Drawing from her extensive experience managing both high-growth start-ups and urgent business turnarounds, Tracy Streckenbach describes important strategies executive leaders should employ as companies enter a phase of constrained growth following a hyper-growth economy. These techniques, says Streckenbach, can be instructive for both start-up and turnaround environments which, as she sees it, are simply two sides of the same coin.

1. LEADERSHIP TECHNIQUES
THAT FLOURISH IN A
CONSTRAINED GROWTH ECONOMY
by Tracy Streckenbach, CEO Hillview Consulting, LLC

2. LEADERSHIP TECHNIQUES
THAT FLOURISH IN A
CONSTRAINED GROWTH ECONOMY
by Tracy Streckenbach, CEO Hillview Consulting, LLC
Drawing from her extensive experience managing both high-growth start-ups and urgent business
turnarounds, Tracy Streckenbach describes important strategies executive leaders should employ
as companies enter a phase of constrained growth following a hyper-growth economy. These
techniques, says Streckenbach, can be instructive for both start-up and turnaround environments
which, as she sees it, are simply two sides of the same coin.
Understanding Fundamental growth begins to soften. We saw this during
Differences in Market Timing: the Dot.com bubble and bust and, more
recently, in the commercial and residential
Unlike the opportunistic
Opportunistic Growth Phase vs.
building segment. Many business leaders
Constrained Growth Phase feel at a loss when trying to navigate the
growth phase, the
Throughout the boom years of the housing transition – and understandably so. Not
market, many companies expanded only do management techniques differ constrained growth phase
rapidly to capture as much market-share as dramatically, but it is difficult to downshift
possible. In a hyper-growth situation, where
cash flow is available, hiring is on the rise
from the high-adrenaline business is often characterized
strategy of opportunistic growth to a more
and market growth is dramatic, companies
take advantage of as many available
conservative approach of constrained
growth as quickly as the market forces
by limited availability of
opportunities as possible, simultaneously change.
incubating and launching many new ideas investment capital and
with limited research. They do this with full Unlike the opportunistic growth phase,
knowledge that some growth opportunities the constrained growth phase is often human capital, and higher
will not bear fruit and may even lose money characterized by limited availability of
before these operations cease. But success
in one or more new venture far outweighs
investment capital and human capital, and risk associated with the
higher risk associated with the failure of
the risk and cost of one or more failures.
This is characteristic of the opportunistic
one or more new business ventures. While failure of one or more new
the limited availability of investment capital
growth phase. is an important factor in a company’s
business ventures.
It is difficult to downshift from the high-adrenaline business reason for deploying different strategies.
strategy of opportunistic growth to a more conservative approach In a constrained growth environment,
most companies have downsized and each
of constrained growth as quickly as the market forces change. employee is expected to contribute more
productivity (often for a lower wage). It
While placing opportunistic “bets” is decision to carefully evaluate new is easy to see why new ventures must be
logical during phases of extreme market investments during the constrained growth carefully considered and why a failure in a
growth, these opportunities must be phase, a company’s limited availability new venture can negatively impact a healthy
evaluated differently as hyper-market of human capital is just as important a “legacy” business unit.

3. What Are The Business As companies emerge from a time of hyper-growth and enter
Strategies To Employ In into a nadir in the market, new opportunities are seductive and
A Constrained Growth it requires a constant vigilance to train management teams to
Environment? stay focused on the company’s competitive advantage.
The single most important concept to build you are capable to deliver. Often, what your So what can you do to counteract this
into your leadership team’s vernacular customers need from you will change after downward pressure and meet your own
is FOCUS. This critical element of your a significant market downturn. This means revenue forecasts?
success is woven throughout each of the your product and service mix will need to
techniques below. While it is logical in times change to accommodate new needs. This A.) CANNIBALIZE YOURSELF – If you
of extreme market growth to “place bets” in may include considering lower price-point don’t someone else will. Find less expensive
new business areas, this may not be the case options, faster delivery, and, often, less products that meet new pricing demands.
in a constrained growth environment. As complicated/more direct selling messages.
companies begin to emerge from a severe
economic downturn, a successful strategy B.) ADD NEW CUSTOMERS – If each
demands a keen understanding of your of your customers will buy fewer units
company’s strengths and the discipline and each unit is cheaper, you must add
to focus your most critical resources in Grow Through Adding customers just to stay EVEN. Think more
areas where your customers value your Accounts and Highly broadly about your potential customers
partnership the most. As companies emerge Correlated Product Groups and where they could come from; consider
from a time of hyper-growth and enter into (see fig A.) Typically, slow growth markets new industry segments or a more global
a nadir in the market, new opportunities yield downward pricing pressure. For customer recruitment effort.
are seductive and it requires a constant example, Very often changes in market
vigilance to train management teams to suppose you forces produce new potential
stay focused on the company’s competitive have 100 customers naturally shifting
advantage. customers from other areas of the
Fig A. economy, even in a downturn.
un-Rate
and your
average Typical R Find them.
customer
ers
100 Custom
Understand Your Company’s
purchases 20
Competitive Advantage x 20 unit s ea. C.) ADD HIGHLY CORRELATED
units of what
total
Leaders who emerge from a crash with a you sell each 2,000 units PRODUCTS – If your products
keen eye on the constrained growth phase x $50 ea. enue
nnual Rev
year (products are sometimes substituted for
must clearly understand their competitive and/or service) $100,000 A other products, start learning
advantage in the marketplace. Focusing
ons traine d
at $50 per about these substitute
on what your customers value most about C
n-Rate
unit. For each products and study the
Growth Ru
your product, service, or team is critical. customer, complexity involved with
It is important to spell out what is acutely offering a broader line
you yield an s
meaningful about your company, based 90 Customer of products. Be careful –
s ea.
average revenue
directly on your customers needs. This x 17 unit
total
of $1,000 per this could go against the
requires a leadership style that is open to year (20 units x 1530 units tenet to FOCUS if it is not
soliciting and responding to employee and x $45 ea. ue
nual Reven
$50) for a total managed correctly. New
customer feedback to ensure current and of $100,000 in $68,850 An products must be highly
near-term future needs are met. Fostering revenue ($1000 x correlated and in high
an environment of open communication Rev 31%
100 customers). demand by your current
with your leadership team ensures you In a market customer base.
can respond quickly to changing market downturn, some
dynamics. customers will
go out of business (now you have 90 Clarifying Key Performance
customers), other customers will find that
their business suffers, meaning they will Metrics and publishing them
Study Trends to Acknowledge
and Plan for Changes in Product
purchase fewer units from you (now they widely will be an important.
only purchase 17 units). Requirements
Demand that Emerge In a for cheaper product alternatives will It will help recondition
Market Downturn increase competition (now your average
employees about which
Focus doesn’t necessarily mean “do what you sale price is $45). Although you haven’t
have always done.” Focus means to clearly changed what you offer or how elegantly activities yield a net financial
target the intersection of your customers’ you deliver it, your new revenue has
needs, the traits they value in you, and what deteriorated by 31% to $68,850. benefit to the company.

