by Matthew S. Olson, Derek van Bever
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Product Description
Very few large companies manage to avoid stalls in revenue growth. These stalls are not attributable to the natural business cycle. Rather, careful analysis reveals that the vast majority of such stalls are the direct result of strategic choices made by corporate leaders. In short, stoppages in growth are almost always avoidable. This extensively researched book analyzes the growth experiences of more than six hundred Fortune 100 companies over the past fifty years to identify why growth stalls and to discover how to rectify a stall in progress or, even better, avoid one. Board members and executives in companies of all sizes will find this book a practical and essential resource. Matthew S. Olson and Derek van Bever investigate the incidence and consequences of growth stalls in major corporations, then probe the root causes. Examining hundreds of stall points, the authors conclude that the greatest threat to a company’s growth is posed by obsolete strategic assumptions that undermine market position, and by breakdowns in innovation and talent management. The study includes a selection of practices for articulating and monitoring strategic assumptions and concludes with a self-test built around fifty “Red Flag” warning signs of an impending growth stall. Top Four Reasons a Firm May Stall: • Premium position captivity • Innovation management breakdown • Premature core abandonment • Talent shortfall
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Average Customer Review:
0 of 0 people found the following review helpful:
A must read for those interested in strategy, 2008-06-14
Buy the book and read it. You will not be disappointed.
Most books on strategy take the same predicable process-oriented view and don't have much new to offer. This book is remarkably different. Based on hard research of the fortune 500 over the last 50 years, including interviews with management to find out what worked, what didn't, and what they should have don't differently, Stall Points offers insights and actionable recommendations for improving strategic management for mid- to large size companies. There are also many small recommendations for where to focus energy and effort to get the biggest return and the trade-offs among the most common approaches.
A must read for business leaders, MBA, and Business School teachers.
1 of 1 people found the following review helpful:
Strategies are for testing, 2008-05-14
Stall Points tells us to test our strategic assumptions if we want to avoid stalling. That in itself is remarkable advice at a time when risks seem to lurk everywhere -- it's a reminder that most big problems are under our control precisely because they're strategic.
Those strategic problems might involve abandoning a core business too soon or focusing exclusively on one too long despite disruptive threats. The point is that these strategic choices about where and when to compete explain the majority of stalls -- not uncontrollable bolts from the blue. I suspect even the sub-prime mortgage crisis will eventually be added to the long column of controllable business disasters.
Even more refreshing in Matt Olson's and Derek van Bever's book are the integrity of the method, the contrarian thesis, and the sobriety of the solutions.
-- The great advantage of the method is its avoidance of survivor bias, which, as Michael Raynor points out, ignores the riskiness of highly successful gambits.
-- The thesis that strategy matters is a much-needed corrective to all the books that write dismissively about strategy as if it reduced to execution, much as if goals could somehow reduce to facts.
-- And there are no zero-sum solutions in this book, like, say, investing in what would turn out to be the same data analysis system every other reader bought.
The book deserves to be read closely. It may even deserve an after-life. After all, one of the key development questions today is why micro-enterprises stall. One hopes to see authors Olson and van Bever wearing safari hats soon in the jungles of Colombia and the steppes of Kazakhstan finding out why the micro-enterprises on which depend the welfare of so many of the world's working poor stay micro.
2 of 2 people found the following review helpful:
Why and how obsolete strategic assumptions can threaten sustainable growth, 2008-04-30
Why and how obsolete strategic assumptions can threaten sustainable growth
In this brilliant volume, Matthew Olson and Derek van Bever assert that "the assumptions a management team holds most dearly - has known so long or so well that they are no longer debated - pose the greatest danger to growth. In other words, it is not what you know that isn't so that will stop your growth run - more likely, it's what you know that's [begin italics] no longer so [end italics]." It is worth noting that assertions such as this one are based on the rigorous and extensive research Olson and van Bever conducted over a period of several years. For example, the material in Part I (The Growth Experience of Large Firms) is based on "a comprehensive quantitative analysis of more than five hundred companies that have numbered among the Fortune 100 across the pasty fifty years.
As for Part II (The Root Causes of Growth Stalls) they complement the quantitative analysis with "detailed case analysis of a subset of the Fortune 100 to determine why growth stalls occur." Then in Part III (Avoiding or Recovering from Growth Stalls), Olson and van Bever examine the controllability of stall points previously discussed that leads them to the implications of what they learned for executives: "you must continually articulate and stress-test the assumptions underlying your strategy because it is the assumptions that you believe most deeply or that you held true for the longest time that are likely to provide your undoing. You may think you are currently doing this, but the odds are that you are not, and it is an oversight that you suffer at your peril."
Olson and van Bever note several times throughout their narrative that it is common for an organization to stall, it is hard to see a stall coming, and it is extremely difficult to recover from a stall; also, that strategic myopia can occur at the highest executive levels even in organizations that are annually ranked among the most valuable, most highly admired, most profitable, etc. For example, 3M, American Express, Apple Computer, IBM, Rubbermaid, and Xerox. Of course, the degree of severity of consequences from a stall period varies from one organization to the next, as does the length of that period.
