1: “Don’t make a decision until you need to,” Panera Bread founder Ron Shaich writes in his book Know What Matters.
“That might sound obvious,” Ron notes, “but so many companies leap to promising dramatic growth and then trap themselves under the weight of the expectations they’ve created.”
Thinking back on the early days of Panera, Ron recalls: “We knew we were ready to grow, and we had an opportunity to grow relatively quickly. But I didn’t want to rush.
“I knew that we didn’t need to decide in 2001 whether Panera would grow to be 500, 1,000, or 2,500 units; whether it would stay in the Midwest or go nationwide.
“We just needed to know we could keep feeding the growth monster by ensuring we had enough prospective sites to fuel us for three years ahead. Enough to keep the investors happy, while learning and then growing in a way that made sense without getting out over our skis.”
2: This measured approach is uncommon. The mistake that many entrepreneurs and business leaders make is believing growth is a means to achieve their goal.
“In the common model,” Ron explains, “a high stock price is the end, and growth is a means to that end.”
What is the mistake these entrepreneurs and business leaders make?
They “nail down that model as fast as possible,” he observes, “and then reproduce it as quickly and efficiently as they can in order to raise the stock price by increasing that magical multiple that is based on your perceived growth rate.”
The key point? “People talk about driving growth,” Ron notes, “but as I’ve said before, growth is not just a pedal to be pushed.
“Indeed, the quickest way to destroy a promising concept is to put your foot down on that accelerator and remove your hands from the steering wheel.”
3: Instead, we are wise to understand that growth is a “by-product of achieving the true end that a business should aim for: Competitive advantage,” Ron explains.
“The means to that end is establishing our authority in our chosen niche,” he shares, “and then leveraging that authority through smart bets that serve our target customer in ways our competitors find hard to match, thus creating barriers to entry.
“”Growth is a by-product, not a means, I hit this point again,” Ron emphasizes, “because it is such a contrary mindset to most conventional business thinking and practice.”
In Panera’s case, Ron and his team spent a decade figuring out their competitive advantage, so that growth “would be the natural, almost inevitable outcome of our continuing triumph in the race for competitive advantage.”
Once they discovered a concept that “generated consistently high sales volumes and ROI across multiple geographies—from Springfield, Missouri, to Springfield, Massachusetts,” Ron writes, then, and only then, would they focus on growth.
“Size and scale don’t mean squat if you haven’t discovered a better way to compete,” he explains.
“The growth we were experiencing,” Ron observes, “and all the rewards the market was bestowing upon us as a result, was neither a means nor an end. It was a by-product of the fact that we’d taken the time to create a truly distinctive concept for a particular target customer, to carve out a real competitive advantage at a particular moment in time. . .
“If I didn’t keep creating a better alternative that had customers walking past our competitors to get to our door,” Ron writes, “we would not succeed over the long term, no matter how many thousands of cafes we opened.”
More tomorrow!
______________________
Reflection: Am I chasing growth for its own sake, or am I building true competitive advantage that naturally leads to sustainable success?
Action: Pause before making the next big growth decision and evaluate whether our efforts are strengthening our unique competitive advantage or simply feeding the growth monster.
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