growth goes through the heart not through the balance sheet! (Part 1)

Most business leaders agree that growth is a prequisite for success and yet few actually succeed in creating sustainable long-term growth. One key problem is that companies attempt to create growth by focusing on results instead of working to create the right behaviors in their organizations that will lead to results.

In order to create growth we must view organizations as groups of people who cooperate with one another of their own free will to achieve common goals. People use resources in processes to achieve results. although we often speak of employees as resources they are not infact resourses they are the value creators who use and manage resources. If we accept this description of organizations then it follows naturally that we should focus our management attention on the behavior of the people in the processes much more than on the end results.

Companies have always focused on growth even if the factors that drive growth have changed over time. Long-term growth has always been about being in phase with the world around you and a step ahead of your competitors.

There was a time when owning production resources was the key to success. If you owned a factory producing almost anything the supply was greater than the demand. Growth was driven to a great extent by your ability to develop and manage your production resources. In that environment, competition was often local and the end-users alternatives were limited.

Today growth comes to those companies who win in competition with the best companies in the world and there is an overcapacity in production for almost all products and services. . As a result of the easy access of information created by the internet, even industries that are not yet confronted with a well developed global competition find themselves forced to meet expectations of end-users as if the best companies in the world existed in their home market.

Consumers that enter a home electronics store are often more knowledgeable about the product they seek that the people working in the store. A patient can have a deeper understanding of the details of their particular illness than a general practitioner (or at least believe they do). In this environment victory comes to those companies that best understand and manage the customer relationship. Owning the customer relationship becomes much more important than owning the factory.

Companies that successfully win and keep customers will find solutions to manufacture their products and services but companies who excel at production but lack the skills required to retain their customers will inevitably fail.

This message is difficult to accept for companies that have built their success over many years based on manufacturing or technical superiority and this message is equally true for both product and service oriented companies. Many companies have placed their faith in their technical capabilities and believe that if your product is good enough then the customers will come to you. Unfortunately, this is only true for a select few companies. Most companies compete against competitors with similar products and services where operational excellence and customer intimacy are the deciding factors not product quality and features.

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