Most successful companies eventually face a predictable crisis that the
authors call stall-out—a sudden large drop in revenue and profit growth
or a collapse of once high shareholder returns to well below the cost of
capital. Stall-out occurs when the growth engine that powered companies
to success stops working. This rarely happens because the business
model has suddenly become obsolete—a common misconception. Rather,
research by Zook and Allen shows that the business has almost always
become too complex, most often owing to bureaucracy that slows the
company’s metabolism, or internal dysfunction that distorts information
and hampers managers’ ability to make rapid decisions and take swift
action on them. But stall-out can be overcome. The authors find that
most companies that achieve sustainable growth share attitudes and
behaviors: (1) They view themselves as business insurgents, fighting in
behalf of underserved customers; (2) they have an obsession with the
front line, where the business meets the customer; and (3) they foster a
mindset that includes a deep sense of responsibility for how resources
are used and for long-term results. Those qualities can help any company
restart its growth engine by removing gunk and complexity that have
built up over the years, inhibiting the clean execution of strategy.
[ABSTRACT FROM AUTHOR]