235. The Growth Curve

Welcome to another episode of at the Table with Patrick Lencioni, where everything we talk about is related to organizational health and the world of work. I'm your host, Pat Lyncione. I'm joined by Bo, Cody and Tracy Summertime. We're back. How are you guys doing?

Fantastic.

Great. Doing all right.

Enough people said. You know, we like to hear how everybody's doing. I'm going to ask again sometimes, who knows how it's going to work? All right, Cody, what are we going to talk about today?

The growth curve.

All right. Oh, I should say Karen is not here. She's on vacation. Matt's producing behind the Glass. So we're going to talk about the growth curve. And it's something I learned years ago. The growth curve didn't come from me, but. But basically it goes like this. The best organizations have to go through downturns in order to experience the next wave of growth and improvement. We've talked a little bit about this on an episode a year ago. But avoiding those downturns, which is so common in organizations and personal life, leads to a guarantee that the next upswing won't happen. Which is why continued growth is so hard. Because companies, after they experience some level of success, their leaders often are afraid to risk that success. And they hold on to programs or processes or strategies that need to be lost and jettisoned in order to get through to the next wave of growth, or they adopt new strategies to adjust to changing markets because they think that they have to grow in terms of revenue, but they do that, and they don't develop their organizations to be true to their values. And that actually impedes their real growth in the long term. And that's the key in the long term. So every organization that thrives has to go through this, this moment where there's a downturn. And they can either try to hold onto things and prevent it, which is going to prevent their real success and growth over the long term. And the more success they have, the harder it is to get to that next important thing. So that's what I want to talk about today. Jim Collins, who I've always loved his books, and he's a good guy. I've had a chance to meet with him and spend some time with him. He had a great way of alluding to this when he talked about we have to preserve the core of our organizations and innovate and be willing to get rid of all the rest. And so often companies can be trying so hard to preserve things that aren't core, that they end up jeopardizing their ability to grow and develop in the way they need to. So that's what we're going to talk about today. And I want to use some examples from the corporate world, but I want to first get your thoughts, folks, about what you think.

I'm always so curious, Pat, is there something that you saw recently or experienced recently that made you want to talk about this right now?

Well, there is, actually. There is, actually, and that it's, it's about Southwest Airlines. You've jumped to one of our examples. You know, like we, Tracy and I prepped for this, but we bring you guys on just to have this real conversation. And so Southwest Airlines, a company that we've known and loved for many years, and we don't work with them on every decision they make. They don't run everything by us. We're, they're just friends of ours. But I, I just recently learned that they're changing the way they, they're going to board their planes, right? And I remember thinking, you know, the question is, is that a good decision? So they're going to actually have some seats up front that have more leg room and they're going to have people reserve their seats, which they've always been, you know, what we call the cattle call. And they used to always say every seat is first class at Southwest Airlines, which means you just get on, grab a seat, let's go. And they did that because, you know, they were about democratizing travel and low fares and keeping things simple and getting people on and off those planes quickly. That was their strategy. That's their core purpose. That's their values. You know, everybody's the same. So the question is, is this a good decision? And the answer is, it depends. It depends on are they going to be able to preserve the core of who they are? And they've done things like this before where people are like, oh, no, that's a change, but they were able to preserve who they were. Or are they doing this because they're afraid to lose something like, oh, we got to get into that slightly higher priced market, or I don't know what it is, and they're going to jeopardize the core? That's the real question.

So that example is so interesting because if you ask somebody, hey, what's different about Southwest Airlines? A commoner like us would say, oh, they're the ones that doesn't have any seat assignments. But actually, that's probably a downstream symptom of one of their values. It's not Actually, the value.

Right.

The value is low cost and they're on time. And customer loyalty.

No, those are actually. But this is interesting, Bo, this is a great conversation. Those are their strategic anchors, which could change. Their values are. And their purpose was that all people should be able to travel, and that's why they're low cost. So, yes, low cost fits into that. But that quick turnaround and all of that stuff is a strategic anchor. And the question is, can they stay true to their values of humor and selfless service and democracy and the commoner and do what they're about to do? So it's really interesting, though, what's the difference between their strategy and their values? It's interesting.

