Podcast Ep 120 | The 20 Mile March concept By Jim Collins: Thrive in Uncertainty

When you embrace a 20 Mile March, you have a tan­gi­ble point of focus that keeps you and your team mov­ing for­ward, despite mar­ket fac­tors lead­ing to con­fu­sion, uncer­tain­ty, and even chaos.This is how one wins. It’s con­sis­ten­cy, sta­bil­i­ty ver­sus sprint and recover.The 20 Mile March will only work if you actu­al­ly hit your mark year after year. If you set a 20 Mile March tar­get and fail to achieve it, you may well get crushed by events.

In this episode of the pod­cast, Brad Giles and Kevin Lawrence talk about The 20 Mile March con­cept by Jim Collins, and why you should con­sid­er it in your busi­ness. They list how to use it, and pro­vide exam­ples of 20 mile met­rics for your business.

The 20 Mile March is a con­cept devel­oped by Jim Collins in the book Great by Choice. Enter­pris­es that pre­vail in tur­bu­lence self-impose a rig­or­ous per­for­mance mark to hit with great con­sis­ten­cy. The march impos­es order amidst dis­or­der, dis­ci­pline amidst chaos, and con­sis­ten­cy amidst uncertainty.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

Brad Giles 00:13

Wel­come to the Growth Whis­per­ers where every­thing we talk about is build­ing endur­ing great com­pa­nies, com­pa­nies that will last, com­pa­nies that will endure, and that we’ll all be proud to watch grow through their jour­ney. My name is Brad Giles joined today, as always by my co host, Kevin Lawrence. Hel­lo, Kevin, how are things today?

Kevin Lawrence 00:34

Things are great. I know I say that every week, but they gen­er­al­ly are. Just had a birth­day recent­ly. I don’t like things that are so much about me. But I had a great time with some fam­i­ly and friends. It was good. And again, we’re in the mid­dle of our sum­mer and life is good. I mean, sun­shine, where we live in British Colum­bia, Cana­da is a great thing. Lots of chances to get out. I just love that it’s bright in the morn­ing. And you know, and get­ting out­side when it’s bright out is what any­way, life is good. How are you?

Brad Giles 01:12

Good. I went on a plane, which may not seem unusu­al to you. But yeah, it’s a bit of a new con­cept again here, went over to Syd­ney for a cou­ple of days work­shop with a team there. And yeah, so that was it was pret­ty good to get back in the groove. And I got back to the hotel. And I was like, You know what I actu­al­ly remem­ber I like this stuff. We’d like to start as we always do with a word or phrase or sub­ject of the day. What might be on your mind at the moment, Kev?

Kevin Lawrence 01:48

Well, mine is sim­i­lar to yours about get­ting on an air­plane and it’s a mag­i­cal thing called cock­tail hour. And, you know, when we get to do these meet­ings in per­son, they work on Zoom, you just don’t get the social time. But when you get to do these meet­ings in per­son, what I’m find­ing is you get time where you just sit and have a drink, and sit and chat before din­ner. And then you have a din­ner and you social­ize and it’s you know, cock­tail hour to me is sim­i­lar to hav­ing a cof­fee as you sit down. You have a chat, you catch up, you catch up with in my case exec­u­tives I work with all around the world and what’s going on in life and with them. And it’s just the mag­ic of cock­tail hour. That only hap­pens when you’re phys­i­cal­ly there together.

Brad Giles 02:33

Well mine is about the oppo­site of cock­tail hour. It’s about a marathon. So if you were going to run a marathon, you’d prob­a­bly be think­ing, Oh, I’ve got to have quite a lot of water to drink. But that’s our intu­ition. But in actu­al fact, no one’s ever died of thirst in a marathon. But inverse­ly, a lot of peo­ple have died from drink­ing too much.

Kevin Lawrence 03:06

They go to the wrong type of water.

Brad Giles 03:08

Yeah, they go to this stops or they car­ry too much. Yeah, a lot of peo­ple have actu­al­ly died from drink­ing too much. But no one’s ever died of thirst. So that’s what’s on my mind.

