This week we’re talking about a new book that Kevin is working on entitled The Four Forces of Growth. We talk about the four forces, why they matter and what you can do to focus on growth.

Read more about it on Kevin’s previous blog post on the same subject here.

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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.

Kevin Lawrence  00:13

Welcome to The Growth Whisperers podcast where every thing we talk about is about building enduring great companies. And there’s something that both Brad and I get a kick out of it seeing companies that continue to go and build for years, decades, generations, in some cases and seeing those businesses thrive over time. We just get a kick out of it and that’s why we like talking about it, sharing the things we learn, working from companies that are doing it, and even things we study from other experts that help companies in this path. So I’m Kevin Lawrence here in a place called Kelowna, British Columbia, Canada, actually in a small town outside of Kelowna called Peachland. And Brad is down in Perth, Australia. Brad, how’s it going today?

Brad Giles  00:55

It’s going very good. I’m very interested in this conversation. And just the thinking that you’ve had around this, and by all accounts, and I don’t think it’s just you the this has had quite a quite a good resonant with the audience. That audiences have really kind of got a lot out of this. So I’m quite interested to dig into it today.

Kevin Lawrence  01:19

Yeah, me too. I am. Hmm.

Brad Giles  01:22

So let’s do that. Let’s jump into it. So we thought we’d adopt a slightly different format today. Rather than just hear Kevin telling us about it. We thought that because it’s Kevin’s material, he’s come up with it. And and as I said, it’s, it’s been quite successful with audiences. We thought what we’d do is, I’d be asking Kevin’s Kevin questions about it, and giving him the opportunity to explain the model and why it works. So look, we’re always up for trying different things. Let’s see if it works in could crash and burn, but hopefully, we’ll be able to get through till the end. Yeah, so tell us, Kevin, what is the four forces of growth? What’s the, you know?  Why is it an issue? What is it?

Kevin Lawrence  02:17

Well, it goes back, if we go back a few years, even pre COVID, I started working on this and thinking about my, you know, I’ve had a passion about what causes people to continue to grow and thrive in their careers. And that led to the book your oxygen mask first. And why some people burn and some people, you know, some people thrive and other people burn out or bonk along the way. And they and I’ve got a similar interest in the same thing with companies. How is it that some CEOs continue to lead their companies to growth, and others don’t. And I’ve been fascinated by it. And I was thinking about it one day, and I did a lot of do and now again, I did before a lot of traveling, flying on planes and fascinated with airplanes. And you know, your oxygen mask first came from it came from airplanes, and I started going like, you know, I know a little bit of a flight. But what makes an airplane fly flying on airplanes hard, leading a business is hard. And I stumbled onto the four forces of flight, which is what it is that actually makes an airplane fly, the force is a pilot has to work with and fight to make a make a plane, get into the air, get altitude, and then staying here for a really, really long time. As you know, going back to the Wright brothers who kind of got going early, early, probably like about 100 years ago. And so I took that the thinking about what makes a plane work, to really what a CEO has to do, to make a business work. And that’s where the four forces of growth came into really directly modelled against the four forces of flight.

Brad Giles  03:43

Awesome. And so is there any chance potentially, perhaps, in the future, that, that we may be blessed by another book from Kevin?

Kevin Lawrence  03:53

Yeah, I’m working on it. I’m just getting things prepared to start running it next year, I’m collecting a bunch of data and information right now. And I’m doing I’m testing the material in talks that I’m doing and with groups that I’m working with. And things that got my attention is put a lot of time into building the model and simplifying the model. But it’s really resonating with people in sessions. And I noticed, you know, a company was at recently, and, you know, in two different meeting rooms, it’s on the whiteboards where the CEO is, has been driving it and using it in conversations. And you know, in our space, and when you create a tool, you know, that when people run with it on their own, that there’s something there and the feedback I get so yeah, it’s, it’s my project for 2023.

Brad Giles  04:34

Awesome. We should always all bear in mind that it takes, you know, a year or even a couple of years to get a book out. But I’m excited to dig into these things. So why do you think that it’s resonating with audiences?

