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Stall Points: Most Companies Stop Growing--Yours Doesn't Have To
 
 
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Stall Points: Most Companies Stop Growing--Yours Doesn't Have To [Hardcover]

Matthew S. Olson (Author), Derek van Bever (Author)
4.9 out of 5 stars  See all reviews (10 customer reviews)

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Book Description

April 28, 2008

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 six hundred 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 S. 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 company’s 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.

 

Top Four Reasons a Firm May Stall:

• Premium position captivity

• Innovation management breakdown

• Premature core abandonment

• Talent shortfall

(20080609)

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Editorial Reviews

Review

Stall Points is grounded in competent and compelling research. There is no fluff here. It is a cogent, practical guide to the most pressing problem today’s managers face: How to sustain growth.”—Clayton M. Christensen, Professor, Harvard Business School, and author of The Innovator’s Dilemma and The Innovator’s Solution
(Clayton M. Christensen 20080618)

"Every company that sets itself a growth trajectory worries about the very real danger of stalling. What makes this critical is that most companies do not realize it even as they encounter stall points. Stall Points captures this dilemma perfectly.  Based on the experience of several organizations across the world, the authors have produced a compelling piece of research. The key takeaway for me personally is the need to build an organization that will identify stall points either before or as they occur, so that corrective action can be taken to put the company back onto its original growth trajectory.”—Mukesh Ambani, Chairman and Managing Director, Reliance Industries
(Mukesh Ambani 20080601)

Stall Points provides a unique combination of fact-based analysis and insight from a broad range of large corporate experience. While no book can hold the answer to growth, this one provides valuable tools to help management take the critical first steps of self-assessment and root cause analysis on the road to driving change in the firm.”—Mike Giersch, Vice President, Strategic Planning, IBM Corporation
(Mike Giersch 20081001)

“This book was a real call to action for us at Caterpillar as we needed to break through the $20 billion stall point in our top line. I recommend this book to every business leader who wants to maintain high growth or recover from a growth stall.”—David B. Burritt, Vice President and Chief Financial Officer, Caterpillar Inc.
(David B. Burritt 20090301)

“Growth is the oxygen of any corporate enterprise, but it’s very hard work—full of uncertainty, difficult questions and difficult choices. Those on the front lines can read an unlimited number of books and articles on growth, but few are as thoroughly grounded in original research, combine the best insights from both academic and consultant thought leaders, and are as littered with pragmatic examples (good and bad) from world class companies. Stall Points is both depressing and exciting. The authors unearth the root causes of the almost-inevitable growth stalls that companies experience, then show that 87% of them are self-inflicted—either strategy failures or organizational failures. Most importantly, they offer actionable ways to both anticipate and react to those circumstances.”—Daniel G. Simpson, Vice President, Office of the Chairman and CEO, The Clorox Company
(Daniel G. Simpson )

“The challenge of sustaining growth has bedeviled business leaders forever. In today’s competitive markets, marked by the shrinking half-life of business models, the penalty for not stress-testing the foundations of your strategy continuously is swift and fearsome. Stall Points provides the data and the tools to guide this process. If ever there was a must-read, this is it.”—Jim Haymaker, Corporate Vice President, Cargill Incorporated
(Jim Haymaker )

“Through its extraordinarily rigorous and comprehensive analysis of growth, and what undermines it, Stall Points provides a new set of lenses through which to view this most important of topics. It also offers a brilliant, yet practical, toolset for focusing these lenses on one’s own organization. It should be read and carefully considered by every executive team, board, and investor.”—Robert A. Whitman, Chairman and CEO, Franklin Covey Inc.
(Robert A. Whitman )

"Executives, by nature, have trouble seeing bad news coming. Despite endless discussion and development of strategy, too many lessons are learned after the fact. What Stall Points uniquely offers is the ability to see problems before they arrive, in time to do something about them. Strategic insight before the fact is what the business world sorely lacks, and what this book offers.”—Daniel O. Leemon, Former Chief Strategy Officer, Charles Schwab Corporation
(Daniel O. Leemon )

