- Hardcover: 288 pages
- Publisher: Yale University Press (27 May 2008)
- Language English
- ISBN-10: 0300136870
- ISBN-13: 978-8189632281
- Product Dimensions: 23.1 x 15.5 x 2.5 cm
- Average Customer Review: 4.0 out of 5 stars See all reviews (2 customer reviews)
- Amazon Bestsellers Rank: 647,889 in Books (See Top 100 in Books)
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Review
'...a useful checklist in how not to do it... like having access to a wily non-executive director.'
--Stefan Stern, Financial Times, May 29, 2008
--Stefan Stern, Financial Times, May 29, 2008
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 600 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 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 companys 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.
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Customer Reviews
Most Helpful Customer Reviews
Good on historical analysis, weaker on what to do about it - and in Kindle diagrams are almost unreadable
28 July 2011
Format:Kindle Edition
First, I read this on Kindle. With a paper book, I'd give it 4*. On Kindle, 3*. The difference is due to the fact that some of the diagrams and most of the complex tables, are at best a real difficult read on Kindle.
Now for the book. The first part is about how the authors categorise the reason why companies stall, as their growth falters. This is really excellent analysis. And you can see many companies today - partic some of our best known technology companies - struggle to get out of a stall.
The 2nd part covers ideas on how to avoid or get out of a stall quicker. There are only 1 or 2 such "techniques". I would have expected more advice on (1) how to avoid stalls, and (2) how to get out out of them
Summary from me is that this is a book anyone interested in growing a medium or large business should definitely read. In general, anyone interested in business may also consider reading this and learn from it.
Now for the book. The first part is about how the authors categorise the reason why companies stall, as their growth falters. This is really excellent analysis. And you can see many companies today - partic some of our best known technology companies - struggle to get out of a stall.
The 2nd part covers ideas on how to avoid or get out of a stall quicker. There are only 1 or 2 such "techniques". I would have expected more advice on (1) how to avoid stalls, and (2) how to get out out of them
Summary from me is that this is a book anyone interested in growing a medium or large business should definitely read. In general, anyone interested in business may also consider reading this and learn from it.
Format:Hardcover
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 past 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 Roger Martin's The Opposable Mind, 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.
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 Roger Martin's The Opposable Mind, 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.
Most Helpful Customer Reviews on Amazon.com (beta)
Amazon.com:
10 reviews
3 of 3 people found the following review helpful
Learning from Failure - the Competitive Advantage of Silicon Valley
3 Mar 2009
Format:Hardcover
Sooner or later all good things come to an end. Winners stumble, the mighty are fallen. People are at the top of their game for only so long. Companies that are the biggest, bestest, fastest growing one year are in the toilet the next.
Literature is filled with stories that teach this lesson. Shakespearean tragedies like Lear and Macbeth detail the challenges faced by those in positions of power.
In contrast, the message of the motivational speakers and books in the modern business world teach how to win, win, win. It's all upside, baby. They ignore, or minimize, the downside.
So it is refreshing to read Stall Points: Most Companies Stop Growing-Yours Doesn't Have To by Matthew Olsen and Derek van Bever. This book examines the fundamental reasons why revenue growth often stalls in successful companies. They identify four main reasons:
1. "Premium position captivity" - when a market leader fails to respond to a low-cost competitor.
2. "Innovation Management Breakdown" - where new product development fails to deliver an ROI.
3. "Premature core abandonment" - where growth opportunities in the core franchise are not exploited or new competitive challenges are ignored.
4. "Talent bench shortfall" - where a company withers due to a lack of leaders and staff able to execute strategy.
It's interesting to review the history Silicon Valley companies and spot candidates for each of these mistakes. I would suggest that, in turn, we can see Sun Microsystems's failure to anticipate the effect of Linux (#1); Xerox PARC's famous inability to capitalize on everything from the mouse to the GUI (#2); MicroPro's failure to hold on to the WordStar franchise in the 1980's (#3); HP's decision to go outside the company for the last two CEO's (#4). In the latter case it can be argued that the stall resulting from the actions of the first candidate has been amply rectified by the actions of the second. The company Board learned from their mistakes.
(Full disclosure: I have not worked for Xerox PARC; at the others I had a ringside seat.)
What's fascinating to consider are some of Olsen & van Bever's prescriptions to avoid these all-to-common errors. These include:
* Being willing to review "belief's that are so obvious and accepted that it is no longer politic to debate them." Something most business cultures are loath to do.
* Writing a "pre-mortem analysis" - a newspaper account five years in the future describing why the company succeeded, and another account detailing why it failed. Not a prescribed activity by the power-of-positive-thinking brigade.
* Setting up a high-level "Shadow Cabinet" to discuss alternatives to current strategy and look for red flag indicators.
These are challenging ideas. One wonders if the mainstream American attitude of winning at all costs can stomach the process. In many organizations it's considered career suicide to point out when the Emperor has no clothes. Think the DoD and Department of State. Likewise, East Coast financial institutions at the core of the current credit market melt-down seemed to lack anyone with this ability. They don't hand out no stinkin' bonus packages down on Wall Street for pointing out how things could go pear shaped. But at least they have the option to short the future and make a dime in the process.
Fortunately, it's more in the nature of Silicon Valley to encourage and reward disruptive innovation. Out here, companies don't stall as much as crash and burn. Out of the ashes, new ones are built. In the current wave of consolidations around the high-tech landscape there's plenty of people making a good living catching the guys who are in stall mode and revving up the engines. In doing this, they often implement many of the solutions Olsen and van Bever proscribe: reviewing core assumptions; testing alternatives; scenario planning; zero-sum budgeting.
