The characteristics of “Growth Champions” were defined as those elite middle market companies that grew at four times the rate of U.S. GDP by the National Center for the Middle Market, a partnership of The Ohio State Fisher College of Business and GE Capital. These characteristics as defined by the Center were summarized in a prior Harvest article and are listed below:
- Strong management culture;
- Exceptional talent management;
- A formal growth strategy process;
- Sharper customer focus;
- A broader geographic vision; and
- Focus on innovation.
In this article we focus on the first characteristic, strong management culture.
“Growth Champions” have high-performing management teams and less bureaucracy. Strategies, no matter how well conceived, are only as effective as the staff that executes them. To that end, Growth Champions are focused on strong management practices that enable them to not only operate efficiently, but also to be nimble and scalable enough to respond quickly to new opportunities. These companies distinguish themselves from the rest of the middle market by having high performance management teams, and in their ability to contain costs through operating efficiency. The Growth Champion executives state that their management structure gives them the ability to quickly take advantage of opportunities when they arise.
At least a part of the reason for these positive assessments may lie in a commitment to less organizational bureaucracy. Indeed, Growth Champions are roughly 1/3 more likely (versus other middle market businesses) to report that they can respond to market conditions more quickly because they are less bureaucratic.
The ability to overcome external challenges is a product of their strong management culture. Management at Growth Champion companies also perform very well in the face of external challenges (e.g., changes in the marketplace, actions by competitors, regulatory and tax issues, and fluctuating conditions in the economy). Indeed, Growth Champion executives are nearly twice as likely to be satisfied with their company’s ability to meet outside pressures compared to their counterparts at other firms. They are also far more likely to feel they have withstood the financial crisis better than other enterprises.
The strong management culture of these companies enables them to be less dependent on the broader economy. Perhaps in part due to more effective management (though their global focus is undoubtedly at work too). Growth Champion companies report that they are less vulnerable to broader economic conditions. These companies are also about half as likely as the rest of the middle market to feel that the overall company performance is dependent on a robust national or regional economy. They are also less likely to see growth as contingent on better national economic conditions, and even less likely to see regional economic conditions as a factor.
Growth companies seemingly see their markets, and potential markets, with a wide-angle lens. They are more likely than other middle market firms to compete in markets outside the U.S., and are more likely to have global suppliers. Conversely they are less likely to operate exclusively in local markets. Almost 1/3 of Growth Champions are more likely to have offices outside of the U.S.
Executives at small to middle market companies would do well to benchmark their management culture against the strong management culture and findings as provide by the National Center for the Middle Market. Harvest CFO can provide your company with a highly-skilled CFO who will assist you to create a solid foundation of financial management that is a critical component of a “Culture of Strong Management” and enable your company to increase the probability of reaching growth and profit goals.
For more information on the National Center for the Middle Market and to obtain the details of its survey and findings, as well as access to a range of tools and resources, go to the Center’s website www.middlemarketcenter.org.