Book Extract: The Real Life MBA
In their latest book, The Real Life MBA: The No-Nonsense Guide To Winning The Game, Building A Team And Growing Your Career, Jack Welch, former chairperson and chief executive of General Electric, and his wife Suzy, former editor of the Harvard Business Review magazine, use their signature conversational style to talk about business problems like crisis management, globalization and team-building. In the chapter “You Gotta Have Growth”, they talk about six catalysts for growth, including the need to concentrate resources and funds rather than sprinkle them across projects. Edited excerpts:
Most businesses have only so much money to spend on growth initiatives each year. And most of the time, whether the budget is $100,000 or $10 million, it’s not enough; again, that’s just one of those facts-of-life things.
But too often, the problem with growth isn’t the number of dollars available, it’s how managers allocate them.
They sprinkle. A little money on this initiative, a little on that, a bit more over here, some over there, until each initiative gets a dusting of funds, and everyone is unhappy. At least they’re equally unhappy, right? Or so goes the thinking of weak leaders practising the age-old, favourite corporate pastime of CYA (covering your ass).
Such an approach, common though it may be, is a losing game. If you want growth, don’t hedge your bets. Go big to get big. That’s our second lever.
Michael Petras had lots of ways to allocate his resources toward growth at AssuraMed; indeed, within his first year, his top team brought him more than a dozen investment options. They all had some merit—that was exciting. And so Michael and his team debated them for days. If you’d been there, the intensity at times would’ve reminded you of a good old-fashioned food fight. Ultimately, for maximum payback, they decided to fund only two. One was Kristin’s segmentation initiative and associated marketing projects. The other was a significant departure for the company—pushing aggressively into the urology market, where the company had a negligible presence.
Not surprisingly, expanding the urology business was met with scepticism by AssuraMed’s old guard. “We’ve tried that already,” they said. “Our competitors have it locked up.” But Petras argued that AssuraMed had never gone after urology with resources and commitment. And that’s what the company did in 2012, investing heavily in leadership, a dedicated sales force, and expanded billing capabilities. By the end of 2013, the business had doubled in size.
Who’d-a thunk it? Not anyone accustomed to sprinkling.
One last thought on growth and resource allocation. As we said, it can seem as if there’s never enough money to fund growth the way you know it “has” to be funded. “To get this new product off the ground, we need at least $150,000 in advertising,” you might tell your boss.
“I hear you. Here’s $50,000,” might come the answer.
Sometimes $50,000 is all there is to spare in the budget. Sometimes $50,000 is all you get because of the sprinkling going on.
Regardless, in such situations, your only hope is to innovate around the problem. Unleash creativity instead of dollars.
Like WestJet Airlines did.
In December 2013, vastly outspent by competitors and facing a lack of awareness in their target markets, WestJet picked two flights travelling from Toronto to Calgary and installed a present-shaped kiosk with a digital screen in the waiting area. An interactive Santa Claus greeted customers before they boarded. Ho- ho-ho, he said, who are you and what would you like for Christmas? It all seemed harmless enough; most people were game and answered. A camera, one customer replied. Socks and underwear, said another. A blender. A warm scarf. And on and on.
The planes boarded, and probably 90 percent of the flyers forgot about their Santa encounter. But unbeknownst to everyone, WestJet personnel on the ground in Calgary were frantically shopping to fill every wish. And when 250 people landed and went to Carousel 8, instead of their luggage, they were greeted with wrapped and labelled presents.
We dare you to watch the video on YouTube without getting a little emotional. Try it; 36 million others have gone before you.
Yes, WestJet’s marvelously innovative marketing Hail Mary resulted in 36 million views. We don’t know how many millions it would have cost to buy that many impressions in conventional advertising, but certainly more than the company spent on presents by orders of magnitude.
Look, the facts are, there’s rarely enough money for every last growth initiative. So spend what you have, spend what you can. Just no sprinkling.