The DNA of a Growth Leader; Do you have it

When I was a young engineer developing global power projects, I went to see the VP of Global Sales. Right behind his desk was a big plaque that said, “Without sales this place comes to a grinding halt.” To this day, I remember the saying and the importance of growth for companies, individuals, and society in general.

That brings me to a question: who drives growth in your organization? You may have heard the saying “Growth is everybody’s business,” but few individuals within an organization are held accountable for growth. What traits should these people have? Is growth a function of innovation or is it also a result of the intangible skills of those leaders who can create opportunities in every aspect of the business cycle?

When General Electric (GE) was firing on all cylinders, the company had a set of five core values for growth leadership: (1) focusing outward, (2) showing expertise, (3) practicing inclusiveness, (4) thinking clearly, and (5) taking risk. Leaders were measured on these values, and there were hard metrics tied to them. When I was a GE employee, I particularly believed in focusing outward and thinking clearly, two foundational elements of growth leadership.

I sometimes ask why some companies or some individuals within companies are much more adept at looking for growth than others. How much of this growth is related to the personal traits of the leaders and how much is related to innovation, where the product or service sells itself because of its competitive advantages. I believe leaders at all levels within an organization can make a big difference in growing their business, irrespective of the market conditions.

During my career as a Mergers & Acquisition (M&A) professional working for industrial companies, I had the wonderful opportunity to meet and interact with entrepreneurs all over the world. I was able to experience firsthand their growth leadership traits and their passion for building something new from nothing. These entrepreneurs built successful companies with formidable products and services, competing against large companies and against all odds in the marketplace. Ironically, it was my job to persuade them to divest their business and then articulate how my company could do a better job of growing their business after the acquisition.

To expand on the GE framework and from my personal experiences, here are the three traits I believe are most important for growth leaders:

Passion and Persistence

You can’t teach passion or force people to be persistent all the time, but passion drives performance. That being said, people generally are passionate about something in life, and as leaders, it is our responsibility to align their values and passion with those of our enterprise to achieve the best results.

It all comes down to picking the right leader for the job during the recruitment process and rewarding the right actions and behavior within the company. Passion can’t be hidden, and passionate people are self-motivated and driven to achieve success in life. During the interview process, specifically the behavioral interview process, look for energy and passion in an individual. Passionate people proactively seek environments where their ideas and energy can be put to use, and creating that environment within your company becomes very important.

When I was recruiting for a business development role for a large business in the Middle East, I interviewed a candidate who came from a war-torn country. During the interview, he passionately discussed how he had worked for two years to sell mechanical products for a prestigious project in Dubai. Against all odds, he had escaped from the war-torn country, gotten his education, and succeeded in his career. After getting the job, he used the same passion to drive significant growth initiatives within our company, and later he went on to take a global role with another large industrial company. As I would say quite often, growth leaders have fire in their belly.

Externally Focused and Customer Driven

External focus does not mean traveling all the time, but it does mean thoughtfully and purposefully engaging external stakeholders of the business. Although your customers are one of the main stakeholders, don’t forget to connect with your supply chain, sales channels, and industry influencers, all of whom can give you valuable insights to grow the business. From my experience, I found out that growth leaders spend more than a third of their time engaging external stakeholders, and they go where the action is.

How often do you pause in your operations meeting and ask what your customers need? Growth leaders fight for their customers and drive the internal machine to deliver value to them. In the early part of this year, I invited half a dozen customers to our internal town hall meeting so that they could meet our team and observe our customer-driven culture. After the meeting, our customers said they appreciated being part of the team and gave us valuable feedback on product positioning and building service capabilities.

Here is a question to consider: When was the last time you hosted a growth day where you invited your customers to help you think creatively about growing your business? Growth leaders are not shy about partnering and engaging with customers, which will only help increase the level of trust in the relationship.

Entrepreneurial and Visionary

More than 50 percent of start-up businesses fail in the first year, but the ones that succeed are based on a solid vision of the founder. Growth leaders dream big, and they rally their teams behind a simple vision with a simple story. Leaders with entrepreneurial spirit are relentless in their efforts to take a vision and convert it into a profitable growth engine. It is not easy to be entrepreneurial in a large firm where there are multiple priorities and stakeholders. But growth leaders don’t easily take no for an answer. They are persistent in their efforts to align the multiple stakeholders to deliver substantial value for the enterprise.

Build a culture where ideas are passionately discussed and debated, and take calculated risks on promising ideas. There is always a place for good ideas in this world, and if you don’t embrace them, somebody else will.

