What type of leaders head up your industry’s strongest, fastest-growing and most innovative companies? I have thought about it—a lot. After conducting a recent survey of 654 publicly and privately held companies, I found that companies helmed by senior leaders classified as “Builders” consistently experience faster revenue growth than those headed up by other types of leaders.
The research reinforced what I have long suspected: Companies never outgrow the need for a Builder mindset at the top. Every company was founded by a Builder. Yet too many end up putting a different type of leader—a Decorator or Remodeler, or even a Realtor—in charge later. From that point on, whether they know it or not, there is a long spiral into mediocrity, irrelevance or even nonexistence.
The C-suite must have a hefty dose of “Builder spirit”—a passion for driving organic growth by delivering differentiated value to customers, a focus on innovation, and an insistence on thinking in years rather than quarters—to stay competitive in a fierce marketplace. When your company loses that spark, it is prone to serious leadership errors that squelch its own growth.
Our research suggests that only one-third to one-half of companies still are led by Builders. The rest have leaders fixated on issues other than growth—say, presenting favorable financial performance to investors, or improving operational efficiency, or pursuing external alliances. These non-Builder types are Decorators, Remodelers and Realtors, respectively.
“Building the long-term capabilities to become a growth powerhouse doesn’t take place in a single year. You need a roadmap that is intelligently formed, embraced by the full leadership team, and communicated clearly and often to all employees.”
Specifically, the survey asked respondents to identify the primary passion of senior leaders in their company. Fifty-three percent gave themselves the Builder description, while only 32% of subordinates characterized their senior leaders this way. More subordinates thought of their senior leaders as Remodelers (41%) focused on operational efficiency.
How can you tell if your company has lost its “Builder spirit?” The red flags are there if you look. They include things like:
- Revenue growth is sluggish.
- Lots of talk about maximizing shareholder wealth (false goals).
- Customer-facing innovation is downplayed (or even neglected).
- Scores of cost-cutting measures like spending freezes and mass lay-offs.
- In general, employees seem uninspired, disengaged, and unhappy, with the best and brightest future Builders jumping ship.
If any of this sounds (dismayingly) familiar, do not worry, there are things you can do to restore the Builder spirit, put your company back on track and ramp up growth.
Your three-step plan of attack includes:
Step 1 — Start putting Builders in charge
When you leave a Decorator in charge—someone fixated on making the company look better to investors—you are failing to inspire employees and you are chasing away future Builders. But don’t fire those who aren’t Builders. You need their help to improve operational efficiency, make acquisitions or look good on Wall Street. You need them, but in supporting roles.
How do you know if someone is a Builder? They should have market-facing innovation in their DNA, a desire to build skills and capabilities, a passion to make things better, a duty to leave the business stronger than they found it and, frankly, they will not be satisfied doing much else.
You cannot afford to hesitate with changes at the senior leadership level, but you can take more time with middle management. Give them a chance to show what they can do. Establish new measures of success, starting with their duty to leave their business stronger than they found it. Ask them for evidence showing they’re strengthening their business’s long-term growth capabilities and their plan to do more of this.
Step 2 — Create a growth capabilities roadmap
Building the long-term capabilities to become a growth powerhouse does not take place in a single year. Nor does it make sense to bounce from one initiative to another in a haphazard fashion. You need a roadmap that is intelligently formed, embraced by the full leadership team, and communicated clearly and often to all employees.
Begin by developing a list of capabilities your company needs for strong organic growth driven by market-facing innovation. The possibilities vary depending on your type of business, but here are a few examples of growth capabilities to build:
- Customer interviewing skills
- Competitive insights
- R&D capabilities
- Transformational innovation
- Patent protection
- New product launch
- Gated project review process
- Project portfolio management
- Talent management
- Culture of innovation
Conduct an employee survey measuring your business’s current capabilities. Then, for each capability, ask them to rate its importance and satisfaction. Place a high priority on improving capabilities with high importance scores and low satisfaction scores. Next, put together a plan to boost those capabilities most likely to impact your growth. Publish your results for all employees to see and make it clear that your goal is to understand and meet customer needs better than others.
Step 3 — Attract new investors who get the benefit of long-term thinking
If yours is a publicly traded company, you need patient investors who, like you, are focused on the longer term. If your quarterly earnings take a dip while you stay focused on the future, these investors will understand. In fact, they do not want you making poor decisions that damage your long-term growth.
When you meet with investors, try to assess if they are truly in this for the long haul with you. Too many company leaders make the excuse, “We’d like to focus on the future, but investors won’t let us.” That argument doesn’t hold up. In Amazon’s early years, Jeff Bezos led it through seven years without showing a profit. Far from penalizing Amazon, Wall Street cheered it on. Its leader had communicated a vision of growth, and this is what you must do.
And there is one more thing: Be careful of the time when you start courting long-term investors. Do it too soon and it might seem like you have a story without substance. Do it too late and your stock will be punished when you make the right decisions judged by the wrong investors.
I suggest communicating elements of your Growth Capabilities Roadmap when you can do so buoyed by early successes. Examples of market-facing innovation that led to positive financial results will be well received. I have seen billion-dollar businesses completely reinvent themselves in this manner. It is not easy and it takes several years. But as a leader, you won’t be on your own. You will have many very motivated employees coming alongside to join you.
Dan Adams is founder of The AIM Institute and author of “Business Builders” and “New Product Blueprinting.” He also writes the blog, “Awkward Realities” and the video series B2B Organic Growth. Adams, a chemical engineer with a listing in the National Inventors Hall of Fame, has trained tens of thousands of B2B professionals globally in the front end of innovation and works with senior executives on driving profitable, sustainable growth. For more information, visit theaiminstitute.com.