Kevin Lawrence 03:21

Inter­est­ing. I have a fam­i­ly mem­ber, extend­ed cousin who was qual­i­fy­ing for the Olympics, I think it was the LA Olympics 86. And wher­ev­er she was doing the qual­i­fy­ing race, it was some­where that was­n’t used to hav­ing marathon races like a, you know, some­where that it just was­n’t com­mon. And they gave the run­ners ice water. And for a marathon run­ner who is run­ning full tilt. Ice water is a bad thing because it shocks the body. And it can lead to all kinds of oth­er things. Any­ways, the sto­ry in the fam­i­ly and whether it’s the real deal or not, I don’t know. But it was that they basi­cal­ly because they gave her ice water and she drank it. It screwed up her sys­tem and give her cramps or what­ev­er it gave her. It’s because it was­n’t the right type of flu­id, inter­est­ing kind of fit­ting into what you’re say­ing. So if she knew what you do, maybe she did­n’t drink the water. She would have been fine. Very inter­est­ing. So I got it, Brad. I got it. I got it. I got it. It’s a marathon cock­tail hour. How’s that for fun? So the idea of today this week show is the 20 Mile March from Jim Collins in his book Great by Choice. And what is the equiv­a­lent out­put you can do con­sis­tent­ly over time. And, you know, some peo­ple could run a marathon every day. But mor­tal peo­ple are like­ly to be able to hike or march 20 miles every day. And that’s what we’ll get into. And the whole idea of this show, and, you know, last week, we talked in Episode 119 about anoth­er Collins con­cept, the SMaC list, anoth­er list that gives you dis­ci­plines to help you make good deci­sions on an ongo­ing basis. And in both, he looked at the 10 xers com­pa­nies that per­formed sim­i­lar com­pa­nies in very tur­bu­lent times, which is, you know, for many what we find our­selves in right now. So 20 Mile March was anoth­er piece of that book. And I love this prin­ci­ple, because, you know, when I pulled some stuff off Jim site, and he was say­ing, and he just talks about how in chaot­ic times, every­thing’s out of your con­trol. Yeah, and right now, infla­tion, out of our con­trol, sup­ply chain issues out of our con­trol, pan­dem­ic, com­plete­ly out of our con­trol, glob­al ship­ping rates, for some com­pa­nies out of our con­trol, oil and gas prices out of our con­trol, inter­est short­ages, staff short­ages, inter­est rates, like it’s actu­al­ly most things a lot of things are out of con­trol. Right now. It’s not just that it’s out of our con­trol. It’s also a lit­tle out of con­trol. And the idea in dis­ci­pline is con­trol­ling what you can con­trol. And the 20 mile march is one of those things.

Brad Giles 06:45

A quote from Jim Collins, I actu­al­ly I saw him in Mel­bourne, and he said this quote, and it hit me so hard that I think every sin­gle work­shop that I do I show it, and this is his quote, ​“the sig­na­ture of medi­oc­rity is not unwill­ing­ness to change. The sig­na­ture of medi­oc­rity is chron­ic incon­sis­ten­cy.” Okay, in so what he said is that the sam­ple com­pa­nies, or the com­par­i­son com­pa­nies, they would change reg­u­lar­ly, okay, but the ones that when what he called the 10, x’s in Great by Choice, they were will­ing to change, okay, but they were con­sis­tent about every­thing they did. So that’s talk­ing to a degree to the 20 mile march, say­ing, It does­n’t mat­ter what hap­pens, this is what we’re going to do in this time peri­od, and we’re not going to change.

