High-growth firms consistently have long-term “game changer events” planned in the future, with action plans that have strategic executive accountability.
In a previous article, I discussed how there’s a significant difference between those firms and companies that are successful in growing their businesses in single-digit growth cycles, versus a small group that consistently grow in double-digits.
They were in double-digit growth mode long before this economy took off, and this is a great reason for all businesses and CPA firms to implement their principles and axioms.
Whether the entity was a company or a firm, most of the double-digit growth at these high-growth entities was accomplished by the CEO and strategic partners by combining organic growth with growth that occurred from a use of strategy. The strategic use of game changer events occurred on an annual basis. Practically every CEO or managing partner who was a part of this high-growth group spoke about “game-changer events” as though they were annual affairs.
For these firms, high growth was a multiple of annual fiscal year growth, or organic growth, coupled with the strategic growth caused by the implementation of game-changer events.
This provided a series of double-digit strategic growth cycles within the company, and as each game-changer event went into year two, three, four, etc. it generated additional organic growth on an ongoing basis, which kept multiplying the annual organic growth. As simple as this seemed, it was planned magic that consistently combined with the new strategic growth from other new game changers.
As these high-growth companies and firms recognized this dynamic, they included game-changer events for every future year so that by the time that future year became the current year, the multiples just occurred as a given each year.
More importantly, double-digit growth occurred as long as the company continually came up with substantive game-changer events. I saw this at every company that professed strategic management, and identified this as an Axiom of Success.
Operational vs. Strategic Management
Operational management is the most common style of management within companies, and this occurs in the operational fiscal year. It is the management process that CEOs and managing partners utilize to grow their business in single digits from the start of the fiscal year to the end of the fiscal year. This style of management probably occurs in approximately 90 percent or more of businesses.
Strategic management is a whole different animal, and this style of management is always involved in high-growth firms. It’s normally a three-year process, with the current year being the operational first year, and the following two years being the strategic years.
It’s easy to see which style has the advantage. If your firm is managing operationally, each October the word goes out to forecast the next fiscal year targets for revenues and expenses. For 2018, this October the executive management team will start planning the 2019 fiscal year’s revenue and profit for single-digit organic growth.
However, when the firm is being managed strategically for double-digit growth, the strategic partners and executives are planning for 2021, and have already planned 2019 back in 2016. This provides a tremendous advantage to those CPA firms who are managing strategically, not just operationally.
Here are some key areas where our firm recognized a significant difference between high-growth strategic management and organic growth operational management techniques:
Focus on Strategic Executive Involvement
Normally an organization’s partners and sales personnel were involved in the operational sale of the products and services, and they were speaking and building relationships with the purchasing agents, buyers and controllers of the customer. However, key executives and partners of high-growth companies were the ones speaking directly with the CEO and executives of their customers or clients. There was no change in this practice in both operational and strategic management.
After witnessing this in practically every high-growth company, to my firm it became another axiom and we added it to the other Strategic Axioms of Success.
Focus on Customer Issues
High-growth firms focus on strategic customer issues. It permeates their strategic as well as their operational plans. This is far different than what was observed at the organic growth companies, where the focus is almost entirely on an operational revenue number, and usually it is a short-term monthly revenue number.
That difference is significant because it forces your executive management to become strategic managers and not just operational managers, with the strategic focus on the customer-centric parts of the operations.
When I see high-growth companies speaking with customers, they speak of solutions to the customers' main problems, which build a different rapport than merely discussing fill-rate percentages of shipments or tax and audit trails with lower level managers.
Put in context, strategic executives situate themselves differently than operational executives and describe the circumstances surrounding the issues along with becoming a long-term part of the customer’s solution. High growth executives talk client issues that create customer profit, for themselves and their clients.
In many instances, the same issue for one client is similar to another client and the solution becomes a “game-changer event” in the strategic plan. This is the type of game changer that focuses on the desired results from your clients, and it’s a key reason why clients enjoy working with a firm that is implementing strategic management practices.
This is normally one of the profound changes in a company or firm’s style and can receive resistance to change from operational executives and partners who have not taken on a strategic executive role, because it has them speaking with the CEOs of clients of other partners in the firm.
High-growth firms and companies implement ongoing game-changer events as a part of their operational plans, transforming the organization into a higher-level customer-centric entity.