“The messages in Stall Points are sobering for many of the top executives at firms I am involved with—especially those in Silicon Valley. That their success could be driven to an abrupt end caused by factors mostly under their control frightens them into renewed determination to create and exploit competitive advantage to avoid such a fate. Stall Points is for every executive who thinks his or her company is on top of the world or has did not deserve to fall from grace.”—George Stalk Jr., Senior Vice President, The Boston Consulting Group
(George Stalk Jr. )

Stall Points calls attention to an overlooked attribute of the most successful companies: they take nothing for granted. This book should be required reading for leadership teams that want to stay relevant to their customers over the long run.”—Sheryl Sandberg, Chief Operating Officer, Facebook
(Sheryl Sandberg )

"Stall Points is well-researched and clear on causes, clues, and management practices that are relevant and critical focus areas for board discussion."—Dina Dublon, Former Chief Financial Officer, JPMorgan Chase
(Dina Dublon )

"About 87% of businesses will hit what [the authors] call a stall point. . . . This book offers a useful checklist in how not to do it, a cost-effective way to learn from other people''s mistakes."—Stefan Stern, Los Angeles Times
(Stefan Stern Los Angeles Times )

"About 87% of businesses will hit what [the authors] call a stall point. . . . This book offers a useful checklist in how not to do it, a cost-effective way to learn from other people''s mistakes."—Stefan Stern, Los Angeles Times
(Harvey Schacter Toronto Globe and Mail )

"A timely book for executives, learning professionals, and strategists concerned with their organizations'' health in the current economy."—Ann Pace, T+D Training & Development
(Ann Pace T+D Training & Development )

"This book''s message is a timely reminder to all managers of this potential for renewal."—Strategy & Business
(Strategy & Business )

“Thoughtful and cogent.”—Jeffrey Marshall, Financial Executive
(Jeffrey Marshall Financial Executive )

"An outstanding supplemental book for graduate students and faculty, as well as a practical resource for corporate executives. . . . Highly recommended."—Choice
(Choice )

About the Author

Matthew S. Olson is an executive director and Derek van Bever is the chief research officer of the Corporate Executive Board (NASDAQ:EXBD), the premier advisory and performance improvement network for leaders of the world’s largest public and private organizations.  The authors live in the Washington, DC area.  


Product Details

  • Hardcover: 256 pages
  • Publisher: Yale University Press (April 28, 2008)
  • Language: English
  • ISBN-10: 0300136870
  • ISBN-13: 978-8189632281
  • Product Dimensions: 9.1 x 6.1 x 1 inches
  • Shipping Weight: 1.2 pounds (View shipping rates and policies)
  • Average Customer Review: 4.9 out of 5 stars  See all reviews (10 customer reviews)
  • Amazon Best Sellers Rank: #922,772 in Books (See Top 100 in Books)

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3 of 3 people found the following review helpful:
4.0 out of 5 stars Learning from Failure - the Competitive Advantage of Silicon Valley, March 2, 2009
This review is from: Stall Points: Most Companies Stop Growing--Yours Doesn't Have To (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.
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5 of 7 people found the following review helpful:
5.0 out of 5 stars Groundbreaking and definitive, April 29, 2008
By 
DWillis "DWillis" (Washington, DC United States) - See all my reviews
This review is from: Stall Points: Most Companies Stop Growing--Yours Doesn't Have To (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.
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5.0 out of 5 stars Best business book on growth strategies, January 29, 2011
By 
John H. Hwung (Fair Oaks, CA USA) - See all my reviews
(REAL NAME)   
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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!

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Inside This Book (learn more)
Key Phrases - Statistically Improbable Phrases (SIPs): (learn more)
innovation management breakdown, organization design, other strategic factors, failed acquisition, bench shortfall, revenue stalls, stall factors, stalling companies, growth stalls, stall points, company stalls, original core business, core business model, senior executive team, strategic assumptions
Key Phrases - Capitalized Phrases (CAPs): (learn more)
Root Causes of Growth Stalls, United States, Shadow Cabinet, Eastman Kodak, Growth Experience of Large Firms, General Electric, Talent Shortfall, Regulatory Actions, General Motors, Talent Bench Shortfall, Incorrect Performance Metrics, Other Organizational Factors, Board Inaction, Big Three, United Technologies, False Assumptions, Apple Computer, Missed Strategic Inflection, Strategic Diffusion, Premium Position Captivity, Premature Core Abandonment
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