Kevin Lawrence  04:50

One, it’s simple. And two, they relate to it. They can see themselves in it. Yeah, because it’s easy. to self assess and place yourself in the model and see where you’re at.

Brad Giles  05:03

Yeah, okay, that’s good. That’s good. All right, let’s jump into it. What are the four forces? Tell us, tell us what are the four forces?

Kevin Lawrence  05:12

I’ll put it on screen for people that are that are able to see on YouTube. But basically, you know, for planes, what pulls them up into the air is the lift of the wings called lift as the force. And in for us in business, that is opportunities, where our heads lift up, we look at opportunities, possibilities, and things that we can do to capitalize on in a business. What takes the plan forward is courage, or sorry, is thrust. And I call that courage in this model. So when you have opportunities, you’re looking up at things that you can do any have courage to act on them, that’s where growth comes from. And it’s only where growth comes from opportunities and courage creates growth.

Brad Giles  05:55

Could I will perhaps, sorry, kept correct, perhaps just quickly interpret what I can see on the screen for those who don’t have a screen. So we’ve got two lines, one is vertical and one is horizontal. At one end of the vertical line at the top is opportunities, the opposite end of that as problems on the horizontal line, at one end, on the right, we’ve got courage. And at the other end of that line, we’ve got fear. Would you like to elaborate on that for us, please?

Kevin Lawrence  06:25

Yeah, it’s basically just like a simple four box type model. And so at the top is opportunities, and forward is courage. And that’s where growth is. Below that, which in airplane language, or is, is, wait, wait, that pulls the plane down, or gravity in different versions of the model? Well, in our world, that’s problems, that pulls our head down, we start looking at our toes and trying to fix stuff. So it’s great, you know, solving problems is a really interesting and potentially dangerous thing for people. But when you’re in problem solving mode, and you have courage, you fix stuff, and you improve stuff. And you it’s that I call that mode and model improvement. And your margins get better your systems get better, there’s less friction in the business, you get better profitability. Tt’s all really, really good. But it’s too good sometimes, and people can over invest energy in improvement. And if you invest all of your energy in improvement, you’ll get all kinds of quick wins, and you will get efficiencies and improve your income statement and your balance sheet. But you won’t necessarily get growth.

Brad Giles  07:40

So I love accountants, but that would be like handing the reins over to the accountants to run the business. They’re going to bring in new efficiencies.

Kevin Lawrence  07:53

So the idea is like for really successful businesses that continue to grow, they run a little loose, it’s messy. And if you clean up all the problems, you won’t have any time to focus on growth. And that’s the that’s on the front end of the model is is that, you know, CEOs and some execs need to spend quite a bit of time in the growth quadrant, but they often get pulled into the improvement quadrant, they often get pulled down into problems and their egos feel good fixing those problems. And often, many of them need to get fixed. And many of them don’t. And many of them don’t need the attention of the CEO. So for example, one CEO I work with who really got me thinking about some of these things years ago, he’s like, to his team look great. “Hey, you let me know when you got any problems. And when he got problems, come down to my office between eight and 830 any morning, and that’s problem time. And that’s a great time to come and get your problem solved.” He comes in at nine.

Brad Giles  08:55

I knew that was coming.

Kevin Lawrence  08:57

Of course. And and he says though, but this is basically, I’m not interested in your problems. But you got something you want to sell. You want something that in this model, if it’s in a growth quadrant, I’ll stay up all night with you. I’ll work with you day and night and we’ll sell so it’s selling a new product, a new service a new to existing customers, or selling to a new customer or expanding a customer into a different region. Yeah. So if you want to sell and that’s what grows and this cel was brilliant is brilliant. But his business was not as profitable as it could have been. Yeah, he he didn’t put too much energy put enough energy into improvement in New York, but he kept a lot of energy on growth so they could grow. And so I call it he ran it a little loose a little fast so it could grow versus clan and many naive executives, CEOs, leaders, managers. put too much energy and improvement and under allocate resources to growth. And then they wonder why they don’t grow. The problem is the decisions have a deferred impact. And you can pull all your resources down to improvement right now. And you’ll still get some growth if you have it. But it’ll gradually fade. It’s like gradually pulling back on the throttle of the plane in the nose will gradually come down. You might not even notice it.