Kevin Lawrence 07:41

Yeah, and that is that con­sis­ten­cy is the core dis­ci­pline for lots of suc­cess suc­cess­es in lots of dif­fer­ent ways. And he gets into one spe­cif­ic piece here with the 20 mile march. And the idea of this is, is that it’s a rig­or­ous per­for­mance tar­get, to hit with great con­sis­ten­cy, like hik­ing or march­ing across the coun­try, 20 miles a day. And Jim tells a sto­ry that when we were doing a ses­sion with him once about his wife, Joanne, and she did a cycling trip across North Amer­i­ca with some girl­friends. And to make this prin­ci­ple work, they pre booked their hotels, at the inter­vals that they want­ed to ride every day and plan their entire route. And what that meant was on the days, when they were feel­ing great they had an easy day, and they would be able to have a great time. And on the tough days where they had to grind it out in the rain. And you know, the thun­der, or what­ev­er it hap­pened to be. They had rough days, but they still hit their mark week after week after week after week. And it’s that dis­ci­pline and that con­sis­ten­cy that makes com­pa­nies run real­ly, real­ly well. The key is, you have to do it over a very long peri­od of time, in many ways. the­o­ry that I kind of have is that, you know, the 20 mile march in many ways is con­nect­ed to your fly­wheel. And it con­sis­tent­ly speeds up your fly­wheel. And if you stop putting pow­er to the fly­wheel, it can slow down. And the 20 mile march has many ways like a mech­a­nism to fire up your fly­wheel. So the idea of this is that con­sis­tent­ly march­ing at a pace, not too fast, not too slow, to ensure that you don’t over­do it, or under do it inter­est­ing, as I’m plan­ning a road trip this sum­mer. And also think­ing about the same thing because I have a ten­den­cy to dri­ve too far. So on a road trip, I’ll be like, Oh, we I had this antic­i­pa­tion of get­ting there, which fits into my per­son­al­i­ty in life. And but in that case, you’re bomb­ing down a road and I like to dri­ve fair­ly quick­ly. You can miss a bunch of the great stops along the way because you’re in such a hur­ry to get there. But once you’re there, all some of the good stuff can be behind it. So same thing isn’t we’re gonna book The hotels and we were actu­al­ly look­ing yes­ter­day at pac­ing out okay. Well, that would be about six hours of dri­ving, because we want to do a pret­ty long road trip. And six hours of dri­ving, we fig­ured is prob­a­bly the right amount, because you’re going to stop and have lunch some­where and you got breaks, and there’s going to be traf­fic. So it’s just a good sol­id pace. So we’re kind of doing, you know, what can we do in six hours a day, to make it a great trip so that it’s not too excru­ci­at­ing? And that we actu­al­ly get enjoy­ment and, and don’t destroy your­selves in the process.

Brad Giles 10:35

Well, that’s not too dis­sim­i­lar to the actu­al con­cept. The 20 mile march comes from a com­par­i­son of two teams who were try­ing to be the first to reach the South Pole, going obvi­ous­ly, back many, many decades ago. In 1911 to be exact.

Kevin Lawrence 10:53

I got the notes off Jim’s source mate­r­i­al 1911. Exact­ly when that hap­pened. Yeah.

Brad Giles 10:59

And one of the teams had the dis­ci­pline to march 20 miles, no mat­ter the weath­er, so nice, fine day. They’re not going more than 20 miles, they’re going only 20 miles. Ter­ri­ble bliz­zard. They’re get­ting out of the tents pack­ing up in the bliz­zard, and still march­ing 20 miles. So it does­n’t mat­ter what’s hap­pen­ing. We’re going 20 miles, the oth­er team, the com­par­i­son team, nice, fine day, let’s push for 40 or 50 miles. And then in a ter­ri­ble bliz­zard, that stay in our tents, per­haps we will go out when it’s good. And then we’ll push through. Now. Of course, we know that the 20 mile march team made it they were the first to the south pole and then made it out. And you know, were cel­e­brat­ed as heroes when they got home. The oth­er team who did­n’t match 20 miles every day, but surged when they could, they will die.

