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Sustainable Growth

Sustainable growth is the expected outcome of leadership activities in the pursuit of the high-performance business organization. I return to the story of the DuPont Company, which was founded in 1802 to manufacture gunpowder and has been growing for more than 200 years. I do this in order to illustrate the concept of setting an aspirational future state, working diligently to approach that target, and achieving sustainable growth as an outcome.

For its irst decades, the company focused on its “black powder” business. Then in the early 1900s, the company entered an era of rapid growth and wide-ranging innovation. Soon, though, one of its senior executives decided that still more change was needed – speciically, the company would from now on engage in fundamental research in the pure sciences as an approach to developing new and transformational products. This was risky, but it succeeded, in part, because of the hiring of very talented engineers and scientists, including Wallace Carothers, who in 1928 was named head of the organic chemistry section at the company's Experimental Station.

Carothers, a talented scientist with an academic background, worked with other scientists and engineers, including Julian Hill, a gifted chemical engineer, to develop a miracle material called nylon. A few short years after they created this new polymer, DuPont built a full-scale nylon manufacturing facility and began marketing this new product with huge success.

During this same period, the company's leaders developed and acquired many products serving diverse markets and technology niches. Those products included sodium cyanide for electroplating, hydrogen peroxide for bleaching, titanium dioxide for paints, and a variety of other industrial chemicals. Nylon was DuPont's most famous invention because it led directly to the development of a number of other polymers, such as neoprene (a synthetic rubber) and the irst polyester superpolymer. Carothers iled ifty patents in the nine short years that he worked for DuPont before his death. All of this supports the claim that DuPont invented the polymer industry.

DuPont's “tagline” – “A Science Company” – speaks to its interest in and mastery of the innovation process. DuPont's success over more than two centuries has been based on its ability to generate a continuous stream of new ideas in science, technology, and engineering; it then implements those ideas in ways that serve its customers as well as society at large. Many of the products it produced in the past, such as nylon, replaced natural materials. Today DuPont has turned its attention to “green” products that align with nature. It is seeking to replace some of its synthetic, polymeric products with organic ones. DuPont Sorona®, a renewably sourced ibre and biopolymer, contains a high percentage of renewable plant-based ingredients. Sonora has a number of uses, such as in clothing and carpeting.1

All of this demonstrates the commitment of DuPont's leaders to continuous change and development, which has led to more than 200 years of ongoing sustainable growth.

Clearly I am biased, but I greatly admire the company. I am also sure there are other companies that are embracing sustainable growth and innovative high performance. I just do not know them as well. Like DuPont, these companies are aiming for the targets of the high-performance business organization to facilitate and inspire their work. In this regard, I would like to introduce three important words that you will encounter in the rest of this book. The irst word is development. This is a book about developmental leadership. In the literature, much has been written about sustainable development. In this book, however, we reserve development for another purpose: the growth of people's capabilities and competence. This is the sort of growth that is required for achieving the goals and promise of Everyone a Leader, as well as for the collective development of people in organizations as they work together to develop higher-performance work processes and systems.

1 The DuPont Oval logo, DuPontTM, Kevlar®, and Sorona® are trademarks or registered trademarks of E.I. du Pont de Nemours and Company or its afiliates. DuPont Canada is a licensee. The second word is business. In my classroom, when I ask students to deine business, they more often than not associate the term with making money. That deinition is too limiting, however. Leaders are important for the success of proit-oriented organizations, but they are equally important for not-for-proit and service-oriented organizations. I deine a business organization as one whose purpose is to add value for the beneit of its stakeholders. Governments, academic institutions, and service organizations such as the Red Cross, Greenpeace, and a small-town Lion's Club are also businesses, when we think in terms of value created for stakeholders.

The third word is growth. In their book Every Business Is a Growth Business, Ram Charan and Noel M. Tichy begin by stating some principles that they maintain are held consistently by the world's best business leaders. Let me reproduce three of them here.