Brad Giles  10:27

But you’re not growing.

Kevin Lawrence  10:30

It will start to fade the engine, the engine is getting less and less fuel and it will start to fade over time.

Brad Giles  10:36

Yeah, I remember I took a call from a business owner, gee it would have been five or six years ago. And he’d said exactly to the map that he that to me, he had a $15 million business. And he said, Brad, look, it’s it’s awesome. We handed over the reins to our CFO, and he’s taken over and he’s run and it’s been great for four or five years now. But the problem is we’ve, we’re more profitable in gross profit margin, percent and dollars than we’ve ever been in our life. But we’re not growing the top line. Yeah. And it’s, it’s doing our head in, because like, we’ve got everything we always wanted in terms of the profitability. But as entrepreneurs, we know that we’ve got to keep growing.

Kevin Lawrence  11:24

Yep. And they most likely got focused too much on improving things. I’ve got one I worked I remember at the time I was sick to my stomach. It was a family business that grew 50% year on year. And when they hit 50 million, it stopped. It plateaued. And so I’m meeting with them, and they call me in because they wanted some help to reignite the growth. And I’m talking to them, like, you know, well, how about customers? That parts a guarantee. They’re like a tap. When we want more, we just turn it on. I was like, okay, and these weren’t arrogant people. But that was a very arrogant statement. Anyways as we started to dig into it, they, in their case, lost sight of their customers, they got so internally focus, so much improvement focus that they weren’t listening to the customers. And the customers were a big source of referrals and their growth and the customers were pissed off. So I said, Hey, you know, Can I can I see the customer feedback? Oh, yeah, for sure. Long story short, I got the feedback. And I was flying back. And I was on the plane reading through spreadsheets, it was was a it was paper, thick document, you know, 30 lines, a page, multiple pages. I got to page three and I was like a cartoon character with steam coming out in eight years, I was so angry. The customers were yelling and screaming off the page at me about a couple of core things. But the and basically, the customer said screw you and stopped referring and stopped expanding the business. And it was a referral based business. Because they were pissed off about stuff. But the team was so internally focused, and I’m not judging them, they had a lot of reasons to be internally focused. But they took their eye off the growth, they weren’t talking to the customers who were their growth engine. And, and the growth stopped. They still hadn’t, okay, and it took them almost three years to get it back to growth again. And they really killed the engine. They basically landed the plane of growth, and they had to get the damn thing off the ground again. And it was unfortunate, great learning for the CEO, but painful because they got they focused on the wrong things.

Brad Giles  13:45

So there’s four forces of growth, you’ve spoken about the intersection between opportunities and courage is growth, you’ve spoken about courage and problems leads to improvement. So what about the other side of the ledger? What about where we get towards fear?

Kevin Lawrence  14:04

And that’s no throw the model up for a second. And that’s a real danger in the kind of economy that our world is going into. The more that fear goes in, some personalities slow down, and they really slow down and they don’t take as much action and that can be really, really lethal. And so if you’re opportunity focused, but you’re very fearful, it’s analysis paralysis, right? You get stuck in analysis mode. And truth is what you read it’s see seeing the boardrooms again and again, you generally need to make decisions with somewhere between 70 and 80% information. You can’t wait for 100% information. So you need to do analysis, just at some point it doesn’t matter. It’s too much and the perfectionism gets in the way. The other is if your fear, fear based and you focus on problems. Well, that’s agony. If you’re fearful about problems, you’re just going to loop and stress and nothing good is going to come of it. It’s it is this relates to ourselves personally as well as it was within the business. And look, there’s, there’s people’s jobs like agony, that’s the department of your chief legal officer, or your Chief Compliance Officer or your person that’s in charge of Legal Compliance, all those things and, you know, keeping us out of trouble. We need those people and analysis, that’s the job of the CFO. And improvement, that’s the job of the CFO or your VP of ops, or whatever, it happens to be in lots of your executives. And obviously, the growth is the CEOs job to spend most of their time. So there’s different roles in there. But the point of it is, is that you end up over weighting in certain areas. And that’s the idea here is that you have too much and you might choose for your business to put a little bit more energy and analysis. But in this market, but do it consciously. I was talking to another CEO about this other days is going on, you know, the challenges, you know, growth is critical. But in a challenging market, there’s way more problems and way more fear. So you’re pulled away from growth. So he goes, logic would say that it’s twice as hard to grow in a challenging market, he goes, I think it’s four times because it takes twice as much energy to get the same growth as you would in a booming market in the challenging market. But you’ve got all this energy being pulled everywhere else. So he says, I think it takes four times the energy to stay in growth to keep your hand on the throttle and the plane going up in a challenging market. And I think he’s right. So the point of this model is just it’s just awareness for people to see like at the end of the day, and I’ll get some more data. But when the CEOs I’ve talked to so far, they generally believe that average number is about 60% of their time needs to be in the growth quadrant six, zero. And I’m hearing different numbers from different execs. But it’s well under 50 for an executive team on average in growth, but the CEO for sure. About 60 At least.