You know, Pat, like you said, we haven't been in the room for all the decisions they're making. But when I heard this change. Here's the way I processed it through our own methodology is I thought, okay, so we know that their strategic anchors have to do with on time and customer satisfaction and low cost. Right? So for years and years and years, the idea was, well, this is a faster way to board these flights, which helps us be more on time when we have no seat assignments. Right. And our customers are relatively happy with that arrangement. So it fit two of their strategic anchors. So I thought it was interesting. What you just said is like, so is it now? There's one of two things that might be happening if they're using the strategic anchors. One is that their anchors have changed. That would be an interesting, you know, departure from. From decades of those anchors being pretty core. Right. To OR 2, and I actually asked this question once because I recently boarded a different airliner and a Southwest, and I thought, is this still faster? Are people more hesitant to take the middle seats? Are they, you know, and maybe they just arrived at the conclusion saying, like, you know what? It's not as fast as it used to be, or it's not as streamlined as it used to be, and our customers are a little more disgruntled by it. So they might actually be using the strategic anchors to make that decision.

Right. And that's why it depends. The question is, are they doing what is good for who they are at their core, or are they trying to avoid missing out on something that's the downturn? Are they saying, like, gosh, we could get more revenue if we had a business class? And if they do that at the expense of who they are, then it's a bad decision. But if they're able to do this without jeopardizing their core of who they really are, then it's okay.

Hey, Pat, you keep on using that word, core. Can you describe what you mean by core?

I'm glad you asked. Jim Collins talked about this, too. The reason why you exist, we call it the reason why you started the company and how you behave. Why we exist and how we behave. The first two questions that companies have to ask themselves and going through organizational clarity, those are the core questions. Those, if you change those, you're restarting the company. The other things are like these strategic anchors which are connected to those. They're driven by those, but that aren't necessarily the same. So, like, for instance, here's how if this plays out the wrong way, this is going to affect Southwest Airlines. If this becomes so complex and so confusing for their flight attendants who aren't used to having to sort this out. And if people are now going up to the front desk and going, I need to change my seat and can I get a middle this, I'm in a middle seat. What do you have? And it steals the joy of their flight attendants and the people booking those, that could violate their core. If it makes people feel like they care more about the people that have the nice receipts than the people in the back, that could violate their core. And what might be happening is that if they're doing this for very tactical revenue reasons, they might be selling their soul. Now, I don't think they would do that, but those are the questions they need to be asking. And who knows? I think it'll be interesting if, come November, if they try this in a few markets and see how it works, I hope they would have the courage to say, we're not going to do that now if it does violate their core. Or they're going to say, yeah, this was a good thing and we did it in a way that didn't violate it.

And then what will probably happen is whether or not it was a good decision, there will be some sort of downturn, right? There will be. You have to onboard your staff in a different way. You're going to lose some customers in some way. So early on, there will be a. The curve doesn't just go always up and to the right. There is a. Sometimes a downturn before the upswing. So early on, the this was a really bad idea and this was a good idea with just a little downturn early on might feel the same. I don't know if that makes sense. So what would you say to that executive team in the room that's like, you're making a Hard decision. There's probably going to be some down before there's up. But while also paying attention to was it a good long term decision?

Yeah. And it's funny. So I wrote notes for myself. I don't always do that here, but I wrote, will there be hiccups in a brief downturn as they adopt this and get used to it? Inevitably. Will that be painful? Yes. But if they can know that in the midst of the pain they are working towards something better, they'll endure it and it will get better. So, so, and already they're going to get criticized. You know, there's people going, well, that's it, they've lost their way. I'm not going to fly them anymore, blah, blah, blah. They're going to have to endure that because it would be so easy to do the wrong thing for the wrong reasons or the, you know, so I don't know what the right answer is. All I know is they have to keep their eye on who are we and what do we need to be in order to stay true to who we are.

