IGI's newest discussion document below:
|From Great to Gone|
Rivaled only by those that at least "claim" to have read Sun Tzu's The Art of War, so was the fervor surrounding Jim Collins' bestseller, Good to Great: Why Some Companies Make the Leap and Others Don't. Debates and analysis sprung up nationwide; from conference rooms to C-level networking breakfasts, even into the study's of some of the world's most renown business thinkers - see Peter F. Drucker's comments on the back cover - (oh, and if you can figure out what the heck he was trying to say in his review, you are smarter than most of us).
But of course while the world was trying to decide just what our "Hedgehog Concept" might be, and just how to take advantage of our "Technology Accelerators" - time kept passing. And now we sit roughly a decade later and look at these mold-breaking companies, these "Magic 11" that were placed on such haughty pedestals and wonder...how can it be that so many of them are mired, struggling, or just flat-out GONE?
It's worth taking a moment to remember the companies that were the source of such high praise just 10 short years ago; Abbott Labs, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens and Wells Fargo. A snapshot today shows nearly all of them performing below, in some cases far below, their 2001 levels when Good to Great was published that warranted their recognition. Wells Fargo needed $25 billion in taxpayer dollars to stay afloat, Gillette was gobbled up by one of their larger competitors in 2005, Pitney Bowes' stock price is down nearly 30%, Circuit City went bankrupt, and Fannie Mae - well, do we really have to go there? Before it is all said and done, "Fannie and Freddie" may well cost taxpayers $1 trillion.
Truth be told, only Nucor showed signs over the past decade of the kind of stratospheric rise and growth one would expect from a company that made the leap to "great". Alas, even they have seen their shares drop from the mid $70's to today's $47 over the past 5 years - a decrease of nearly 9%.
So just what happened to these companies that allowed so much that was right, to go so wrong - and so quickly?
Well if we were to hang with Mr. Collins for just one more moment, we would tell these companies to "Confront the Brutal Facts" - and in this case, the facts would be simple: they forgot that the next new product, the next new marketing campaign, the next new commercial jingle, could not replace continuing to arm and train their sales professionals with the ability to withstand economic change and the arrival of new competitors into their market space.
It's worth noting that Nucor, during the building boom from 2001-2005 saw their sales in steel nearly double from 11 million tons to 19 million, only to watch those sales shrink by nearly 25% over the next five years from 20 million tons in 2006 to less than 16 million in 2010. Now some would say this was just the bad luck of a bursting housing and manufacturing bubble, maybe even go so far as to say that not unlike the US Steel industry in general, they were victims of "unfair international competition"- but the simple fact is, when the environment shifted and new competitors came attacking, their sales professionals were unprepared and poorly armed.
So the question is worth posing; what are you doing to arm your sales professionals to not just survive, but excel over the next 12-24 months? A two year span that may arguably be as difficult and severe as the last two - perhaps worse? If the answer lies in some new product that will sweep the market and take it by storm - forget it. Someone else has either made it already, or will replicate yours within months.
No, the difference in success and failure will be how well you have armed both your managers, and your front-line salespeople to build value where they have not had to before, and to do it quickly and efficiently. Otherwise you may learn the lesson that even so-called "great" companies learn - there is no substitute for a well-trained, adaptable sales force. The question is, will the majority of your salespeople be gone, before you could make them great?