Kevin Lawrence 11:55

Yeah, exact­ly. And they did get there. They just did­n’t make it back. Yeah. And there was many oth­er things that hap­pen in that. And it’s basi­cal­ly in many ways, pro­tect­ing you from your ego, or from youth­ful exu­ber­ance that can get the best of you at times. Yeah, right. It’s not that you’re not capa­ble, some­times of push­ing hard­er, but you can kind of wear your­self down and, and those peo­ple you’re talk­ing about we’re I am I’m descend­ing on Scott, I think floors, and med­i­cine, that’s how you I know there’s a way to pro­nounce. And I’ve got my notes here. And the oth­er inter­est­ing things too, just in this and, and those, the those sto­ries include some of the prin­ci­ples from Great by Choice, but I also remem­ber, like the dis­ci­pline that they had to do that 15 or 20 miles every day in March there and even at the end, when they were get­ting close, and out of this end­less Amund­son. They thought Scott might be ahead because they had word that he was try­ing to get there first, and they want­ed to get there first and the team is like, we can do 25 miles a day, we might be able to do more, we could push more and assure that we win. And Ama­zon said no. And they con­sis­tent­ly did their 15 to 20 miles every sin­gle day and they main­tain their pace. Under­neath that is the think­ing of like, we don’t want to over­do it. Yeah, because if you go too hard, you’re gonna and incon­sis­tent­ly you’re gonna wear the sys­tem, you’re gonna wear your­self down. Yeah, right. And you or you could wear your­self down and you leave your­self more open to be vul­ner­a­ble if things go wrong. If you just had a 30 mile day, and then the next day is a storm, you know, you can you get in a lot of trou­ble. It’s not a great choice. So the oth­er inter­est­ing thing about Ama­zon that I real­ly loved is the hon­est jour­ney. He prac­ticed eat­ing and liv­ing on seal blub­ber. Basi­cal­ly, if you’re run­ning out of food, there’s big fat seals, but the stom­ach in the sys­tem is not used to eat­ing those kinds of things. So he test­ed eat­ing dif­fer­ent things. He did all kinds of oth­er things to assure suc­cess. So so the main thing is, that sto­ry is a great sto­ry bread, and thanks for open­ing it up with that. The oth­er thing about this is real­ly is it’s about the sec­ond point is about self con­trol. Because gen­er­al­ly, more com­pa­nies will die of indi­ges­tion than they will of star­va­tion. Gen­er­al­ly, they grow too fast. They make a big freakin mess. And then they won­der why the girl stops and the com­pa­ny get in trou­ble. They get overex­tend­ed. They get over some­thing. Yeah. And and and then they get in trou­ble or they get the busi­ness­es in trou­ble. It’s not because there’s not enough oppor­tu­ni­ty. There’s always an abun­dance of oppor­tu­ni­ty. Just got­ta stay dis­ci­plined. It’s a bet it is and it’s a long game. It’s not a sprint. And you hear peo­ple all the time on a roll. We got to be the first to mar­ket. Oh, no. You need to be good and you need to be there long term like right now in tur­bu­lent times. You got to be there on the oth­er side of the val­ley that hap­pens in the econ­o­my. Yeah, right it that’s all you got­ta be good. You got­ta be good sol­id oper­a­tor mov­ing towards great. And you got to be there on the oth­er side. You don’t nec­es­sar­i­ly need to do any­thing insane­ly fast or, or kill your­self you got to sus­tain not sprint. Yeah, so yeah, the self con­trol is a real­ly, real­ly big piece any­thing you’d like to add in there?

Brad Giles 15:22

Look, I’ll get back to the orig­i­nal state­ment I said the sig­na­ture of medi­oc­rity is chron­ic incon­sis­ten­cy — 30 miles, five miles, no miles, 50 miles. And com­pared to that the anal­o­gy is 20 miles every day. And that’s what we’re advo­cat­ing. This is how one wins. It’s con­sis­ten­cy, sta­bil­i­ty ver­sus sprint and recover.

