Best Practices in Corporate Growth
“What’s the headline?” That’s the question the lead partner asked our consulting team during an internal strategy session. It was the summer of 1997, and I was working for a boutique management consulting firm helping companies create growth strategies and plans. We were hired a couple months earlier by a global apparel company. The client was interested in developing a process to stay at the leading edge of innovation. They wanted to define a common approach to growth, then implement it across the half-dozen or so business units across the company.
The project approach consisted of two broad parts – a design phase, and an implementation phase. The design phase kicked off with an internal assessment to get up to speed on our client’s business. We reviewed documents and conducted interviews with top executives and cross-functional managers. This helped ground our team on the marketplace and establish initial hypotheses, regarding challenges and opportunities. How were leading companies able to consistently grow their businesses vs. others in the same industry? What were the major steps, activities, outputs, and requirements to achieve above-market growth? Our job was to define best practices that distinguished “good” companies vs. “great” companies, then use that information to design the process. (If this “good to great” approach sounds familiar, it’s a fairly common way to benchmark best management practices.)
We determined which companies to study based on financial analysis of corporate growth, including percent of revenues through new products and services. We also considered company access – could we speak one-on-one with company executives to obtain proprietary insight, unavailable through literature searches? Six companies were selected: The Gap, Gillette (now part of P&G), IBM, Nike, Walt Disney and First Union (now part of Wells Fargo). In exchange for participation, the companies received a copy of the study findings.
With the list solidified, we set out to gain market insight. The first profile company I visited was Nike. At the time, Michael Jordan and the Chicago Bulls were in the middle of their second three-peat, world championship performance, after the first three-peat win a couple years earlier. With Jordan back in the game and at peak performance, Nike’s Air Jordan brand was generating huge revenues for the company. Nike had a significant athletic footwear business, though not much else. Though maybe hard to imagine now, in 1997, there was no Nike Golf, no Nike Soccer, no Nike Tennis.
Through my desk research before the visit, I learned that one year earlier, in 1996, Nike signed then little known, 19-year old Tiger Woods, to a $40 million, five-year contract, despite no real presence within the golf category. Also in 1996, Nike made its commitment to the world’s most popular sport, soccer, clear by signing the CBF – the Brazilian Football Federation —making good on CEO Phil Knight’s belief that “We will only truly understand football when we see the game through the eyes of Brazilians.” Looking at the business through the eyes of the consumer. This was a recurring theme in researching Nike. It would become even more apparent during my visit to Portland, Oregon.
When I pulled into the headquarters in my rental car, I thought I had made a wrong turn. I was expecting a typical corporate office. The Nike grounds, though, looked more like a college campus or sports complex. Baseball diamonds. Volleyball nets. Running tracks. It was early morning, though felt like lunchtime or a Saturday afternoon. Employees were out on the fields, playing, working, experiencing the category and brand. Nike’s culture, deeply associated with athletes, sports and design was vividly on display that day. Phil Knight’s mantra was evident. His team was looking at the business from the consumers’ eyes. In fact, they were the consumers, gaining deeper insight while having fun!
I didn’t get to meet Phil Knight that day though did spend time with some of his lieutenants to understand Nike’s approach to growth and innovation. These interviews were instrumental in defining how Nike was able to successfully innovate time after time, year after year.
Weeks later, our consulting team met to compare notes and debrief everyone on our findings. Each of us reported our individual company insights and then debated collective learning to push the thinking. If we found patterns or discrepancies, additional research ensued.
We had hoped to uncover a common innovation process to replicate with our client team. That didn’t happen. The companies were too different, and no single process emerged. What we found instead was a set of principles, far more impactful. The principles addressed the importance of customer research, strategic direction-setting, brand management, organizational alignment and other factors. We used the findings in preparing initial recommendations and obtained approval to proceed to the pilot phase.
Implementation was the second project phase. This is where our study veered from typical “good to great” comparatives. Once we designed the process, we worked directly with the client in piloting the findings “real time” with a couple of their divisions. This ensured our recommendations worked in practice before rolling them out across the organization. Most of the findings worked. Some did not. We revisited and revised the findings during the pilot, resulting in final recommendations. Finally, we worked with the client in rolling-out the principles across their organization.
In the end, we significantly improved our client’s business condition. A principle-based approach to business growth was developed, adaptable across individual business units. Numerous new products were developed and launched, with results far exceeding the cost of the study. It was a very favorable return on investment.