And it is so interesting, like the who are we? And core all of these things, like kind of lend themselves to this idea that companies have an identity when they've gone through this. Like when you have your own culture, when you attract a certain type of customer. And then I think what you're describing as a possible misstep in companies is like when you, you know, in the NFL, they call it the copycat league. One team wins the super bowl with know, a new wide receiver or a different way they run their offense. So everybody else in the league tries to do that very thing. And in companies we're prone to this too, right? We think, oh, we should violate the, the very thing that, that made us who we are in search of the, the thing that we want to copycat or there's a, there's somebody who's, who's outperforming us potentially. And so I, I love that, that analogy of just knowing who you are, the identity that you have as, and then doubling down on it. And if this is reinforcing that, it's probably a great outcome. They get to message it in ways that like, hey, this is going to make our customers happier. It's going to make our planes more on time, like what, whatever that is. But if it's just a way of copycatting or going outside of their identity, it might be disastrous for them.

And that's the worry. So I did hear one explanation. I don't know if they put this out or how it got. I think they might have, but. And you know, communication is often different than strategy. But they said we were losing customers to other airlines. Many of the ones we were losing were people who wanted to choose their seat. Okay, now that should not be the way you describe this, because what you don't want is to say to the people, oh, but the people actually who loved us for who we are, it's like, are those your. Are you losing core customers who love you for what you are? Who said that? If so, that might be the right thing to do. But of course there's going to be people that, I mean, if you gave me the choice to fly first class on a decent airline or fly Southwest and it was a long haul flight, I'm not going to choose Southwest. And they should be. They should say what, what Herb Kelleher said, hey, we'll miss you. That's okay. We understand. But if they're doing this because they're core good customers who really value that democratic approach and the fun and the, and the humble service, if those people are saying, hey, you know, it's gotten to be such a pain, then maybe this is exactly the right thing to do.

But either way, there's a risk. There's a risk to keep doing things the same way, then there's definitely a risk to change and try things a different way. But the latter feels so much riskier, doesn't it? It's so tempting. Just hang on to the way that we've always done it before. And it takes courage to actually look at our strategic anchors in our core and say, based on who we are, do we need to take our medicine and, and make a change that will make a long term difference?

And that's the thing. To avoid pain at the expense of preserving your core values and purpose is a terrible decision. So we have an example here at the Table Group. For years, we knew that we were a content provider to organizations and a consulting firm. But we thought, you know, if only there was technology we could give our clients and give other people that would allow them to do organizational health better. But we were like, but we're not a technology firm. We're not good at that kind of stuff. And we suffered through that period when other people were doing it or saying we should do it or people were trying it. And we were like, yeah, I know that that looks like the right thing to do, to chase that and pursue it, but we would do it at the expense of who we are. And then finally we met this partner leader, L E A D R who actually loves doing that, they're good at it. And we said, oh, they can do that with. That is their culture. And so that allowed us to find this wonderful partner who we. If we had tried to do that ourselves, we'd have lost our soul, and we wouldn't have been able. They would have been a competitor rather than a partner. So it was the right thing to do for us to suffer through that time. We're like, we're missing out. But it was the right thing for us to miss out because we. We needed to find the right partner.

And Pat, I'll just say this. I mean, I was. Even though you and I have worked together for 10 years, I'm on the leadership team. I actually was trying to galvanize you into the wrong decision. Like, during that season, like, couple, three years ago, I came to you and said, hey, I think we should build our own technology platform. And this is why I love the methodology that you built, is because you. You literally just wrote up our six questions and said, hey, here's why do we exist? Here's how we behave, here's what we do, here's how we'll succeed. Does that fit into these? Into these? You know, our clarity and you being able to say, like, that's not our core competency, that would be a distraction to us, even though the bright, shiny object that, like, it did fit squarely into. Boy, we want to change the world of work, and we need to get inside the native work environment of all these people. But we were not. Our core competency was not technology. And. And you're right, like, it was so interesting because you. You use the word like, you suffer through that period because there was this temptation to say, well, there's more opportunity, and not just more opportunity from revenue standpoint, from impact standpoint, because we wanted to impact all these companies and. And it finally came to this place where we actually found a perfect partner and leader and are building the leader advantage with them. That is doing exactly what we had hoped three years ago in. In ways that is just transforming organizations from the top down. And. And we get to do our thing and they get to do their thing, and it's way better than if we had gotten distracted.