Kevin Lawrence 15:49

Yeah. So inter­est­ing­ly, you know, one of the com­pa­nies that I work with their 20 mile march is also con­nect­ed to their direct­ly to one of the pieces of their fly­wheel. And it’s the num­ber of sales­peo­ple that they have in the com­pa­ny. And what we real­ized, at a cer­tain point, going back five years with this com­pa­ny, is the num­ber of sales­peo­ple was­n’t grow­ing. And as a result, our rev­enues weren’t grow­ing enough, and prof­itabil­i­ty. So now we have an obses­sion with the num­ber of sales­peo­ple that we hire, pro­mote, devel­op, train all the work that we do. And that is one of our num­ber one num­bers we track in the busi­ness because it’s their army, army strength. And we dri­ve it like crazy. It is the 20 mile March is one of our num­ber one objec­tives every year, that we know that the growth of our sales team is the growth of our com­pa­ny. And it’s the most crit­i­cal dis­ci­pline, that often wanes nor­mal­ly in the past, when we get busy, and peo­ple let it fade.

Brad Giles 16:46

So you might look at it just to dis­cuss that for a moment and say, cur­rent­ly, we’ve got a sales team of 40. This time next year, we need a sales team of 48, which is we’re going to add two sales peo­ple net per quar­ter, and then we’re going to grow it and so this time, next year will be 48 peo­ple, this is the aver­age bud­get, this is how we like it.

Kevin Lawrence 17:08

Yeah. And with those num­bers that you used, we have a tar­get of where we always want to be, we’re always work­ing three years out. Yeah, you know, and that case, the num­ber would prob­a­bly be for you to prob­a­bly be like 100. Yeah, so we’re march­ing towards 100, from our base of 40, which is one of our key dis­ci­plines and dri­vers of our growth, because with­out that, it does­n’t work. So self con­trol is key. This the next thing around the 21. March is it builds a lot of con­fi­dence. Because you con­sis­tent­ly when you con­sis­tent­ly achieve it, because you’re con­sis­tent, it’s not a mas­sive win, and then a hor­rif­ic loss. It’s you know, it’s a sta­ble sys­tem and sta­bil­i­ty in lots of dif­fer­ent ways, builds con­fi­dence in the sys­tem con­fi­dence with your col­leagues, and allows you just to stick to your work because you believe you’re gonna win.

Brad Giles 17:57

Yeah, I’ve men­tioned to you on this pod­cast before, the state in which I live is pre­dom­i­nant­ly a min­ing state. And that state is dri­ven by cycles. So at the moment, the I think the iron ore price is prob­a­bly the pri­ma­ry dri­ver of all finances in the state, it was as high as 240. And as low as $30 per ton in the past four or five years, right? So you can imag­ine the mas­sive changes. So when it’s high, min­ing com­pa­nies are mak­ing big invest­ments, noth­ing mat­ters apart from get­ting the tons out. Yep. And the oppor­tu­ni­ties seem bound­less. And when it’s dry, you know, when it’s real­ly low, it’s real­ly, real­ly tough. And so the SMAC applies in that envi­ron­ment. And the way that I’ve worked in clients that are in min­ing ser­vices, or what­ev­er it is, is we’re say­ing, We’ve got to keep an eye on the longer term, the con­sis­ten­cy, because it can, you can get caught up in the eupho­ria of the mass.

Kevin Lawrence 19:10

And if you over invest when the time is high, yeah, you’re gonna get the crap beat out of you when the mar­ket falls, and then you won’t be able to invest prop­er­ly in the next cycle because you get real­ly, real­ly dam­aged where­as if you con­sis­tent­ly invest when the mar­ket goes incred­i­bly high, you’re not going to fall as far like it’s dis­ci­plined through chaos. Yeah. And it’s a great exam­ple, Brad, is that, you know, com­pa­nies they get too caught up in that. Then when a falls, they fall with it, and they end up very weak when they fall.

Brad Giles 19:44

Yeah, yeah, it’s the con­sis­ten­cy that that real­ly you know, that real­ly mat­ters because every­thing goes up and every­thing goes down, you know, there is surg­ing demand, you know, it’s just this con­stant bat­tle between sup­ply and demand that one way or the oth­er, and we’ve got to endure through that.

Kevin Lawrence 20:10

So why is it crit­i­cal to have this kind of gov­er­nor on your growth, to not grow too fast, because when the mon­ey show­ing up at the table, a lot of peo­ple have a hard time not grab­bing it now. So why is it dan­ger­ous to grow too fast?

