The No1 Reason for Stagnant Business Growth

The #1 Reason for Stagnant Business Growth

If you’re leading a company going through a stagnant business growth period, then you know the solution is not simple to solve. A quick google search gives hundreds of possible solutions and almost all of them involve fixing strategy, sales, marketing and product innovation in some way. In this blog post I’m going to give you an alternate solution that you may not have thought to explore.

When I was doing my HR courses back in 2003, my organizational behaviour text book featured Nortel Networks as an exemplary business in leadership, innovation, and market share. Just over 5 years later the company filed for bankruptcy. Mired with issues surrounding accounting irregularities, conflicts of interest, environmental damage, the company declined so stunningly, the fallout is still a cocktail conversation topic over a decade later.

In 2009, Blackberry was at its height of prosperity and pretty much held 100% of the market share for business smartphones (you get bonus points if you remember Research in Motion!). Just 2 years later it started shedding market share to Android and iPhone and by Q4 2016, had a nearly 0% market share. I was a loyal Blackberry user all the way to 2014, but their slow-to-catch-up app store, clunky devices and small screens pushed me and so many others into Android’s and iPhone’s waiting arms.

So what causes companies to struggle or lose momentum? What causes them to decline so spectacularly after seeing such phenomenal results? 


Reasons for Stagnant Business Growth – the Experts’ Opinion

There are, of course, many reasons, but I wanted to talk about a few of the ones experts talk about. 

Then I’ll share the one all-encompassing reason that company’s never seem to get right. The ones that do, turn themselves around from the brink of expiration.


Inability to respond to market changes

Arguably the number one reason companies fail is because of their inability to respond to changes in the market. Their inability to read their customers and disambiguate passing trends from permanent preference changes. Kodak is one company that was unable to respond to the growing digital trend. A more recent casualty is Toys R Us. They were unable to adapt to customers’ preference or keep up with the likes of Amazon. It will be interesting to see how Toys R Us fares with their restructuring efforts. 

However, even companies that have managed to adapt to shifting markets don’t rely solely on a strategic change to overcome their decline. There are always other things at play. Simply shifting their products or services is not enough. These companies adopt a full shift in their makeup.


Poor sales and marketing

Sales and marketing are the bread and butter of a company and if those are broken for too long, there’s almost no chance of a company succeeding. While marketing can sometimes jumpstart stagnant business growth, unless companies look deeper, this isn’t going to sustain long term growth for them. Companies need to change other parts of their organization in order for the marketing changes to be successful, for example, operational practices.


Poor leadership

There’s a reason why CEOs get fired and why companies turnaround after hiring a new CEO. Apple is the classic example here. The company had almost gone under before they called Steve Jobs back to take the CEO chair. CEOs make a difference and their leadership makes a difference. A company can have a fantastic product, great marketing, great sales, but without a visionary leader, it won’t be able to keep the top spot for long. Leadership matters but leaders need to be able to infuse the entire organization with their brand of leadership. The behaviours of the rest of the organization must match the leader’s or even the best leaders fail at growing a company. 


Poor product

A poor product happens when there’s a misalignment between customer wants and what you are offering them. Basic quality aside, it’s important to give customers what they want and not what you want to give them. This happens very often and I see it in big and small companies, both service-based and physical product-based businesses. Of course, if the quality of your product sucks, you’re not going to grow. But when there are no buyers for your product, it’s time to pivot double time. And in order to get the right product into the hands of your ideal customers, your people need to listen and be innovative. Not just you, the CEO, but your employees too.


Stagnant Business Growth – the #1 Reason

The 4 items I listed above are the most commonly cited reasons for stagnant business growth. This is what the experts tell us, this is what Google has in its search results. But the one thing that encompasses all these reasons, the one thing that nobody seems to talk about explicitly, is culture

Looking at all the fantastic business turnarounds in economic history, the ones that standout all took a long hard look at their current culture and changed it. Without changing your current culture, the culture you have in place while you’re going through a stagnant business growth period, there is no way you’re going to get out of this period. 

When you look at some of the most successful companies in the world, the ones that really excel have outstanding organizational cultures. Google, Netflix, Shopify, Costco, Microsoft, WestJet. And the companies that are at the top that didn’t adapt their culture, or neglected it, get called out. This harms their brand. Even if the flak doesn’t cause significant damage, it does slow down their growth. Some of the companies that come to mind: Uber, Amazon, Airbnb. People want to do business with companies that treat their employees right. People want to do business with companies that have a strong stance on doing the right thing, whether that’s through philanthropy or great HR practices. 

What CEOs Can Do

I’m partial to HR’s position in a company, of course, but I’m not partial because of my background in HR. I’m partial because I see the results of a strong HR presence in a company and their results. I see leaders like Gary Vaynerchuk, Sundar Pichai, Matt Mullenweg who actively advocate for strong HR practices in their companies and we see their success. These leaders, and others, understand that in order to build great companies, they have to pay attention to the culture they’re creating. 

I’ve said this before and I’ll say it again – culture doesn’t come from words on a wall in the lobby. Culture is defined by the way you do business. How you treat your employees, your customers, your vendors, your partners, your shareholders. It’s the way you speak to them, the way you service them. If all that is lacking or deficient in any way, you’ll see it in your financial results. 

There’s a misconception that HR only has jurisdiction over HR policies and practices. The reality is HR has influence over every single person that walks into the company. They have influence over your operational practices because of the people they bring through the door. If you’re a small business owner that doesn’t have an HR department, then that responsibility falls on you. Even if you have an HR department, you have the ultimate responsibility, an obligation, to focus on company culture. You set the tone for the organization. HR can help, but it starts with the CEO. 


Closing words

If your business is experiencing stagnant growth, it’s time to examine your company culture first and foremost. What do you stand for? What does your company stand for? Are your practices and processes in line with those beliefs and values? If not, then which ones are misaligned? Start revising those first. Are your employees embodying those values? If not, then start communicating the values and show them what they look like in real life. As the CEO, that’s your job, not HR’s, not your executive team’s, not your middle managers’ – it’s on you.

If you’re unsure of how to start examining your culture, take a look at this blog post. It’s meant for executives starting a new job, but the cultural assessment process applies here.

If you want to talk about your specific situation, book a call and let’s chat. Give me 30 minutes of your time and I’ll give you at least two things you can do right away to fix your culture. Start taking control of your stagnant business growth and let’s turn it around!

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