For the organization that builds their capacity to solve business problems today, an interesting result inevitably occurs:  the organization will experience different challenges tomorrow, AND, they’ll be even greater in their scope. 

Indeed, a paradox exists for growing organizations that learn to cultivate their capacity to execute strategy effectively, which we appropriately call “The Growth Paradox.”

Here’s how the scenario plays out:

• No matter what business leaders think is their biggest problem is today, it isn’t. 
• Tomorrow’s challenges will not only be different, they’ll be even more difficult.
• Learning how to balance strategy and execution, while overcoming the inevitable surprises, is the most foundational capability any organization can have.
• With this newfound capability, organizations reduce risk, manage chaos, and are able to gain or regain control.
• Leaders who build organizations with an ability to balance strategy and execution over long periods of time achieve a level of enduring business excellence.
• Consistent execution over time is extremely rare, and because it’s rare, this increases the value of the organization.

Overcoming this challenge is what we mean by “solving the one problem that makes solving all other problems easier.

Six Disciplines, chambers of commerce, and economic development councils share a common vision of strengthening business in America. When faced with increased global competitiveness and economic uncertainty, it’s vital that we develop better ways of doing business, and more specifically, creating new business opportunities and extending existing business development, especially among small and midsized companies. History shows us that it is these organizations that are the backbone of our local economies, which are responsible for the lion’s share of employment and economic growth.

To support this assertion, the Small Business Association (SBA) published a new report in June 2008: High-Impact Firms: Gazelles Revisited. This new study revisits and expands upon some of the conclusions about rapidly growing firms conducted in the 1980s. Specifically, this report examines firms with significant revenue growth and expanding employment.

The revealing research findings about “high-impact firms” are summarized as follows:

• They are relatively old, rare and contribute the majority of overall economic growth.
• They exist in all industries, in almost all regions, states and counties.
• They represent only 2%-3% of all firms, yet they account for almost all private sector employment and economic growth in the economy.
• On average, they are 25 years old.
• In the four years after a high-impact firm undergoes its high-growth phase, only about 3 percent die.
• Yet, 75% of them fail to sustain their high-impact status.

For community organizations that have a strategy focused on an economic development platform, the implications and benefits of acting on this data are significant. Those who do will recognize the value of cultivating high-growth firms versus trying to increase entrepreneurship across the board, or trying to attract relocating companies.

Following are some game-changing implications for you to consider, particularly before going into next year’s strategic planning process:

• What kind of impact could your community organization have on your community’s economic development if you could help to cultivate the number of local high-impact firms from say, 3% to 4%, or perhaps even 5%?
• What if your community organization could recommend a systematic approach to enable companies to get to the high-impact stage sooner — and stay there longer?

The answers to both of these questions are outlined in my new book, Six Disciplines Execution Revolution. Growing the number of high-impact firms, getting them to the high-impact stage sooner, and getting them to stay there longer, are all essential drivers behind the revolution in strategy execution that’s already underway.

The Business Excellence Model we’re describing is not about company size. It is, however, very useful in helping leaders of businesses of any size to understand where they are now.

When we put this Model in front of business leaders, they quickly point to where they think their company is today.

The ultimate goal is to get to cultivate the capability in your organization to stay in Quadrant II for longer and longer periods of time.

Now, you can do the same by taking the Execution Revolution Challenge. Visit our free interactive tool at www.SixDisciplines.com/Challenge.  Have your entire organization take the Challenge as well, and you’ll be surprised to see how differently people view how your organization is balancing the two dimensions of strategy and execution.

Quadrant II of the Business Excellence Model (the upper right-hand quadrant) is all about being able to balance growth with profitability and performing predictably and consistently.  This requires a disciplined organization, one that’s learned to execute its strategy well enough to address the needs of today, while building for tomorrow - at the same time.

Sustainable excellence isn’t possible unless an organization learns to systematically increase its capacity to execute, and to do so faster than the rate at which its challenges are growing.

The Growth Paradox

It’s ironic that the better an organization executes today, the bigger its challenges will be tomorrow. That’s the reason it’s so difficult to balance strategy and execution over the long-term. Without an aggressive, proactive approach, organizations cannot identify or address their challenges in sufficient time, to avoid drifting into one of the other quadrants.  The good news is that the sooner these challenges are caught and addressed, the lower variability the business undergoes.

Performance in Quadrant II is difficult to sustain. Few companies are able to achieve this kind of performance for long periods of time. But this is what the Execution Revolution is all about:  the process of changing the game by focusing on how to successfully plan and execute strategy more effectively, while managing the inevitable surprises along the way.

When an organization in Quadrant IV becomes so focused on operational issues, it can get it a rut and slip into the weak state of Quadrant III, where it has neither strong growth nor good profitability.

It’s easy for a company to flounder in Quadrant III for quite a while, before leadership accepts they’re really there.  In my experience, a company in Quadrant III is very reactive and frequently in chaos, operating daily in “fire-fighting mode” without a clear path out of their circumstances.

It takes tough decisions to get out of Quadrant III. While in it, the team members are overworked, confused, frustrated - sometimes even a feeling of hopelessness creeps in.

Unfortunately, by the time an organization recognizes that it’s operating in Quadrant III, it can take up to two years to fix the problem!  But, the picture doesn’t have to be this grim. It takes courage, determination and the willingness to change the behaviors that landed the organization in Quadrant III to begin with.

Typically, the best exit plan for moving out of Quadrant III is to aggressively reallocate resources from low-profitability areas - to the growth areas. This sounds easy, yet most organizations don’t possess a framework, the will, or the persistence to make the hard choices it requires.