Brad Giles 20:27

Because we’re human beings. And we have emo­tions. And, you know, our brain is just a wet mess of meat that has elec­tri­cal stim­u­lus in it. And that means that, you know, and a great deal of our brain is pri­mal. Okay. And that dri­ves us to want to gam­ble, to take risks, and, you know, to not stick to the dis­ci­plines that make us actu­al­ly suc­ceed and get what we real­ly want.

Kevin Lawrence 21:07

So basi­cal­ly, that’s one of my march­es. They don’t gam­ble on growth. Yeah, con­sis­tent and dis­ci­pline. And, you know, we watch when peo­ple do take on too much busi­ness, like, if you’re a busi­ness, and you’ve got, you know, three or 400 employ­ees, and you dou­ble, in a year or so, which I’ve got a client recent­ly that did that. And they’ve mirac­u­lous­ly done a spec­tac­u­lar job of it. But there’s a cost to the orga­ni­za­tion. Because when you go in dou­ble in size, often a bunch of your sys­tems start to fail, whether it’s man­age­ment sys­tems, back end oper­a­tional sys­tems, or what­ev­er it hap­pens to be, ser­vice lev­els often fall, because it’s hard to main­tain qual­i­ty. So you know, a 20% growth per year, let’s just say is a sus­tain­able growth a lot of orga­ni­za­tions can do if they’re dialed in. But at scale, 100% growth a year, you’re basi­cal­ly you’re gonna implode your­self in almost every case, you can do it for a short peri­od of time. But then you start to build up these debts in the sys­tem that you got to pay. And it real­ly, real­ly hurts. That’s why com­pa­nies will go and they’ll grow and then they’ll flat note or crash. Because it’s just too hard. This the sys­tem just can’t han­dle that quick of growth.

Brad Giles 22:22

And the prob­lem is, it’s there’s very few peo­ple like us who were talk­ing about build­ing endur­ing great busi­ness­es and focus on the bor­ing basics. If you look to the Busi­ness Media, it’s all BS, right? Talk­ing about this com­pa­ny had 14,000% growth, or this com­pa­ny did this. And it’s all they only talk­ing about the mete­ors in the sky, not the stars, if that makes sense. They’re only talk­ing about a beau­ti­ful metaphor. Yeah. Well, I think it’s a bad one. But yeah, right. They’re only talk­ing about these real outliers.

Kevin Lawrence 23:01

Yeah. And I saw this great arti­cle in The New York Times and recent­ly about this young Cana­di­an artist who’s 26. Yeah, and her paint­ings are sell­ing for $1.4 mil­lion. Right? It’s a beau­ti­ful sto­ry. And I’m thrilled for her, and she has a real­ly inter­est­ing art. That’s just how what hap­pens one time and 50,000, you know, for every 50,000 artists or 100,000 artists, there might be one of those at that age. But the point of it is, we’d love those sto­ries. It’s just gen­er­al­ly not how it’s done. And I And I’m thrilled for the peo­ple that it does. But build­ing a great busi­ness is gen­er­al­ly not those one of those out­lier events, its core dis­ci­plines, com­pound­ed over time.

Brad Giles 23:44

And when the aver­age exec­u­tive or leader reads those sto­ries on a reg­u­lar basis, they can’t help but be com­pelled to want to try for those types of things. But so many of those busi­ness­es crash and burn.