Many of those who are thinking about reading this book may well ask, "All well and good, indeed very interesting, but how specifically can this book help me and my own organization to avoid or recover from a stall period?" Hence the importance of the last of five appendices that provides a diagnostic test for senior managers to complete. Each respondent is asked to rate each of 50 "red flag warnings of an impending doom" in terms of having No Concern, Moderate Concern, or Substantial Concern about it. In my opinion, this diagnostic test (all by itself) is worth far more than the cost of the book. Olson and van Bever also offer five foundational recommendations (in the final chapter) for executive teams that find themselves struggling to recover top-line momentum, and briefly explain the importance of each:
1. Build consensus about the sources of weakness in your core business strategy between the top management team and "skip-level" management.
2. Confront the operational and/or business model challenges in your core business that you previously have avoided.
3. For even the closest of adjacency extensions, conduct a careful "gap analysis" to identify required changes to the core business model.
4. Examine opportunity for new business models early in the new product development process.
5. Exploit "privileged insight" into customers in building new growth platforms.
I appreciate the fact that after briefly identifying or suggesting a "what" (e.g. a challenge, question, problem, peril, or opportunity), Olson and van Bever devote the bulk of their attention to explaining the "how." For example,
How to recognize the limits of prudent growth
How to recognize a stall point
How to calculate the costs of a stall period
Why companies stall and how to avoid or recover from one
How to take into full account various strategic factors (e.g. "premium position captivity")
How to take into account various organization design factors (e.g. talent bench shortfall)
I also commend them on the provision of five appendices in which they identify the companies in their sample, explain their methodology, list case study companies for stall factor taxonomy (in business markets ranging from Asset-Intensive to Tech-Intensive), provide stall factor definitions, and then conclude with the aforementioned diagnostic test in Appendix 5.
Those who share my high regard for this book are urged to check out Enterprise Architecture as Strategy: Creating a Foundation for Business Execution co-authored by Jeanne W. Ross, Peter Weill and David Robertson as well as Dean Spitzer's Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success, Edward Lawler's Talent: Making People Your Competitive Advantage, Jeffrey Pfeffer's What Were They Thinking?: Unconventional Wisdom About Management, and Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management co-authored by Pfeffer and Robert Sutton.
1 of 1 people found the following review helpful:
Groundbreaking and definitive, 2008-04-29
While there are many reasons to recommend this book, three in particular deserve mention.
First, the authors' approach to the problem of achieving sustained growth is inherently empirical and comprehensive. This differentiates their work from virtually every other tome on growth in the marketplace. Most such volumes, no matter how well written, are inherently versions of "post hoc, ergo propter hoc" analysis. Alpha Company adopted strategy X. Alpha Company succeeded. If you adopt strategy X, you will also succeed. The problem with this line of analysis is obvious to any student of Aristotelian logic, and equally obvious to anyone who has run a business. High-level strategies do not necessarily transfer from one industry, market, or corporate culture to another. Further, even sound strategies often fail because of breakdowns in execution. It's less the specific strategy that creates success than it is exceptional implementation of any strategy. (The recent work of Bossidy and Charan is very instructive in this regard.)
In stark contrast, the authors have conducted a rigorous analysis of all companies represented in the Fortune 100 over the past 50 years (and a handful of equivalent companies from outside of the US and from private equity.) The cumulative weight of the evidence commands much more authority than another well-documented case study of Dell, Merck, Johnson & Johnson, or Starbucks.
Second, the book is relentlessly prescriptive. Having identified the most common root causes leading to growth stalls, the authors provide a substantial number of specific actions, tactics, and business practices that real companies have used to overcome them. (And per my first point above, as a manager one takes much more confidence in adopting those actions because the analysis behind them is thorough and comprehensive.) Further, many of those actions are not of the nature of expensive, cumbersome new initiatives. A number of the suggested activities could be easily integrated into most organizations' current strategic planning and review processes.
Finally, the book is exceptionally well-written. This attribute is near and dear to my heart. As a voracious reader of business literature, I am frequently dismayed by the quality of the prose embodied by this particular niche of our culture. Most authors in the trade fall into one of two equally sophomoric camps. The first is characterized by the worst sort of academic rhetoric and reads about as well as your average software manual. Assuming you can stay awake long enough to finish it, one finds it a tiresome, often fruitless exercise, to extract any real learning. The other camp, which may be more annoying, is the folksy style so in vogue with ex-CEO memoirs. "We shook things up, charged forward, made up a plan as we went along, and kicked a lot of butt on the way."
Olson and Van Bever are gifted students of business, but they are equally gifted writers. Their chapters, and indeed the entire book, have a readable cadence, with appropriate amounts of wit, and they never make the audience work an iota harder than necessary to understand their point. They also understand when to stop hammering that point home. Sometimes a simple sentence is sufficient; other times several paragraphs are necessary, and the authors seem to have an intuitive feel for the difference. I challenge you to read this volume and not find yourself enjoying the process as you learn something on the journey. Very few competitive volumes pass that test.
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