ILRHR4640 Lecture 9- When Growth Stalls

ILRHR4640 Lecture 9- When Growth Stalls - When Growth...

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Unformatted text preview: When Growth Stalls When Dr. Daniel Cohen Spring 2009 Key Learning Points Key Understand why growth stalls Become familiar with patterns associated with growth stalls Learn how to prevent a stall Learn what caused a specific stall: Purina Case Causes Behind Growth Stalls Causes Premium Position Backfires • Caused by shift in consumer preferences or low cost alternatives that erode differentiation • Key Symptoms: market share plummets in narrow customer segments Customer acquisition costs jump Key customers resist service enhancements Causes Causes Innovation Management Breaks Down • A company mismanages processes for new product/service offerings • A company focuses on efficiency and reduces investment in R&D • Company becomes more bureaucratic and less entrepreneurial Causes Causes Core business is abandoned prematurely • Believing core business is saturated, a company doesn’t fully exploit growth potential Key Symptoms: • Company invests in acquisitions or growth initiatives in areas distant from existing customers and products • Execs refer to product line as “mature” • Examples: RCA, McDonald’s Causes Causes Company Lacks a Strong Talent Bench • Company has few executives with strategy execution capabilities • Exec team comprised of “company lifers” with narrow experience base • Mngt development programs focus on replicating current leadership skills Patterns Patterns Do you see any trends across the four causes of growth stalls? Preventing a Stall Preventing Commission a squad of younger, newer employees to ask questions such as: Have teams develop visions of what company will look like in 5 years Ask a VC to sit in on strategy reviews and probe for weaknesses • What industry are we in? Who are our customers? Questions? Questions? ...
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