Growth leaders come from all races, colors, nationalities, genders, and ethnic backgrounds. Growth leaders can be extroverts or introverts. They can be quirky, and they may even carry pocket protectors. But they all share some common genes that hinge on passion, persistence, outward thinking, and being visionary. Whether your business is a product company or a software company, you need a good mix of growth leaders on your team. A good growth leader is also a good operational leader and they deliver on what they promise. If your company is hungry for growth, design your recruitment process to bring the right DNA into your talent mix and then build a culture that nurtures entrepreneurial spirit.

Hire for passion and persistence, train for knowledge and leadership, and retain for growth and value creation.

Industrial Services as a Growth Business

The classical definition of a services business is one that provides intangible products, such as, accounting, consulting, banking and repairing. This definition gets a bit murky when you start talking about services in an industrial sector and many industrial companies are challenged when it comes to investing and growing the service franchise.

Whether you are the head of a power plant or an owner of a finely German-Engineered automobile, at some point in the life of the asset, it needs to be serviced, fixed, repaired, upgraded or overhauled. The company that provides this service before you know it needs one through Predictive and Preventative tools has the key advantage over their competitors. If you analyze your current business model in depth, there might be somewhere a service component that can be your next growth engine.

As business models evolve, capital equipment providers are creatively thinking on how best to continue the current relationship with their customers after the original sale is done. Think about the rotating equipment manufacturers (e.g. gas turbine) who have successfully launched back-end servicing capabilities for their equipment that continues to generate a service revenue annuity for many years.

As customers are cutting their CAPEX spend and continue to operate their assets for longer periods, it creates an opportunity to increase the service growth. Typically, the growth rate for the service business is approximately 2x of original equipment growth and this growth comes with higher gross margins of at least 5% to 10%. When companies neglect the service side of the business, third party vendors have provided that service and taken over the customer relationships from the OEM. This becomes acutely important in Emerging Markets where companies do not have the necessary infrastructure to serve the customers and they end up with a coopetition situation where your channel partners sells your products and services to them.

As a starter, here are three important considerations in your pursuit to build a world-class service franchise as part of your current offering:

Creating a menu of service offering

If you don’t have any service offering today, do a bit of data mining on the historical installed base of your products to determine the size of the opportunity. It is amazing how many companies lack this important information, which could potentially be a gold mine for creating service revenue annuity in the future. The scope of a typical service offering could be so broad; it helps to map out where your company has competitive advantage over third party firms and create a set of offering around these advantages.

Map out the company’s service offerings end-to-end and seek customer input on the desired service levels to find your sweet spot of offerings to a particular market segment. For a typical industrial company, the offering can span from field installation, field services, consulting, parts, upgrades, repairs, overhauls, software upgrades, calibration, training, and the ultimate model of managing the asset for the customers through predictive tools. Smart companies have introduced remote monitoring and diagnostics of assets with condition-based service models. In this knowledge based service model, the customer and the company will share the risks and rewards of maintaining the assets based on certain performance metrics. Some companies are talking about using the Big Data to transform information to revenue and growth, but this model is still in its infancy. Until one can prove definitively the economic benefits of the Big Data to the customers, they are unwilling to open their wallet.

Generally speaking, a big portion of service offering is replacement parts. For the critical and expensive parts category, companies can partner with the customers to manage their inventory and share the risks and rewards of maintaining an optimum level of parts inventory. Consider creating a menu of service offering so that customers can pick and choose the service levels. There are situations where a company may give away certain aspect of the offering (e.g. software) in order to capture value through pull-in of other products and services. Another creative model is to be a full scope service provider where you not only service your products, but also your competitors’ products. Of course, this has inherent risks but if you have the technology edge and the customer is willing to work with you, this could be a unique offering. The ultimate service model is total asset management on behalf of the customer and this has the highest risk and reward equation.

Measuring and delivering service

Companies who have excelled in the service model have created a dedicated service team to manage the scope. Additionally, just as with any product sales, there are key service metrics that are measured, evaluated and delivered to achieve total customer satisfaction. Some of the traditional KPIs’ for services are first time fix rate, field service utilization, on time delivery, parts availability and lead-time.

There is always this creative conflict of selling a service offering vs. selling a new product to solve customer issues and you can address this situation by asking the most fundamental question: What is the best value for your customer?