There is no such thing as a mature business.2

What this means is that all successful business enterprises need to ind ways to grow, or they will die. Maturity cannot be sustained, and neither can zero-growth operations. This is largely because world-class competitors will grow and take customers away from the business.

Growth is a mentality created by the company's leaders.3

That is, the successful leaders of these world-class business enterprises are the intuitive starting points for a growth strategy. It is their expectation – their “truth” if you will – that growth will happen in their business enterprises.

Deine a growth trajectory so that everyone in the company can understand it.4

That is, these world-class leaders all believe that growth is a responsibility shared by everyone. As we say here in this book over and over again … Everyone a Leader, for superordinate success. Charan and Tichy and many

2 Ram Charan and Noel M. Tichy, Every Business Is a Growth Business (New York: Three Rivers Press, 1998), 241.

3 Ibid., 242.

4 Ibid., 88. others who write about successful business enterprises know that the goal is growth – “grow or die” – and they also know that the role of business leaders is to grow their enterprises.

In my world, the target concept for all people is Everyone a Leader, and the deining characteristic of leading is “inluencing others to make positive change.” The irreducible outcome of these future states is rapid, sustainable growth, and the expected additive outcome is the satisfaction of all stakeholders, that is, sustainable development. And all of this results in a sustainable and responsible business enterprise – one that, as it grows, improves the lives of all people.

True leadership is about creating domains in which we continually learn and become more capable of participating in our own unfolding future.

Joseph Jaworski5

It does not matter whether we refer to this as growth or as positive change: role model leaders are driven to ensure that their organization is sustainable and continuously improving. “Sustainable” in reference to growth is a very important qualiier when we consider the work of the role model leader.

I attended an important meeting several years ago. Its purpose was to ind ways to grow a particular business unit, and it was attended by midlevel and senior managers from that unit and beyond. I was struck by the number of suggestions that focused on short-term gains, most of them cost related. Somewhat facetiously, to compel people to start thinking in the longer term, I suggested that I could do better than any of the short-term solutions being offered if I simply terminated half our employees and threatened to dismiss the ones who were left. That would dramatically increase our proitability.

Some laughed, and some got angry, but I believe that all of them got the message: we needed to think about sustainable ways to grow the business instead of short-term, one-time answers.

When leaders think about growth and do something about growth, a number of questions arise. Mostly, those questions are variations of the following: How will the business organization be grown more rapidly?

5 Synchronicity: The Inner Path of Leadership (San Francisco: Berrett-Koehler Publishers, 1996), 182. How will it be grown in different directions? How will both of these be accomplished? That is, what needs to be done to grow the business and improve it continuously in terms of development and innovation?

Put another way, leaders are challenged to think about growing sustainably in terms of speed, size, and competence – the three dimensions of growth. Those three dimensions in turn serve as a very useful model for thinking in terms of expanding, extending, and evolving – the “three Es” of growth.

Expanding refers to doing more of the same things and doing them at lower cost proportionately. In DuPont Canada's paint business, the manufacture of coatings for new automobiles was an important business unit. Growth occurred by expansion – that is, new and more productive facilities were built similar to those already in place. More paint was produced and the business grew. At the same time, the unit expanded by gaining new customers for essentially the same lines of paint.

Growth by expansion is not as dramatic or innovative as growth by extension or evolution. Even so, leaders play an important role in it. Role model leaders inluence people to expand the company and to meet the challenges of growth in effective ways. Of course, expanding a company requires a great deal of managing in addition to leading. The DuPont Company, since its founding, has been expanding; indeed, many companies do expand successfully, but unfortunately, many stop there.

Extending growth is not the same thing as expanding it. Extending it means moving into new arenas of competence, which are often related to the old ones. Frequently, companies extend themselves by carefully examining their competencies in the two distinct dimensions of marketing and technology. Without entering into too much detail, marketing competencies encompass matters such as geography, customer proiles, products, services, merchandising, and the competition. Regarding technology, the factors to be considered include materials technology, information technology, and “inancing” technology. Again using DuPont Canada's paint business as an example, we extended our business by building a new operational segment that targeted the auto collision repair market – an extension beyond the new car market and painting technology. Extension involves increasing the organization's capabilities – those of its people, its technologies, and its processes and systems. Thus growth by extension involves signiicant change, which requires role model leadership. And, of course, it involves managing and planning competencies as well. With regard to our opening example in this chapter, DuPont's leaders early in the last century grew the company by
extending it from the original gunpowder business into the developing market for the new explosive technology called dynamite.