Driven by the relentless pace of technological change, business models learn from failure and reinvent. This is the competitive advantage of Silicon Valley.
Literature is filled with stories that teach this lesson. Shakespearean tragedies like Lear and Macbeth detail the challenges faced by those in positions of power.
In contrast, the message of the motivational speakers and books in the modern business world teach how to win, win, win. It's all upside, baby. They ignore, or minimize, the downside.
So it is refreshing to read Stall Points: Most Companies Stop Growing-Yours Doesn't Have To by Matthew Olsen and Derek van Bever. This book examines the fundamental reasons why revenue growth often stalls in successful companies. They identify four main reasons:
1. "Premium position captivity" - when a market leader fails to respond to a low-cost competitor.
2. "Innovation Management Breakdown" - where new product development fails to deliver an ROI.
3. "Premature core abandonment" - where growth opportunities in the core franchise are not exploited or new competitive challenges are ignored.
4. "Talent bench shortfall" - where a company withers due to a lack of leaders and staff able to execute strategy.
It's interesting to review the history Silicon Valley companies and spot candidates for each of these mistakes. I would suggest that, in turn, we can see Sun Microsystems's failure to anticipate the effect of Linux (#1); Xerox PARC's famous inability to capitalize on everything from the mouse to the GUI (#2); MicroPro's failure to hold on to the WordStar franchise in the 1980's (#3); HP's decision to go outside the company for the last two CEO's (#4). In the latter case it can be argued that the stall resulting from the actions of the first candidate has been amply rectified by the actions of the second. The company Board learned from their mistakes.
(Full disclosure: I have not worked for Xerox PARC; at the others I had a ringside seat.)
What's fascinating to consider are some of Olsen & van Bever's prescriptions to avoid these all-to-common errors. These include:
* Being willing to review "belief's that are so obvious and accepted that it is no longer politic to debate them." Something most business cultures are loath to do.
* Writing a "pre-mortem analysis" - a newspaper account five years in the future describing why the company succeeded, and another account detailing why it failed. Not a prescribed activity by the power-of-positive-thinking brigade.
* Setting up a high-level "Shadow Cabinet" to discuss alternatives to current strategy and look for red flag indicators.
These are challenging ideas. One wonders if the mainstream American attitude of winning at all costs can stomach the process. In many organizations it's considered career suicide to point out when the Emperor has no clothes. Think the DoD and Department of State. Likewise, East Coast financial institutions at the core of the current credit market melt-down seemed to lack anyone with this ability. They don't hand out no stinkin' bonus packages down on Wall Street for pointing out how things could go pear shaped. But at least they have the option to short the future and make a dime in the process.
Fortunately, it's more in the nature of Silicon Valley to encourage and reward disruptive innovation. Out here, companies don't stall as much as crash and burn. Out of the ashes, new ones are built. In the current wave of consolidations around the high-tech landscape there's plenty of people making a good living catching the guys who are in stall mode and revving up the engines. In doing this, they often implement many of the solutions Olsen and van Bever proscribe: reviewing core assumptions; testing alternatives; scenario planning; zero-sum budgeting.
Driven by the relentless pace of technological change, business models learn from failure and reinvent. This is the competitive advantage of Silicon Valley.
5 of 7 people found the following review helpful
Groundbreaking and definitive
29 April 2008
Format:Hardcover
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.
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.
Best business book on growth strategies
30 Jan 2011
Format:Paperback|Amazon Verified Purchase
This is the most significant business book I have ever read ...
This book is exceptionally well-researched and fact-based. It is a must-read for C-level executives as well as business school students and all people interested in business or business history.
If you even wonder why some large companies come and go, why some big companies continue to prosper while others flowered and then withered, this is the book with answered. If you'd like to know about the biggest perils a large company can face, you must read this book. If you want to be smarter than average business consultants, read this book. If you ever wonder what the secret formulas are for a company to continue to do well and avoid the pitfalls of the stalls, this book has the answer.
The authors analyzed the Fortune-100 companies in the past 50 years for a total of 500 companies for the reasons why the revenue growth stalled for most of the companies. They also performed in-depth analysis of 50 of these 500 companies. Once a company stalled, it can seldom come back to pre-stall growth. Most likely, it will loose two-thirds of its market share and will have near-zero or even negative growth rate afterwards.
Five stars are not enough for this book. It should be given seven stars!
This book is exceptionally well-researched and fact-based. It is a must-read for C-level executives as well as business school students and all people interested in business or business history.
If you even wonder why some large companies come and go, why some big companies continue to prosper while others flowered and then withered, this is the book with answered. If you'd like to know about the biggest perils a large company can face, you must read this book. If you want to be smarter than average business consultants, read this book. If you ever wonder what the secret formulas are for a company to continue to do well and avoid the pitfalls of the stalls, this book has the answer.
The authors analyzed the Fortune-100 companies in the past 50 years for a total of 500 companies for the reasons why the revenue growth stalled for most of the companies. They also performed in-depth analysis of 50 of these 500 companies. Once a company stalled, it can seldom come back to pre-stall growth. Most likely, it will loose two-thirds of its market share and will have near-zero or even negative growth rate afterwards.
Five stars are not enough for this book. It should be given seven stars!
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