Kevin Lawrence 23:59

Yes, because you crash and burn your sys­tems, you crash and burn your peo­ple because you over­load. Every­one goes through growth spurts we’ve done in our own firm recent­ly, too, and it’s hard and too much too fast. Sounds good. You think you’re gonna make a whole whack more prof­it, and often you give a whole bunch of a back. So great things. So let’s get a few exam­ples. So I there’s an exam­ple the Jim talks about from Stryk­er, and I did­n’t give a sim­ple exam­ple. It’s a com­pa­ny in the US. And they decid­ed John Brown, the CEO decid­ed they would have a 20% net income and growth year on year now. He also put a lit­tle bit of teeth into it. Any­one who was behind that 20% net income growth as the water­mark, they said it’s the water­mark. So if you’re below it, he need­ed a cir­cle. And all of those peo­ple were giv­en snorkels, snow so you were div­ing snorkel, a div­ing snorkel, because you’re below the water­mark. So yeah, you would be award­ed a snorkel and even when they had their annu­al Chair­man’s break­fast when they had their annu­al divi­sion­al reviews. You got invit­ed to his table, the chair­man, John Brown’s table, if you were above the water­mark, every­one else just went for break­fast. They weren’t in the room they weren’t invit­ed in, they were basi­cal­ly social exclu­sion. Because they did­n’t per­form. So that’s, you know, that’s I like the teeth. And I mean, that’s account­abil­i­ty. That’s not every­one’s cul­ture. But you know, if you’re gonna have the dri­ve to grow net income, 20% year on year, it’s beau­ti­ful. By the way, I’m also thrilled to see when peo­ple are talk­ing about grow­ing net income or return on cap­i­tal, not rev­enue, growth, rev­enue growth is a dan­ger­ous, undis­ci­plined way of look­ing at most busi­ness­es, gross mar­gin growth, EBIT a growth or net income growth, return on cap­i­tal growth, in return on return on cap­i­tal, sus­tain­ing return on cap­i­tal, but get­ting a high­er num­ber, which is gen­er­al­ly tied back to your net of your uutta.

Brad Giles 26:03

So if you were at Stryk­er, and you’re turn­ing up and you’ve pro­duced a 40, or 40 or 50% growth, then you’re not nec­es­sar­i­ly succeeding.

Kevin Lawrence 26:15

I’m sure you would get a talk­ing to of like, how you’re going to sus­tain that. And why did­n’t you save some of that? Yeah, why did­n’t you mod­u­late your growth so that you could do it next year, and the next year, and the next year.

Brad Giles 26:28

And that’s what’s so impor­tant in this 20 minute discussion.

Kevin Lawrence 26:31

It is strength, you’re build­ing strength and con­cern. It’s, it’s like the fly­wheel speed, don’t speed it up too fast, con­sis­tent­ly dis­ci­pline. So some oth­er ones we’ve seen is EBIT up per­cent increase one client is that they want their EBI­TA per­cent­age to go up year on year on year, the per­cent­age, not the dol­lars. So it dou­bles down on the dollars.

Brad Giles 26:55

Now that would be con­sis­tent over many years, it’d be like a 1% per year or some­thing like that, right?

Kevin Lawrence 27:01

Less than 1% in less than one. It’s a less than 1% Num­ber. Yeah. And it’s over many, many years.

Brad Giles 27:07

So in five years, less than 1%, every sin­gle year, we get a feel­ing, and then every­thing comes back to that but don’t go too high, and don’t go too low be in that Goldilocks zone.

Kevin Lawrence 27:19

You got it. Cash, build­ing up cash in the busi­ness­es, and improv­ing whether it’s cash flow or cash, we’ve seen a real­ly inter­est­ing one, which is div­i­dends to share­hold­ers in pri­vate­ly held busi­ness­es, fam­i­ly busi­ness­es. One that I had heard about, this was­n’t one of our clients, but some­one else shared this with me is that the div­i­dends to the fam­i­ly? The share­hold­ers went up every sin­gle year. So and that mon­ey was com­ing out no mat­ter what. Yep, so the CEO and exec­u­tive he had to pro­duce addi­tion­al returns beyond that. So they had cap­i­tal rein­vest, because the there was an accel­er­a­tor on the stuff being sent out to share­hold­ers. Yeah, I’ve seen it around new mar­ket open­ings. But it’s again, it’s often guardrails. It’s like a min max, right? It’s it reg­u­lates a speed almost like reg­u­lates the that was, so it was mar­ket­ed openings.

Brad Giles 28:15

I’m say­ing that with retail­ers, so retail­ers can get into a buoy­ant mar­ket. And they’re, they’re going to open too many stores too fast. In bricks and mor­tar stores, and it con­strained their bal­ance sheet. Where­as if they say, we’re going to open one store per quar­ter or half, some­thing like that, it may be more sustainable.

