Founding partner of CEO Advisory Guru, LLC. Bestselling author of The Private Equity Playbook and The Exit-Strategy Playbook.
Hinterhaus Productions 2016
In my career as a business leader, I have been fortunate to have great mentors who have taught me an incredible amount about developing, growing and scaling a company. One of the greatest was Jack Welch, former CEO of General Electric.
I was with GE for the last 10 years of Jack’s career, from 1991 to 2001. In that decade, GE was arguably the most admired company in the world, and Jack was without a doubt the king. Being under the tutelage of a visionary as he was an eye opener.
Among other things, Jack learned that entrepreneurship requires strategy, strategy requires initiatives, initiatives require measurement systems and leadership effectiveness must be managed. Jack also taught about A, B and C players and the importance of hiring good people and forcing the turnover of underachievers.
These concepts – let’s call them Strategic Planning 1.0 – were revolutionary. When GE started implementing them, productivity skyrocketed and results improved dramatically. In that 10-year period GE’s shares have been split three timesand GE leaders were coveted worldwide.
For years, Jack’s ideas were the foundation upon which business leaders in every industry grew their businesses. However, it eventually became clear that while this system supports growth, there was a lot missing. Therefore, in order to generate more consistent results, companies must reinvent their strategic planning.
The missing piece
All of us at GE followed Jack’s teachings closely. For example, when we hired new people, we made sure they had a history of strong results. Despite this, there was only a 50/50 chance that the person we hired would produce the kind of results we were looking for. In other words, even though we’ve hired good people who have achieved great results in the past, success was anything but a foregone conclusion.
Clearly a piece was missing. Jack’s strategic planning methodology had enabled GE to get off the ground, grow and perform better. But the system itself had inherent limitations, and those limitations meant we couldn’t consistently achieve our optimal desired results.
So, what was that missing piece? That’s what we – and all the companies that follow Jack’s initiative-based strategic planning system – had to figure out.
Connecting talent with value
Then Sandy Ogg, a former operating partner at Blackstone Private Equity and the founder of CEO.WORKS, dropped by. He discovered the gap in Jack’s system: It put measurement systems in place and emphasized the need to hire good people, but it didn’t connect talent with value.
Sandy eventually realized that, in addition to identifying key initiatives that drive value creation, companies also have to think about who in the organization will do the work. They then need to match those people’s skills to the actual work being done.
For example, suppose a B2B company that wants to do a buy-and-build and increase its revenue from $100 million to $1 billion wants to hire a new VP of Sales. It’s not specific enough to interview people who have strong sales backgrounds and have great success in achieving top financial results.
To match talent with value, the company definitely needs to be looking for a great salesperson. However, the right candidate will also have experience in successfully bringing together the different sales cultures of multiple companies brought together through a buy-and-build in a B2B industry. that is connecting talent to value, and it’s what will help ensure the desired value outcome is achieved.
Increase the chance of success.
Whether you have 10,000 or 10 employees, creating growth initiatives and finding the right person is crucial. When you introduce this kind of system, you raise your chances of success to a new level.
In addition, implementing a growth system like this can help you identify gaps around your strategic initiatives. To see how, think of each of your identified initiatives as conference tables in a conference room. Now imagine who in your organization sits down at the tables to talk about, work on and bring about the desired change.
For example, let’s say you have an “organic growth” table. Who ensures organic growth in your organization? As you envision who should be sitting at that conference table, you may realize that you need a VP of Sales, a Director of Pricing, and someone from the legal department to oversee the change of contract language.
When you think about the people who need to be in the room, you may realize that you already have the right talent in your organization to fill these roles. Or you may realize you have gaps and need to hire people to fill roles that don’t exist. Either way, you know what steps to take next to reach your desired goal. Thinking about your growth in this way will help you move forward and grow confidently and strategically.
Implement a system.
Perhaps the most important thing I’ve learned is that growth doesn’t happen by accident. Instead, it is the result of taking specific, deliberate, systematic actions. That is why it is so important to implement a growing system.
Obviously there are many systems. The one I’m describing is one of many – a highly respected and widely practiced one, sure, but by no means the only one. While this framework has worked for me and many others, I encourage you to do your research to determine if it’s the right approach for your business. If you’re not sure which system is best for you, check with colleagues or work with a business coach who has experience in this area.
As a business leader, it doesn’t really matter which system you follow. What’s important is that you to have a system. If you have a strategic framework to think about growth, you are more likely to succeed. Ultimately, no matter what system you use, you start to think strategically about your business. If you do, there’s a good chance you’ll be able to achieve strong growth and reach new heights.
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