Resources
Q&A With Tom Doorley: How to Position Your Business Strategically Now
While most business consultants are focused on helping their clients survive the economic downturn, Tom Doorley, chairman of Skout Group and chairman and CEO of Sage Partners is looking ahead to the next economic cycle and is more interested in ensuring that businesses are well positioned for success then. Doorley is well-positioned himself to offer this advice: Throughout his consulting career he has focused on the strategic issues clients face as they strive to achieve high levels of performance. His book, Value-Creating Growth, codifies the lessons he learned over the years, working with clients such as GE, Northrop Grumman, Kimberly Clark and Deloitte. Recently, The Skouting Report talked to Doorley about the moves businesses should be making now.
The Skouting Report: What are some of the specific strategic challenges businesses face in the current economic climate?
Thomas Doorley: The challenge for businesses is always how to cut expenses and pump up profits without destroying the growth engine. Your company’s growth engine can be a product, service or technology or even a team of people that help grow the business. That’s why an organization has to make sure it knows what its growth engine is then protect it. And that’s not always easy since, although it’s only fair to ask everybody to cut back in the same way, the smart leader must look strategically at where to take expenses out.
TSR: How would you recommend businesses deal with these issues -- and keep an eye on their bottom line?
Doorley: Ideally, a leadership team has done the analysis already and knows where its growth engines are. But this crash was quick and deep and caught people off guard.
Companies that manage to achieve value-creating growth tend to operate on three levels: Level one is the core business that is responsible for 80 to 85 percent of revenues and profits. Level two is the new product or service that is fast-growing and likely to be the core within a few years. Level three is in its earliest development stages, generating little or no revenue now but likely to be an income source within three to five years. If, in reaction to the economic crisis, a company stops investing in level three, it’s a tragic mistake. They are compromising the company’s future. That’s why finding ways to put money in levels two and three –- and not just focus on level one -- should be a priority in a recession. To accomplish this, leadership has to ask itself, ‘What’s our special sauce? Where are the things that can contribute to our growth?’
Take Apple. In the late 1990s it had its core business, computers, and tucked away out of sight to the external world, were its level two business, the iPod and level three business, which became the iPhone. When the tech bubble burst it could have spelled disaster for the company, but Apple protected and innovated in its core and also found a way to build their level two and three growth engines. Beyond the potential they recognized in their new products, they identified their true growth formula—the people, processes and teams of their world-class design function.
TSR: You've worked with very large companies and smaller entrepreneurial firms. How do strategic issues and solutions differ with size and scope?
Doorley: The difference is mostly how the issues get understood and actions taken. Large companies have so much history that they have to begin by acknowledging the need for change. But a younger company has to establish the importance of structure and bureaucracy -- they need processes that allow them to go forward. They need to understand where and how to grow.
TSR: The current economic climate has generated a lot of fear and low morale in the workplace. How can a good manager counteract these forces and encourage their employees to reach their full potential?
Doorley: By communicating honestly with employees and demonstrating that you care. In the Boston area, some unions are not taking increases to avoid layoffs. It shows these guys actually care. In one small company I work with, when the CEO raised the possibility of layoffs to his management team, they all took a 12 percent salary reduction instead. They are saying to their employees that they believe they have a good team and they want them to stay. They are reducing costs but still protecting their growth engines.
TSR: How can businesses best position themselves now to be ready for the economic recovery?
Doorley: Identify team members who can think innovatively and creatively and charter them to look for new ideas. Spend a little money on initiatives with long-term growth potential but, most importantly, make sure you identify your growth engines and protect them from harm. When you nurture these growth engines, you will be well positioned for the coming recovery.