Kevin Lawrence 28:36

Yeah, and by the way, open­ing up new stores from retail, and often peo­ple get, I’ve seen it hap­pen. A lot of times, it’s a lot of work in retail, peo­ple get over exu­ber­ant, they exu­ber­ant, sor­ry, they get excit­ed about it. And then I start­ed open­ing up b stores and C stores because they’re try­ing to do it too quick­ly. And not doing the dili­gence or wait­ing for the good loca­tions. Yeah, yeah, new prod­uct releas­es about how new prod­ucts will get released. And con­tin­u­al­ly or, and the exist­ing prod­uct will there’ll be con­stant mini releas­es. And that’s what improvement.

Brad Giles 29:07

That’s what I do in soft­ware a lot. It’s like every week, or every fort­night, what­ev­er it is, we’re going to do a sprint, and we’re going to have the next ver­sion and the next ver­sion. Yep.

Kevin Lawrence 29:15

Con­stant releas­es return on cap­i­tal growth, as I had men­tioned, rev­enue growth, which is can be a dan­ger­ous one, depend­ing on the busi­ness mod­el. And a real estate devel­op­ment group I work with is the devel­op­ment square footage that we’re going to expand the square footage that we devel­op at a cer­tain pace, and we’re not going to go too fast or too slow. And all of these things I mean, the idea here is, is it’s putting para­me­ters on the growth. So you know, when some­times exec­u­tive teams will want to slow it down and make it eas­i­er to hit their bonus­es. Right. And it’s almost an expec­ta­tion set between the exec­u­tive team and some­times share­hold­ers of what is the pace of growth. So we’re gonna have and what is that mark­er that we’re gonna watch? Is that the peo­ple that we hire? Is it the mar­kets that we enter? What­ev­er does it hap­pen to be? Is it the prof­itabil­i­ty of cer­tain pieces, wher­ev­er it hap­pens to be just, you know, how are we going to set those dis­ci­plines in place to con­sis­tent­ly bring the best out of us and make sure that we get stronger and stronger as we grow?

Brad Giles 30:25

Because just like peo­ple, com­pa­nies, you know, become weak­er or can die from try­ing to con­sume too much or do too much.

Kevin Lawrence 30:35

Yeah, exact­ly. You remind me of a big din­ner that we had the oth­er night. And the 20 mile March, it’s like when you have din­ner, that’s real­ly, real­ly good, and you just eat too much. Right? You’re that’s not a great thing. If you had your most impor­tant day of work tomor­row, and you did­n’t eat enough, or you ate too much, or you drank too much. It’s gonna set you up to be wob­bly the next day and you can’t be your best. It’s con­sis­tent dis­ci­pline and not exces­sive. And also not being too con­ser­v­a­tive too.

Brad Giles 31:09

Yeah, yeah. And we cir­cle back to the check in about the marathon, right? If nobody’s died from a lack of thirst of no one’s died from not drink­ing enough dur­ing a marathon, but heaps of peo­ple have died from drink­ing too much. So we’ve got to main­tain discipline.

Kevin Lawrence 31:28

Exact­ly. That’s the 20 mile march. So thanks for lis­ten­ing. This has been the Growth Whis­per­ers Pod­cast. I’m Kevin Lawrence, and I’m here with my part­ner, Brad gels. I’m in Van­cou­ver, Cana­da. Brad’s in Perth, Aus­tralia. If you haven’t, please do sub­scribe wher­ev­er you lis­ten to pod­casts, and please share it with a cou­ple of friends, oth­er CEOs and execs that you know might ben­e­fit from this. For the video ver­sion, go to youtube​.com Search the growth whis­pers and to con­nect with us in our newslet­ters or the great con­tent and resources on our web­sites. Brad’s is evo­lu­tion part​ners​.com​.au And mine is Lawrence and co​.com. Hope you have a great week and hope you con­tin­ue to march towards where you want to get and ide­al­ly towards your ver­sion of great­ness. Have a great one.