This leads to the universal dilemma on whether sales for services are kept within this group or combined with the new product sales team. In order to create a seamless growth organization with clear metrics, it is recommended having a dedicated sales team being part of the services organization. This model can help break down silos as the team still needs to collaborate with new product sales team and the engineering team to provide the full breadth of offering to the customers.

Companies who predominantly serve the customers through indirect sales channel have difficulty managing the service business. If you are using channel partners to provide services, it is important that as an OEM, you follow up with the customers to keep the direct link to your customer base.

Building a world class service team

One of my mentors used to say, “service people are not wrench turners; they’re top-notch professionals who take care of our customers 24/7.” I wholeheartedly agree. Building a world-class service company means fostering a culture of pride in serving your customers. As I have seen first-hand, these people go beyond their normal work schedule to delight their customers. The service business is “people business” and as such, the trust and bond between this team and customers is important. This trust is built over years of impeccable service.

A service team that looks sharp, communicates professionally and tackles the customers issues thoroughly will help build a strong brand for your company. Invest in your service team by training them both technically and commercially and create a unique reward system that rewards the service culture within the company. Pick a service leader who is both customer centric and hands-on, and make sure this leader has a seat at the management table. To sustain a service culture, it is important to create a strong career progression plans for service professionals so that it becomes an attractive career path for new and young professionals joining the company.

In my last two roles in the Emerging Markets (Middle East and Asia), we created a brand new dedicated service organization. In both cases, we started seeing incredible results six months after we launched the program. The service leader reported directly to the head of the business, and this team was housed in a separate service building adjoining the service shop. In addition to service specific metrics described above, we measured typical KPIs’ of safety, quality and delivery on the operation side and booking, sales, margins, and working capital on the financial side of the business.

The best way to find your next customer is to serve your current customer to the maximum extent.

Getting High on High Growth Markets

In a world of anti-globalization where Brexit, troubled Trans-Pacific Partnership (TPP) and changed North American Free Trade agreement (NAFTA) exist, it is important for business leaders to re-think the approach to their non-traditional markets. Free trade is moving towards fair trade and getting the formula right is important for the future of any enterprise.

From the perspective of living in developed countries, if looking at the phenomenal growth of international markets, you wonder how to best penetrate these high growth markets (HGM). Some call them emerging markets, but for the people in those markets, they have already leapfrogged into the new economy growing at least 3x-developed economy GDP growth rate. These markets are attractive, fragmented, political, risky and challenging, but they shouldn’t be ignored. Entering these HGM markets should be a deliberate strategy, and it’s certainly not an undertaking for leaders who are faint of heart.

If you’re already operating in these HGMs, and your growth is in the low single digits, and / or your market share is less than 5% to 10%, you either need to get out or think about taking drastic actions.

If you are growing at high single digits and your market share is between 10% to 20%, you need to refine your business models in order to become more competitive.

Finally, if you are growing at double digits and your market share is north of 25%, congratulate yourself and continue to defend your market share and grow profitably.

For those of you who are looking to fuel growth, there are few tricks to succeed in these HGM’s. Unfortunately, implementing them and getting the entire organization to support it can be a challenge in any multi national companies. There are companies, who, decades ago, ventured out of their traditional markets, and are now reaping the benefits of their investments. However, it’s important to note that the senior leaders and board members in these companies had the necessary international experience to deal with the challenges of the HGMs’.

After living and working for industrial companies in 5 countries, I’d like to share 3 important considerations in your pursuit for growth:

  1. Right Mix of Products and Services – One frequent mistakes some companies make, is to push all products and services to all markets, without considering carefully enough customer preferences, applications, branding, channels, and profitability.Unfortunately, there are certain markets that still have No-India and No-China procurement policies. Getting the voice of customer to determine the optimum mix of products & services, including local delivery – is key to success. The front-end missionary work needed to influence specification on engineered products is key to value selling for those products manufactured in these markets.

Product localization is moving towards Product regionalization where products are designed and manufactured in HGM for a broader customer pool to achieve economies of scale. Branding and pricing decisions have a big impact on how you sell and profit from these markets. Be careful localizing your highly engineered products when customers are still willing to pay a premium to import it. Differentiating your offer by having local servicing & process engineering capabilities can improve your chances of winning against the growing domestic competition.

 

  1. Customer Segmentation and Channel Strategy – This is where your local sales team can make a big difference in identifying the right customer segments and then figuring out the optimum channel mix. I’ve observed how companies can get caught up between Direct Channels and Indirect Channels without paying close attention to what it takes to sell an engineered product. Smart companies allocate the right mix of selling cost between these two models to achieve optimum sales. Channel management is another core competency of successful companies; proactive channel management and channel support is needed to achieve accelerated growth.

