Leading Sustained Growth: A Balancing Act

Do you ever feel that leading your company is a balancing act?

Leading a company to sustained growth requires a dual focus: handling today’s business and ensuring tomorrow’s success.  Leaders of growing companies are like circus tightrope walkers who must focus on the next step while keeping an eye on the end of the rope.

Regardless of all of the changes in the marketplace, labor force and technology, the most consistently proven formula to create shareholder value is to balance BOTH of the following dimensions: 

1. Growth – demonstrated by a history of profitable growth AND
2. Growth Capacity – demonstrated by your company’s ability to sustain profitable growth.  This is the result of developing the appropriate operational infrastructure, management talent, customer relationships and market positioning.

Focusing on one or the other of these dimensions is not sufficient to sustain growth.  We live in a “Both-And” business world not an “Either-Or” world.  Those companies that create the greatest value effectively balance both of these dimensions. 

This report contains:

I. Examples of how the Growth and Growth Capacity dimensions are demonstrated through your company’s:

• Focus
• Activities
• Systems
• Skills

II. Insights from two client CEOs who are successfully performing this balancing act:

• Barry E. Davis, Crosstex Energy Services, Inc.
• Andrew Levi, Aztec Systems, Inc.

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I. Growth and Growth Capacity dimensions

These dimensions are neither good nor bad in and of themselves.  Further, neither is better or worse than the other.  The key is to balance both of them.  The following descriptors are not definitive; rather, they are intended to illustrate typical types of activities that support each dimension.

FOCUS

Growth	Growth Capacity
– Short-term	– Long-term
– Reactive	– Proactive
– Anything revenue-generating	– Core competencies
– Costs	– Investments

ACTIVITIES

Growth	Growth Capacity
– Frenetic pace	– Deliberate pace
– Day-to-day execution	– Environmental scanning
– Tactical planning	– Strategic planning
– Recruiting	– Attraction and retention

The word “pace” refers to the activities themselves, not the pace of work within the company. 

These Growth activities reflect the world in which many growing companies live.  We call it the “Treadmill” because the primary challenge is simply keeping up but never really getting ahead.

The Growth Capacity activities help companies gain perspective.  We call it the “Eagle’s Nest”.

SYSTEMS

Growth	Growth Capacity
– Autonomy	– Succession planning
	– Customer support
	– Performance management
	– Employee selection
	– Knowledge management
	– Continuous improvement

The predictable imbalance in systems tells a story in and of itself.  Growth activities by their nature run counter to systematizing and streamlining processes. Autonomy is the key to getting work done with a heavy reliance on leveraging personal relationships to do so.  Effectively led companies balance autonomy by designing and integrating the necessary processes and systems to ensure a consistent, replicable employee and customer experience.  The acid question to assess your company’s sustainability is, “Can you franchise your business?”

SKILLS

Growth	Growth Capacity
– Sales	– Planning
– Leveraging personal relationships	– Team/culture building
– Cost management	– Investing
– Customer assessments	– Market assessments

PITFALLS of IMBALANCE

Growth	Growth Capacity
– Inefficient operations	– Government think tank
– Employee burnout	– Lose best operators
– Declining product/service quality	– Reduced sense of urgency
– Market share erosion	– Market assessments

The obvious result of an over reliance on Growth activities is limited Growth Capacity (too much time on the “Treadmill”).  On the other hand, the result of an over reliance on Growth Capacity is slowed growth (too much time in the “Eagle’s Nest”).

The ultimate consequence of an extreme reliance on either of the two dimensions is going out of business.

Since misalignment of your “Organizational Backbone” is a natural result of your company’s growth, a balance between Growth and Growth Capacity will help you maintain alignment.  Click here for an on-line Organizational Check-up and an immediate diagnosis of your “Organizational Backbone”:
http://www.thelgroup.com/p_What/checkup.asp

II. Successful Balancing Acts

Company:	Crosstex Energy Services, Inc.
CEO:	Barry E. Davis
Industry:	Natural Gas/Energy
Established:	1997 (predecessor started in 1992)
Average Growth (last 3 yrs.):	450% Annualized

The average growth number above is, in fact, correct.  Crosstex Energy Services has demonstrated impressive growth.  Crosstex CEO, Barry E. Davis, has also been proactive in creating the capacity to sustain this growth over time – a real balancing act while growing 450% a year.  Barry notes that it is important to use key growth milestones (e.g., revenues, employees, funding, acquisition) as rallying points to renew employees’ energy and commitment for the next phase of growth.  Additionally, Barry created his TOP 10 Keys to Maintaining Balance:

1. Balance working “in the company” and “on the company”. 
2. Systematize the company.
3. Balance your team with players in all 4 “Natural Positions” (major personality types).
4. Discipline and Focus – stick to your plan.
5. Culture – identify, nurture and reinforce.
6. Communicate at all levels and share business knowledge.
7. Team approach – break the company down to maintain “smallness”.
8. Align intentions of all employees:  The company is what we think of when “driving down the highway”.
9. Resource Management – control the “magnetism” of growth projects:
   • Abundance mentality
   • Body of many parts (all employees working in concert)
   • TRUST
10. The 4 Questions – define, continually update and fanatically communicate:
    • Where are we going?
    • How are we going to get there?
    • What’s my role?
    • What’s in it for me?

Company:	Aztec Systems, Inc.
CEO:	Andrew Levi
Industry:	Technology Services and Solutions
Established:	1991
Average Growth (last 10 yrs.):	50% Annualized

Aztec Systems has been cited as an INC. 500 and Dallas FastTech 50 company and has also been recognized for their application of best practices.  Aztec’s CEO, Andrew Levi, was recently noted by Sm@rtPartner as one of the “50 Smartest People”.  Andrew sees the following challenges in leading Aztec System’s growth:

• Constant change and churn in the technology industry.
• Finding talented team members.
• Continually promoting a “best practices” approach.
• Maintaining profitability in an extremely competitive space.
• Sustaining an aggressive strategy for hyper-growth.
• Handling the constant need for re-inventing our core mission.

In response to these challenges, Andrew asserts these principles to maintain balance between Growth and Growth Capacity:

• Always keep your eyes and ears open – locally, regionally and globally.
• Run fast, think fast, act fast, be smart.
• Plan the work, work the plan – Proper Prior Planning Prevents Piss Poor Performance (7 Ps of Success).
• Continuously recruit – whether you need to or not.
• Continuously tune the machine –it will never be perfect and therefore should never be ignored.
• Always strive to create an environment where people wake up and say, “I get to go to work today!”
• Find a few people you would trust with your life – sooner or later you will have to test this.
• Recognize when to engage outside help.
• Understand that as companies grow they, like snakes, need to molt.

Both of these companies implemented our 5-Point Check-up to enable sustained growth. Click here to learn about it:
http://www.thelgroup.com/p_What/services. asp

You may have noticed that these two CEOs’ comments reflect many of the leadership concepts that are addressed in prior reports of The LETTER.  These CEOs have differentiated themselves and their companies by applying these leadership principles.  The result:  sustained, profitable growth.

Copyright © 1999 – 2003 by The L Group, Inc.