Every Company Was Founded by a ‘Builder’

Dan Adams, founder of The AIM Institute, says the best companies are those with a senior leadership team full of “builders,” not “decorators” or other less growth-centric types. Here, he offers some red flags that yours may have lost the spark that made it great—and a three-step plan of attack to take this year and beyond.

“Every company was founded by a Builder,” says Adams, author of Business Builders: How to Become an Admired & Trusted Corporate Leader. “Yet too many end up putting a different type of leader—a Decorator or Remodeler or even a Realtor—in charge later. From that point on, whether they know it or not, there’s a long spiral into mediocrity, irrelevance, or even nonexistence.”

This begs the question: Could the root of your problem be that you’ve got the wrong leader at the helm? That’s a good possibility, says Adams. His company research yielded two key findings:

• Only one-third to one-half of companies are led by Builders. The rest have leaders who are fixated on issues other than growth—say, presenting favorable financial performance to investors, improving operational efficiency, or pursuing external alliances.
• Companies helmed by senior leaders he classifies as Builders consistently experience faster revenue growth than those headed up by other types of leaders.

Adams says senior leadership must embody a hefty dose of “builder spirit”—a passion for driving organic growth by delivering differentiated value to customers, a focus on innovation, and an insistence on thinking in years rather than quarters—to stay competitive in a fierce marketplace. Lose that spark and you’re prone to leadership errors that suppress your growth.

How can you tell if your company has lost the “Builder spirit” that no doubt burned hot in the belly of its founder? A few red flags are:

• Revenue growth is sluggish.
• There’s lots of talk about maximizing shareholder wealth (Adams calls this a “false goal”).
• Customer-facing innovation is downplayed (or even neglected).
• There are lots of cost-cutting measures like spending freezes and mass lay-offs.
• In general, employees seem uninspired, disengaged, and unhappy, with the best and brightest future Builders jumping ship.

If any of this sounds familiar, don’t worry: As a leader, you can restore the builder spirit, get back on track, and start ramping up growth this year. Adams offers a three-step plan of attack.

Start putting builders in charge.

When you leave a ‘decorator’ in charge—someone fixated on making the company look better to investors—you’re failing to inspire employees, and you’re chasing away future builders. “But don’t fire those who aren’t builders,” Adams advises. “You need their help to improve operational efficiency, make acquisitions, or look good on Wall Street. You need them but in supporting roles.”

How do you know if someone is a builder? They should have market-facing innovation in their DNA, a desire to build skills and capabilities, a passion to make things better, a duty to leave the business stronger than they found it, and frankly, they won’t be satisfied doing much else.

“You can’t afford to hesitate with changes at the senior leadership level, but you can take more time with middle management,” notes Adams. “Give them a chance to show what they can do. Establish new measures of success, starting with their ‘duty’ to leave their business stronger than they found it. Ask them for evidence showing they’re strengthening their business’s long-term growth capabilities and their plan to do more of this.”

Create a growth capabilities roadmap.

Building the long-term capabilities to become a growth powerhouse doesn’t take place in a single year. Nor does it make sense to bounce from one initiative to another in a haphazard fashion. You need a roadmap that is intelligently formed, embraced by the full leadership team, and communicated clearly and often to all employees.

Start by developing a list of capabilities your company needs for strong organic growth driven by market-facing innovation. For example: customer interviewing skills, competitive insights, R&D capabilities, new product launches, talent management, and a culture of innovation, to name a few.

“Conduct an employee survey measuring your business’s current capabilities,” suggests Adams. “Then, for each capability, ask them to rate its importance and satisfaction. Prioritize improving capabilities with high importance scores and low satisfaction scores. Next, create a plan to boost those capabilities most likely to impact your growth. Publish your results for all employees to see and make it clear that your goal is to understand and meet customer needs better than others.”

Attract investors who grasp the benefit of long-term thinking.

You need patient investors who, like you, are focused on the long term. If quarterly earnings take a dip while you stay focused on the future, these investors will understand. They don’t want you making poor decisions that damage long-term growth.

When you meet with investors, try to assess if they’re truly in this for the long haul with you. “Too many company leaders make the excuse, ‘We’d like to focus on the future, but investors won’t let us,’” Adams says. “That argument doesn’t hold up. In Amazon’s early years, Jeff Bezos led it through seven years without showing a profit. Far from penalizing Amazon, Wall Street cheered it on. Its leader had communicated a vision of growth, and this is what you must do.”

One more thing: Carefully time when you start courting long-term investors. Do it too soon, and it might seem like you’ve got a story without substance. Do it too late, and your stock will be punished when you make the right decisions judged by the wrong investors.

“I suggest communicating elements of your Growth Capabilities Roadmap when you can do so buoyed by early successes,” says Adams. “Examples of market-facing innovation that led to positive financial results will be well received. I’ve seen billion-dollar businesses completely reinvent themselves this way. It’s not easy, and it takes several years. But as a leader, you won’t be on your own. You’ll have many very motivated employees coming alongside to join you.”

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