Brad Giles  17:14

So I’m looking at it. And I’m thinking, Okay, so the CEO is in growth between opportunities and courage. A COO might be improvement, which is courage and problems. But the question is, the question is, how do I avoid analysis, paralysis and agony, the things that are on the left hand side of the model, which is between opportunities and fear, and fear and problems. How do I avoid those as a leader?

Kevin Lawrence  17:41

That’s the CEOs job is to get people to make decisions to drive for decisions, right? And as having and we’ve talked about this in previous episodes, having the debates, making the decisions, saying, Okay, let’s go. Right. That’s the CEO’s job is to lead people to decisions. No different than in a previous episode, we talked about musk, Elon Musk, making some tough decisions and saying, let’s do this.

Brad Giles  18:08

With hi acquisition of Twitter. Yeah.

Kevin Lawrence  18:11

So it’s so it’s about it’s about the CEO, being in the right mindset, and having the right team, but it’s pushing for decisions. Yeah. When the fear kicks in, which it does, if the CEO gets fearful and scarce, scarce mindset, the whole organization is going to go that direction. So the CEO’s gotta keep up the courage and keep people more forward than backwards.

Brad Giles  18:35

And that makes me think about the 20 mile march. Okay, which is consistent, not too high, not too low, consistent growth, in the right direction. And that’s, you know, that’s, that’s driven or led by the leader.

Kevin Lawrence  18:51

Yeah, and exactly, and the 21 Mile March, lots of our companies that we’re talking about that right now with the clients we work with, yeah. And it requires a CEO that can be courageous. Interestingly, I came from a meeting this morning with one of my clients that we’ve done a lot of work on his balance sheet, and really dialed in his balance sheet over the last year. So he can stay courageous. If you have a fragile balance sheet, you can’t you know, it’s like if you’ve got a steel hold boat with double layers of steel, you can go into some areas that might have some debris in the water and not worry about it and maybe bang into a few icebergs. If you’ve got a thin paper hold boat, you know, I got a traditional Canadian Canoe made of animal skins stretched over some, some some some branches. You’re not going to go bounce against crazy sharp rocks and icebergs because it’s gonna rip. It’s not going to work. You’ve got to set yourself up with the structure and have the resources to be courageous. And if we look at the research of courageous leaders, they’re incredibly well prepared, well trained and ready to go. Right. And that’s, and that’s and that’s why education, leadership, boards of advisors, experts, and balance sheet, strong balance sheet make it a hell of a lot easier to stay courageous because you have choices. And you know, you’re not going to kill the business.

Brad Giles  20:26

I used to, I’ve still got a saying, and that is that if you have a, if you have a strategy, but you’re worried about making next week’s payroll, the strategy the you might as well not even have it. Right, because no one cares about the strategy. No one cares about anything, it’s everything always comes back to how do we make payroll. So you’ve got to have that you gotta have it is that depth of balance sheet for sure.

Kevin Lawrence  20:56

I love, I love that it was with a client couple weeks ago, and they’re in a business that’s gonna get impacted in this economy, we know it, we got a balance sheet that makes it not matter. So it’s like, most of our clients have balance sheets. It’s like, okay, we don’t like it, but bring it on. Like, we’ve got cash and access to cash, to be able to weather pretty well, any storm that is including things like COVID if it didn’t go their way. But that’s a lot of work to set themselves up to win. And this goes back to Collins is working Great by Choice and, and productive paranoia. Right? And, and also just having incredibly, so again, all that stuff allows you to have courage. Experience, experts. Good.

