TITLE : FAST - GROWTH MANAGEMENT: HOW TO IMPROVE PROFITS PROFITS WITH ENTREPRENEURIAL STRATEGIES.

In the business climate of the 1980s, either we learn how to grow fast or we will be caught.

Entrepreneurs grow businesses fast; corporate managers are far less successful. At first glance this seems paradoxical. Corporate managers are resource-rich. They work with a veritable treasurehouse of funds, wise counsel, and sophisticated support services. Entrepreneurs, on the other hand, are usually resource-poor. They scramble for dollars, often sacrificing control of their businesses in exchange for venture capital, and then barter away even more of their ownership to pay for competent counsel. No broad constellation of services supports them. Nonetheless, entrepreneurs build fast-growth businesses while corporate managers fail.

Why should this be so?

We all know the traditional explanations. The entrepreneur succeeds because he must succeed or starve. His counterpart, the "corporateur," is salaried and secure. The entrepreneur is a committed soul, a monastic loner, a monomaniac in single-minded pursuit of his objective. The corporateur is selected by scientific screening processes to be a more balanced person, more diversified in his cares and concerns, and a more highly socialized member of a corporate family. The entrepreneur is by definition a risk maximizer. The corporateur minimizes risk; corporate careers are often the reward for survival, not for overwhelming accomplishment. Survival is often earned not by aggressive growth but by opening the doors every morning on time and doing a little bit better with a business today than yesterday.

The distinctions between entrepreneurs and corporateurs are all gross generalizations. They are hackneyed stereotypes. Yet they are true. Entrepreneurs run 1vusinesses differently.

Entrepreneurs run fast. They run lean, practicing skinny management. They concentrate on doing a few things extremely well. As for the rest, they do them well enough or not at all. They go for the essentials and let nothing deter them. They love the building process, moving into unstructured situations and forming them, shaping them into a commercial enterprise. They are movers and shapers.

The few entrepreneurs in the business world operate through a combination of intuition, wit, and a physiological sixth sense which they variously refer to as gut feel or seat-of-the-pants flying. This book is not for them. No book is. They need room, not books. Most of the rest of us need to go by the book; for us, this is the book. It is intended for the men and women who, by choice or the luck of the draw, will be the business growth managers of the 1980 decade or will be responsible for appointing fast-growth managers and acting as their mentors.

The question that we in The Wellspring Group keep asking ourselves is this: "What can we learn from entrepreneurs that corporate managers can apply to running their businesses for faster profit growth?

Many corporate managers say that the answer to this question is "nothing": the personalities, the motivations, the rewards, and the situations are so different that entrepreneurial business-building strategies cannot be projected into the corporation. I disagree. My associates and I have been studying entrepreneurial businesses since the mid-1960s when we began to work with multibillion-dollar multinational corporations to help them create new business ventures. For the most part, corporate venturing has failed. Yet entrepreneurial businesses have succeeded in many of the same fields. Low overhead, corporate managers asserted. Satisfaction with smaller rewards that would never satisfy corporate criteria. Sure, they said, if you want to devote 24 hours a day to it, you can make anything grow.

What was really happening? On the one hand, growth businesses were being put up. On the other hand, their builders were being put down. The acid test came when corporations, unable to grow their own businesses, began to buy out entrepreneurial ventures. More often than not, they ran them into the ground. To some extent, they smothered them in the crib when they allocated overhead burdens, applied centralized controls, and installed slow-growth management styles in fast-growth businesses. But it was more than high overhead that spelled the doom of these ventures. It was low awareness of the skills required to grow a business.

We have sat in as observers studying dozens of case histories of our clients' failure to grow profitable new businesses. We have participated in many others, sanctifying what we know now to be the egregious error of throwing money at problems instead of throwing entrepreneurial management at them. Our failures, far more than our successes, have led us to the conclusion that growth follows certain laws and that, like all laws, these are inexorable in all but the rare instances when the exception proves the rule. A few years ago, one of our clients named them Hanan's laws. They are listed in the Introduction.

By "grow" we mean profit growth. We have no interest in growth for its own sake. We subordinate sales volume, share of market, and the size of a business itself to profit. The best size for a business is however many people, however much capacity, and whatever volume or market share are most conducive to maximizing profit.

The strategies for fast growth that are described in this book are derived from Hanan's laws. Three of them are leadership strategies; four are management strategies, four others are organizing and operating strategies. Taken together, they are helping many corporateurs achieve growth even inside the frequently viscous medium of a large diversified corporation.

Who manages according to these precepts? Many, maybe even most, superior managers: Gordon Levy, who can probably grow any business he gets his hands around; Bill Gerow, who overcame being a good engineer and, as one of the first really good general managers I worked with, set a standard of excellence in performance that has always stayed with me; Bob Katkov, who extends almost daily his tornadic ability to apply growth strategies to a bewildering variety of conglomerated businesses; and Christine Valmy, who came to the United States with the proverbial $25 in her pocket and founded not just a new business but an entirely new industry.

These managers have, of course, made it look easy. So have others-like Charles Gilbert, who had to invent the machinery to make the product before he could invent the product, and then had to invent a business from its inception so he could market the product. But it isn't easy, even though the management, leadership, organizing, and operating strategies for fast growth are obvious to all of us-once we set them down. They are easier to see than to implement. And they are easier to implement than to keep pure and disencumbered by corporate overengineers who would always like to add one more principle to them.

If there is any message that we have learned from entrepreneurial managers, it is this: Stop perfecting the process of management and start perfecting its objectives. Perfect the growth of these objectives-their size, their speed of achievement, and the sureness with which they can be achieved.

That and that alone is what profit making is all about.

In the the process of perfecting growth objectives, is there any one supercritical propensity that all fast-growth managers must share? If there is, it may well be their sense of being pursued by time: of never having enough, of time continually closing in, of time-in the final analysis-being the archenemy of accomplishment. Growth managers always want yesterday back. They want today to never end. Tomorrow is too late.

To grow fast, time is of the essence. Profits exist only in relation to time. The time value of money is its real value, its only value. If there were an old Chinese proverb governing fast growth, it might very well go like this: Few strategies, much concentration, little time, many profits.

Mack Hanan