Evolutionary growth is considerably different from growth by expansion or extension. Growth by evolution is meant to generate transformational change. It requires leaders to sense and think about change opportunities and the accompanying challenges. It entails considering change in all dimensions of size, speed, and competence. Again I refer here to DuPont Canada's paint business. Leaders may decide to change the business in an evolutionary manner by developing innovative ways to produce paint that signiicantly improve productivity, quality, and the capacity to serve customers. An example would be replacing organic solvents with water-based ones to reduce the risk of damaging the environment. Another example would be changing how paint is marketed by selling the idea of “painted cars” as the unit of sale rather than “gallons of paint.” The business would take “ownership” of the task of painting the cars on the production line, replacing the automobile producer. This could move the company into a new business, partnering with the car company to produce and sell painted cars, rather than simply being a supplier of paint to the car company. For that matter, the company might develop unique chemistries for coating a variety of things besides cars – items like plastics, pharmaceuticals, and food products. The technologies for these things would have to be radically different from the ones for painting cars. Nevertheless, the company would still be in the coating business.

Perhaps the best example of sustainable evolutionary growth in the DuPont Company up to this time has been nylon, which was a planned evolutionary step in the company's growth. That product was developed by setting a superordinate expectation that a commercial business in the very new science of macromolecules was possible. The how and what were related to creating a disciplined, systematic process of invention that meant founding an Experimental Station and hiring a gifted but little-known researcher who was at the forefront of the academic research and who was prepared to be guided by the company's aspiration.

So there are various dimensions of rapid and sustainable growth. Expanding, extending, and evolving each require competent role model leadership. And, importantly, the role model leader must help the organization's people develop their competence in ways that further the organization's aim, which is to grow sustainably and rapidly in all three dimensions.

Growth is a process. Rapid growth needs to be viewed as essential to all people and all stakeholders in the business organization. To achieve that rapidity, leaders inluence people to work on growth every day, every week, every month. I believe that speed is a clear mark of success in our rapidly
changing business environment. Indeed, the ability to get things done quickly is a precondition for success.

Leaders who are committed to achieving rapid growth must make abundantly clear to their people what outcomes they expect. That in turn requires a ceaseless effort to minimize organizational distractions that cause people to lose focus on growth activities. Common purpose is dificult for groups, teams, and organizations to achieve at the best of times, and this dificulty only multiplies when the outcomes expected are not well understood by the people who have been tasked with achieving them.

The measures of success for a mission of rapid, sustainable growth are best described in terms of productivity, quality, and service.

Productivity is a generic measure of output / input. Inputs are, basically, the actual things and processes that people work on, along with the energy they exert on these. Outputs are the results of the work they do. Quality is the generic measure of perfection. Speciic measures of quality most often involve calculating the reduction of waste from value creation and value realization processes – in other words, less waste means higher quality. For example, in a manufacturing process, a common measure of quality is “irst pass yield,” deined as the amount of 100 per cent acceptable product produced in a manufacturing process the irst time through, with no need for recycling or rework. Service measures refer to key performance indicators of stakeholder needs satisfaction. For example, in a commercial business, a common customer service measure is repeat sales to a given customer. A satisied customer will buy again and again.

An important point: role model leaders act rapidly and competently when growing their people, just as they do when growing goods and services. It is people who do the work of growing things; but people also need to do the work of growing themselves. Here we are referring to the growth of leadership skills, character attributes, and purposeful behaviours, in addition to the growth of functional expertise in engineering, marketing, manufacturing, accounting, and so on. For an organization to grow, its people need to develop and grow their organizational capabilities. I discuss these in the following pages.


 
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