Brad Giles  21:47

Now, the question, what are the well intentioned things that people do that hurt company’s growth in this four forces model?

Kevin Lawrence  21:57

They go solve 75 cent problems. And they think that all problems should be solved. And they think that solving problems is a good use of their time. Yeah, it’s all about solving problems. At the end of the day, our job as leaders is to teach people to solve their own problems. We teach our children to tie their shoes and about what, three, four or five years old? Yeah, like we don’t teach 15 year old, we don’t tie shoes for 15 year old kids. I hope we don’t know. And in business, sometimes we have bad habits. Because Solving problems is so good for the ego. It makes us feel good. So getting too involved in problems, and I go back to the story of serious aircraft and plane metaphor. I’m gonna dig out the case but you know, when they were optimizing Sirius Sirius is famous for recreational aircraft that’s got a parachute on the plane. And if things go weird, you pull the the parachute thing I shout out to Ethan Martin, another advisor and coach that you and I know what are the US and Ethan got me to, I told them what my first flying experience when I took flying lessons it didn’t like it, he goes, “you’re in the wrong plane.” To go fly a serious he set it up I went and test drove was Sirius. It was amazing. Loved it. But the main thing is if you mess up, you pull the handle the parachute things drops or pressure pops out and you land the plane on the ground. You probably have to replace the landing gear because you’d probably break it. But that’s about all your break. Yeah. So the point of it is that when they were optimizing serious as they became more important, is they started solving problems that were $6,000 I think it started at 20,000. But then they went down to $6,000, a plane, and then five and then for they left all of the inefficiencies. Because at that point, if they’re burning 10-20 grand a plane on a million dollar plane, that’s fine. Over time, they will get it but they didn’t waste time chasing 75 cent problems.

Brad Giles  23:53

Hmm. Okay. Very good. So if you would maybe just talk us through the key points, maybe just as we move to close out, just give us the key point summary to close out the four forces here.

Kevin Lawrence  24:07

Sure. Well, I mean, flying a plane, like a like a well well trained pilot is very much like being a CEO or Executive. There’s so much to learn to be effective, particularly in turbulence. And it’s counterintuitive to continue to stay in growth mode. Just like it’s counterintuitive to stay hard on the throttle and gain altitude in a crazy turbulent storm. It’s just because it freaks people out. And so for effective CEOs find ways to stay in growth mode, which is new revenues, adding new revenues into the system from new products, new services, new customers, new markets. That’s the root of it, and keeping the right amount of energy in growth, while you make sure the other areas are taken care of. But if you only take care of the other areas of analysis and agony and improvement Do you dedicate 5% of your energy into growth as a CEO, your growth will die in time. You need to keep enough, whatever is right for your business and growth.

Brad Giles  25:10

Very good. Thank you very much for forces of growth. I look forward to that coming out sometime in the future. We want you to take the time to do it right, not quick. When I say that, you know, probably on behalf of the audience, because there can be pressure to get it out quick. Yeah, so but it’s been awesome to share the concept and get to understand the ideas and where it’s heading, and I’m sure it’ll evolve over time. So thank you. All right. So as we move to close, my name is Brad Giles. This is The Growth Whisperers in case you hadn’t picked that up yet. We talked about building endearing great companies. Of course, we’ve been speaking to Kevin Lawrence my every week co host, you can find me at evolution partners.com.au  And you can find Kevin at Lawrenceandco.com. We both have interesting newsletters that we put out each week about all of these kinds of subjects that may interest you if this is your cup of tea, and you can subscribe on our websites for those obviously, the YouTube version is available may be a bit more relevant for this episode because Kevin shared some slides in this episode. You can find that at YouTube obviously, by searching The Growth Whisperers and obviously Subscribe and Like where appropriate to keep getting updated. hope that you’ve enjoyed today’s episode. Look forward to chatting to you again next week. Have a great week.