Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wed on Twitter from 8-9pm ET. This is an excerpt from my recent interview with Steve McKee @whengrowthstall on Twitter. Steve Mckee is the author of When Growth Stalls and a columnist for BusinessWeek.com. A marketing strategist for more than two decades, he runs his own firm advertising firm, McKee Wallwork Cleveland, which was recently recognized by Advertising Age as one of ten top small agencies in the nation. For more information or to purchase a book log on to http://www.whengrowthstalls.com/.
Disclosure Note: I was mailed two books to review and to give away on #smallbizchat to prepare for this interview.
SmallBizLady: How did When Growth Stalls come about?
Steve McKee It was actually a fairly serendipitous thing. My firm, which had been named to the Inc. 500 as one of America’s fastest-growing companies, suddenly and inexplicably stalled. We went through a very difficult two-year period of drifting. During that time we commissioned a research study among other Inc. 500 companies to see what we could learn about their ability to maintain growth, and that’s when the lights came on for us, I began sharing the findings in speeches around the country and one thing led to another until the book came out.
SmallBizLady: The book seems well-timed. Did you plan it that way?
Steve McKee The fact that the book came out during the worst recession in our lifetime is pure coincidence. Our original research was completed in 2003 when the economy as a whole was doing just fine. We started the book project in early 2007, and it wasn’t until late that year that things started to go downhill. My publisher did try to move the pub date along once the economy started to tank, but it wasn’t any more planned than that.
SmallBizLady: Has the depth of the current recession impacted your thinking?
Steve McKee Only to reinforce it. Economic factors are the cause most often cited for stalled growth, and that’s happening in spades this year. In fact, my research shows that in an average year between ten and fifteen percent of companies stall. I’ve seen estimates that during this recession as many as nine out of ten companies’ sales are flat or down. Truly unprecedented.
SmallBizLady: You talk about destructive factors that correlate highly with stalled growth. What are they?
Steve McKee There are two main categories–external events, which we call “market tectonics,” and internal dynamics, which are the most insidious and destructive.
SmallBizLady: Let’s start with the externals. What are market tectonics?
Steve McKee We call them market tectonics because just as with plate tectonics in the geological world, when the economic ground starts to shake, it affects every company. Recessions, new technologies, government regulations, competition–every company has to deal with these in one form or another. That’s not to downplay their impact (the current recession being the most powerful case in point), it’s just to say that they’re not unique to any one company. Typically when growth stalls, other things are going on.
SmallBizLady: Which must be the internal dynamics, right? What are they?
Steve McKee They’re what make life really interesting in a stalled growth environment. There are four that we see cropping up over and over when things get rough: a lack of consensus among the management team, a loss of focus in the marketplace, a loss of nerve, and inconsistency. All can do their damage by stealth, which is why they’re so destructive.
SmallBizLady: Lack of consensus sounds a little odd to be the first one. Why is it?
Steve McKee It is odd, but it also tends to be present in virtually every stalled company. There’s this place between autocratic leadership and management by committee (two unworkable management situations) called consensus–some might call it strategic alignment–where healthy companies operate. Because everyone on the management team is a unique individual, we all tend to think a little bit differently about objectives, strategy and tactics. There’s room for some disagreement and lengthy debate when things are going well, but when a company is in decline (and tensions are on the rise) a lack of consensus can grind things to a halt. The reasons I list it first is because until it’s solved, none of the other internal dynamics can be.
SmallBizLady: Loss of focus is #2. Is that common?
Steve McKee Very common. Sometimes successful companies start believing they have the Midas touch and lose their focus, which causes growth to stall. Other times a loss of focus is a response to stalled growth, as companies desperately seek new revenue streams. Either way it can take them way off track.
SmallBizLady: I’m intrigued by the loss of nerve dynamic. Why is that an issue?
Steve McKee Largely because of both of the above. If you’re not sure where you’re going–if you’re not even entirely sure what’s wrong–you tend to get very cautious. The place it manifests itself most often is in the wallet, as stalled companies cut or quit investments in the things that drive business forward–training, innovation, marketing, to name three. That loss of nerve only serves to slow things down further, reinforcing the lack of consensus and creating more pressure that can cause additional focus problems. It can get complicated fast.
SmallBizLady: Factor #4 is inconsistency. Why is consistency so important?
Steve McKee Primarily because it tends to go out the window when growth stalls. And in our over-communicated culture, consistency can be your best friend. Every time a company launches a new initiative or kicks off a new campaign, in some ways it’s starting over. It’s one thing to refresh your advertising along the same lines you’ve been doing for several years; it’s quite another to try to be something in the marketplace you’ve never been before. And since it can take some time to realize marketing effects, companies that need a quick fix tend to lose patience. That only leads to more change as they dig an even deeper hole without even realizing it.
SmallBizLady: since so many companies are so slammed by economic events, can this book really help?
Steve McKee Absolutely. The recession has been terrible, but one way to look at it is as one big tectonic event. It has affected every company, and many (if not most) are now dealing with some or all of the above issues. Those that recognize them and take steps to address them now can actually gain competitive advantage, positioning their companies for greater success as the economy starts to rebound.
SmallBizLady: Any other words of advice?
Steve McKee Yes. Don’t neglect or ignore these issues. They’re real, and they’re terribly destructive. They’re not as easy to see as something that shows up on a P&L, but I guarantee you they’re affecting what that P&L says. Face up to what might be going on psychologically within your company, and don’t be afraid to confront these destructive dynamics. You may never rid your organization of them entirely (not as long as any human beings are involved), but you can keep a lid on them if you remain alert and aware.
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Melinda Emerson “SmallBizLady“, is a Veteran Entrepreneur, Small Business Expert and Social Media Coach who hosts #Smallbizchat on Twitter. #Smallbizchat is the trusted resource on Twitter to discuss everything entrepreneurs need to know about launching and running a profitable small business. Melinda’s first book, Become Your Own Boss in 12 months. A Month-by-Month Guide to a Business that Works will be released by Adams Media in March 2010.