 

  1. Super Matrix & Super Talented Organization – No matter which way you organize yourself, you cannot avoid forming a matrix organization to connect the business units (BU), which own the intellectual property, the customer sales points (Regional Sales) and the functional support (HQ/Local). The key to success is not the organization, but the collaboration and partnership needed to make the enterprise work. Progressive companies use collaboration as a metric with their senior executives to achieve the synergies between the working units.

Building solid competencies and capabilities within the local teams, empowering them to make faster decisions and holding them responsible to deliver customer value is key to success. Cross-pollinating leadership & technical talent between regions and BU will help build the competencies needed in the field.
Finally, it’s critical to create a fast lane to decision-making centers so that important decisions are not languishing in the field for a long time.

Now, none of these are new ideas but to operationalize them, you need alignment on the culture, strategy and leadership – that combination drives success.

As John le Carre once said, “a desk is a dangerous place from which to view the world”.

Venturing out into these new markets to meet your customers and more importantly, your team in the HGM, will help craft your decision on growth. Do not be afraid to take calculated risks with your business model. Listen to what your team is saying in the field because these men and women, who represent your company, feel the pulse of your customers and competition daily.

You Can Be a cEo

Many corporations around the world typically have one CEO—a chief executive officer. From being strategically minded to exhibiting tremendous energy, these leaders have worked their way up the steep organization ladder by displaying exceptional leadership traits. But what if I could tell you how to be another kind of exemplary cEo—a chief energy officer? Being a chief energy officer does have its benefits, and who knows: it could lead to a chief executive officer position when you exhibit characteristics and traits that are important in any organization. I have personally seen leaders who exhibited cEo qualities later becoming CEOs.

When I first got a break in my career to manage a complex operation acquired from an entrepreneur in the Middle East, I was fortunate to be mentored by the owner who sold the company to us. His first piece of advice to me was not to spend too much time in the office, but to be out with the customers and on the factory floor. He advised me to avoid writing emails and preparing presentations during office hours. More importantly, he encouraged me to engage our employees at all levels. I have compiled below a set of best practices from my experience on how to be a chief energy officer in a company or community.

  1. Tie the company’s values to employee engagement programs

How many times have you seen well-written company values posted on the company website, in the annual report, or in the foyers of the company lobby? Very few companies tie their values to programs that have a meaningful effect on their customers, employees, community, and shareholders. Leaders who figure out the right formula with the right programs and engage the employees and other stakeholders start to build positive momentum and energy within the company. Xylem, a leader in the water industry, has a corporate social responsibility program called Watermark where they build drinking-water towers in remote areas of developing countries by involving employees, customers, and the local community. This has an incredibly powerful effect on all the stakeholders. Other large companies engage in similar activities, from engaging with Habitat for Humanity to cleaning up inner-city schools. You can take the lead, participate, collaborate, and become a cEo.

  1. Empower employees to deliver results by focusing on their natural skills

Humans are bestowed with qualities and skills that are unique to each person. Identifying those unique skills and combining them with business goals will allow you to not only motivate and energize your teammates, but deliver spectacular results with natural energy. In my previous job, our administrative assistant exhibited skills in public speaking, customer care, and employee wellness. While she kept her administrative-assistant job and did it very well, we encouraged her to take a larger role in employee engagement programs. She set up a Toastmasters Club within the company that drew more than twenty participants, and two of our employees became accomplished Toastmaster leaders. She helped organize a Safety Marathon to bring awareness of employee safety in the workplace to the community. With continued support from others and me she went on to take a much bigger role in the company and finally ended up being the human resources leader for the organization. As a cEo, I suggest you look for your teammates’ natural skills and encourage them to harness that energy while continuing to perform in their current position.

  1. Be active and go see your employees in their natural habitat

If you want to become a cEo, be externally focused and spend more time outside your office. Meet and engage your employees in their offices and locations. Positive energy has a snowball effect that gathers momentum along the way to create value within your team and the enterprise. A cEo does not spend long hours in the office writing emails and preparing presentations; they engage with their teammates energetically during office hours while allowing them to focus on achieving personal and company goals.

You see, anybody can be a cEo, and with hard work and a bit of luck, you might end up becoming a CEO. You can’t fake personal energy . . . Be authentic and you will have a following.