Dan Adams is the founder of The AIM Institute and author of the books “Business Builders and New Product Blueprinting,” as well as the blog Awkward Realities and video series B2B Organic Growth. He is a chemical engineer with a listing in the National Inventors Hall of Fame. Adams has trained tens of thousands of B2B professionals globally in the front end of innovation and works with senior executives on driving profitable, sustainable growth. For more information, please visit theaiminstitute.com.

What type of leader heads up America’s strongest, fastest-growing, most innovative companies? I’ve given this question a lot of thought. And recently, I conducted a survey of 654 publicly and privately held companies to test a theory I’ve formulated from my four decades of working with Fortune 500 corporations. What I found was this: Companies helmed by senior leaders I classify as “Builders” consistently experience faster revenue growth than those headed up by other types of leaders.

Our research reinforced what I’ve long suspected: Companies never outgrow the need for a Builder mindset at the top. Every company was founded by a Builder. Yet too many end up putting a different type of leader — a Decorator or Remodeler or even a Realtor — in charge later. From that point on, whether they know it or not, there’s a long spiral into mediocrity, irrelevance, or even nonexistence.

The C-suite must have a hefty dose of “Builder spirit” — a passion for driving organic growth by delivering differentiated value to customers, a focus on innovation, and an insistence on thinking in years rather than quarters — to stay competitive in a fierce marketplace. When your company loses that spark, it’s prone to serious leadership errors that squelch its own growth.

Our research suggests that only one-third to one-half of companies are still led by Builders. The rest have leaders who are fixated on issues other than growth—say, presenting favorable financial performance to investors, or improving operational efficiency, or pursuing external alliances. (I label these non-Builder types Decorators, Remodelers and Realtors, respectively.)

Specifically, the survey asked respondents to identify the primary passion of senior leaders in their company. Fifty-three percent of senior leaders gave themselves the Builder description, while only 32% of subordinates characterized their senior leaders this way. More subordinates thought of their senior leaders as Remodelers (41%) focused on operational efficiency.

How can you tell if your company has lost the “Builder spirit” that no doubt burned hot in the belly of its founder? My new book, “Business Builders: How to Become an Admired & Trusted Corporate Leader,” explains more, of course, but a few red flags are:

• Revenue growth is sluggish.
• There’s lots of talk about maximizing shareholder wealth (I call this a “false goal”).
• Customer-facing innovation is downplayed (or even neglected).
• There are lots of cost-cutting measures like spending freezes and mass layoffs.
• In general, employees seem uninspired, disengaged, and unhappy in general, with the best and brightest future Builders jumping ship.

If any of this sounds (dismayingly) familiar, don’t worry: There are things you can do to restore the Builder spirit, put your company back on track, and start ramping up growth. Below, I provide a three-step plan of attack.

STEP 1: Start putting Builders in charge.

When you leave a Decorator in charge — someone fixated on making the company look better to investors —you’re failing to inspire employees, and you’re chasing away future Builders. But don’t fire those who aren’t Builders. You need their help to improve operational efficiency, make acquisitions or look good on Wall Street. You need them, but in supporting roles.

How do you know if someone is a Builder? They should have market-facing innovation in their DNA, a desire to build skills and capabilities, a passion to make things better, a duty to leave the business stronger than they found it, and frankly, they won’t be satisfied doing much else.

You can’t afford to hesitate with changes at the senior leadership level, but you can take more time with middle management. Give them a chance to show what they can do. Establish new measures of success, starting with their ‘duty’ to leave their business stronger than they found it. Ask them for evidence showing they’re strengthening their business’s long-term growth capabilities and their plan to do more of this.

STEP 2: Create a growth capabilities roadmap.

Building the long-term capabilities to become a growth powerhouse doesn’t take place in a single year. Nor does it make sense to bounce from one initiative to another in a haphazard fashion. You need a roadmap that is intelligently formed, embraced by the full leadership team, and communicated clearly and often to all employees.

Begin by developing a list of capabilities your company needs for strong organic growth driven by market-facing innovation. The possibilities vary depending on your type of business, but here are a few examples of growth capabilities to build:

• Customer interviewing skills
• Competitive insights
• R&D capabilities
• Transformational innovation
• Patent protection
• New product launch
• Gated project review process
• Project portfolio management
• Talent management
• Culture of innovation

Conduct an employee survey measuring your business’s current capabilities. Then, for each capability, ask them to rate its importance and satisfaction. Place a high priority on improving capabilities with high importance scores and low satisfaction scores. Next, put together a plan to boost those capabilities most likely to impact your growth. Publish your results for all employees to see and make it clear that your goal is to understand and meet customer needs better than others.

STEP 3: Attract new investors who get the benefit of long-term thinking. 

If yours is a publicly traded company, you need patient investors who, like you, are focused on the longer term. If your quarterly earnings take a dip while you stay focused on the future, these investors will understand. In fact, they don’t want you making poor decisions that damage your long-term growth.

When you meet with investors, try to assess if they’re truly in this for the long haul with you. Too many company leaders make the excuse, “We’d like to focus on the future, but investors won’t let us.” That argument doesn’t hold up. In Amazon’s early years, Jeff Bezos led it through seven years without showing a profit. Far from penalizing Amazon, Wall Street cheered it on. Its leader had communicated a vision of growth, and this is what you must do.

One more thing: Carefully time when you start courting long-term investors. Do it too soon, and it might seem like you’ve got a story without substance. Do it too late, and your stock will be punished when you make the right decisions judged by the wrong investors.

I suggest communicating elements of your Growth Capabilities Roadmap when you can do so buoyed by early successes. Examples of market-facing innovation that led to positive financial results will be well received. I’ve seen billion-dollar businesses completely reinvent themselves in this manner. It’s not easy and it takes several years. But as a leader, you won’t be on your own. You’ll have many very motivated employees coming alongside to join you. | AC&F |