In a new book, two Kellogg faculty members advise mindful growth on the path to enlightened profitability
7/24/2014 - From startups to established conglomerates, companies looking to expand often go for broke—literally. They make more products, create more brands, and enter more markets with the goal of growing their market share. While seemingly reasonable, this approach used throughout the ages can often lead to fleeting gains, dismal results, or outright failure.
“The complexity of companies frequently grows faster than revenues,” says Mohanbir Sawhney
, the Robert R. McCormick Tribune Foundation Clinical Professor of Technology. A strategy and innovation consultant in the start-up world, Sawhney has long observed the “unwieldiness” of companies that expand for expansion’s sake. “The paradox is that to grow, you need to cut back and do less.”
This simple-but-powerful strategy is just one of several detailed in Fewer, Bigger, Bolder: From Mindless Expansion to Focused Growth
(Portfolio). Sawhney partnered with co-author Sanjay Khosla
, former president of Kraft Foods International (now Mondelēz International), to develop a simple framework for sustainable growth and profitability in any market. At its core, their seven-step model, Focus7, calls for making fewer but much better bets.
Khosla intuitively followed this strategy throughout his long corporate career. Most strikingly, he used it in 2007 to turn around Kraft’s then-floundering developing-markets business. In five years, annual sales rose from $5 billion to $16 billion. Now consulting and implementing the model for other companies across varied industries and geographies “seems to work,” says Khosla, a senior fellow within the Kellogg Markets and Customers Initiative (KMCI)
The authors have created a “how-to” book on achieving profitable expansion by combining their academic and real-world experiences. In addition to drawing upon case studies featuring companies from Cisco to Netflix to Spirit Airlines, the duo also interviewed business executives around the globe. They have distilled their observations and practical application of the program into a handful of key concepts:
Focus only on the areas where you’ll have the best chances of winning. Distort resources — people and money — accordingly.
Reduce complexity in your organization, from the number of decision makers to the number of meetings.
Write blank checks.
Selectively give teams carte blanche to devise their own budgets and control their own destinies. Empowerment can yield amazing results.
Move quickly and learn from trial and error. Stay with what’s working. Cease and desist with what’s not.
“At the end of the day, this is a model for making things happen and not just one-stop growth,” says Khosla. “It’s about creating a winning culture for sustained growth.”