4. Executive leaders should
employ a keen FOCUS as they
move through a constrained
growth economy. Consider
employing the techniques
below to ensure the “urgent”
doesn’t overtake the priority of
the “important.”
1
Identify and publish Key
Performance Indicators that will
Measure Results, Coach Your Team On What NOT put the spotlight on results that
Not Activity To Pursue… Right Now yield financial business benefit.
2
The business adrenaline that exists in a It can be difficult to let go of an idea Clearly identify where you are
time of hyper-growth is palpable. Anyone your team has nurtured. During a phase going as a company; define
who lived through the Internet boom in the of constrained growth, a willingness to what you plan and expect to
early 1990’s can surely call up the “feel” of eliminate a lower-performing business accomplish.
3
the constant urgency to MOVE or LOSE. segment or an idea where time and
In times of hyper-growth, companies train money has been invested is a mandatory Identify and capitalize on your
their employees to avoid “analysis paralysis,” executive leadership action. Few leaders competitive advantages.
make quick evaluations, and move forward have experience in making these difficult
into iterative planning and implementation decisions, and almost none enjoy making
4
phases. During these market conditions, them. However, as a requirement for growth
it is better to try and fail than to blunt emerging from a market nadir, you must be Define multiple avenues for
financial results because you lost the first- willing to de-emphasize and then focus. growth (products, markets,
mover advantage. The step of de-emphasizing or eliminating segments) which are highly
underperforming divisions or projects correlated to your current
is precisely what frees up the resources strength position(s).
5
(people, time, money) you need to reinvest
Conversely, during a phase of constrained Share results openly and support
in your core business and closely aligned
growth neither excess cash flow nor idle true operational decision-
“substitute” product or service areas.
human capital exists to simultaneously making authority at lower levels
explore a large number of potential in your organization.
6
opportunities while reliably meeting Reward Key Leaders and Give
budgets and maintaining cash flow from Them True Authority Limit distraction by closing
your base products and services. During this While many companies see the need for under-performing units and
phase, maintaining budgets and forecasts a decentralized organizational structure, retraining leaders to FOCUS,
for your core business alone simply takes few follow through with decentralized FOCUS, FOCUS.
more time and energy. authority. Why? The underlying reasons ###
are typically two-fold. The first is often
an inability to clearly communicate the
Often, there is a re-training of work style company’s goals. The second, quite simply, Tracy Streckenbach is the
that needs to take place for leaders who is a fear of losing control. If your leaders CEO of Hillview Consulting,
find themselves in a constrained growth don’t clearly understand the company’s LLC. An experienced CEO,
stage, having just emerged from the financial and strategic goals and how COO, and Board Member,
adrenaline of the hyper-growth market. success will be measured, they will likely Tracy has led business start-
Because the company’s momentum tends not make the decisions you would make. ups, turnarounds and client
toward MOVE or LOSE, there is too much It is incumbent on the president of the engagements for both Fortune 500 and Middle Market
moving and not enough traction as the company to make these goals clear and to companies in many industries including high-tech,
market cools. Clarifying Key Performance measure and disseminate results widely.
insurance, telecommunications, finance, construction,
Metrics and publishing them widely will be
and national defense. She excels in hyper-growth market
an important tool. It will help recondition In a down market there is a tendency to
development and urgent turn-around management and
employees about which activities yield a rein in control. However, a more effective
net financial benefit to the company after approach is to provide a laser-focused possesses a unique triad of abilities including: strategic
considering any loss in traction that may picture of where the company must go and positioning, organizational management, and critical
simultaneously result in your core business encourage decentralized decision-making process and technology implementation for a targeted
as a direct result of bifurcating your focus. authority. and repeatable outcome.