Both of my books, the best-selling “Six Disciplines Execution Revolution” and the award-winning “Six Disciplines for Excellence” are now available as audio books.

Each audio book is on 4 CDs, and are available for U.S. retail $24.95 exclusively from Six Disciplines Publishing.

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Let’s take a different look at the same two companies from the previous post.  This chart illustrates the quarterly growth rate in sales over a five-year period for Company A and B.

Even though over a twenty year period they both achieved the same compound earnings growth, which business would you prefer to manage? How would you sleep at night? While I know nothing personally about these two companies, it appears there is something cyclical going on in Company B, but it isn’t in the same quarters each year.

The people in Company B may have total confidence in what’s going on, but as an investor or outsider, Company B looks to be pretty nerve-wracking.

My point? An organization that learns how to execute its strategy and deal with day-to-day surprises operates in a less stressful environment and, as you will see, increases its value. How you get there, indeed matters - BIG time!

To get better insight about why execution is such a tough challenge, we analyzed the quarterly and annual earnings performance of 200 companies over a twenty year period.

The following graph shows the annual earnings rate on the vertical axis. The horizontal axis shows the volatility produced by that growth. Volatility is another word for how predictable the growth was. The farther to the right the more Unpredictable the earnings performance is. The first thing we learned in this analysis was that as the growth rate increased beyond about 15% per year the volatility increases faster than the growth rate.

For example, when growth rate doubles from 20 to 40%, the volatility increases from 20% to 150% — a 7 fold increase. The faster a business grows the more unpredictable it becomes. So there is something about growth that makes execution more difficult.