Exactly. And you know, Cody, and funny, I don't remember it as a me versus. I mean, but I do now. When you said that, yeah, I remember you saying those things, but you didn't fight me. You were like, oh, yeah, yeah, that's right. But we always felt, oh, Maybe we're missing out. But what I realized is think about all the different things we did because we didn't chase that technology. We came up with more thought leadership, more, more ideas and more concepts because that's what we do. And then we meet leader and they're like, we love that you're good at that. That's not what we do. And we're like, well, we love that you're good at that. That's not what we do. Let's do this together. And that's a fabulous partnership. But it's because we, we were able to go, we're going to miss out on, on something that's not core to us in order to, for what would be longest term growth. Hey, here's another example. In N Out Burger and a coffee company, we were talking about them Dutch Bros. The question for companies like that is they don't have, you know, delivery service through doordash and all those things, right? And many, many restaurants do now, but there are still some that do not. And the question becomes should they do that? Should they do that? I mean anybody can drive through drive thru and deliver food to anybody, but they don't have an official program. And the easy decision, the safe decision would be they have to do it because everybody else is doing it. And everybody else saying do you know how much more revenue could get that? But they're like, but we wouldn't be happy and we wouldn't serve our customers. And they may change their mind on that, but hopefully if they do, it's because they think they can still be true to who they are without doing it just because everybody else is and chase that new offense and then lose their soul.

And even as you're describing this, I want to go back to something you said at the very beginning, what we titled it, the growth curve is like if you're, it depends on what you're measuring as growth. And when companies only measure growth by revenue, if they think like, oh, we have to outperform last quarter's revenue, that's the only way to measure that we're growing as a company. When in fact, like you think about it on a personal level, you grow in really hard seasons. You know, it's not like everything is up and to the right. And so I think if we just reoriented how we measured growth even as a company where it's not just what's that, what's that P and L say at the end of the quarter, but like making that decision in the face of adversity, in the face of it causing pain or missed opportunity is actually demonstrating growth as like a leadership team. It demonstrates growth to say we're committed to our identity, the core values that we set out to, you know, to accomplish in this company. And so I think maybe that's one of the problems is our idea of growth is so revenue focused that it causes people to get confused.

Oh, yeah. Like. Cause it says in my thing here, I just look at my notes. Growth is not just increasing revenue, but developing the organization to be true to your values and identity, which leads to long term growth in the right way.

Mm.

Yeah. I think so often instead of thinking about who we are and the difference we want to make in the world, we're distracted. And we've talked about a couple of these distractions. One distraction is what everybody else is doing. And so instead of getting together and saying, who are we? And what does it look like to take steps in that direction, we look at the news and our competitors and see what they're doing. Or we say what's worked in the past can be distracting too. Or what could be distracting is what you just talked about. Path, how do we keep money coming in myopically day to day to day, rather than saying, let's measure what matters most. And I love this idea of as a leadership team or as you think about your business, your organization, stepping back to really acknowledge who are we and what does it look like to step more in that direction?

Yeah. And Southwest, maybe what they're saying is everybody is holding on to this what I would consider a, gosh, what's the right word? Like ancillary or surface level thing, which is how they board their planes. And they're like, no. To be the company we need to be in a changing world, we're going to hold on to our core and change some of those things, which were not core, but they were just something we were used to. And it's going to be painful, but without going through the pain of that, you never get past it to the next thing. And people can look back at Southwest years ago, they had rules then that they. That they had to change. And like. And they said they didn't travel overseas. I mean, they. They didn't go to Hawaii. And they said, I think it's time we can go to Hawaii and still be Southwest. Then they. Now they have a few foreign markets. So it just. We can't hold on to things because people are used to those. Even if that's safe, even if that's it, we have to let Go sometimes of things in order to get through to the next level. And that's what this is about. Alrighty. So the unpaid ad. I've got the unpaid ad today. You know what I'm going to say? I wondered about this for years. I'm going to say I'm going to call out Goodr Sunglasses. G O O D R. Which I love the name even. And it's not just Goodr, but there's a whole bunch of others now that are out there that cost like 40 bucks or 50 bucks. And they're polarized and they're fine and they work really good. But for years it felt like I either had to go to the gas station and get a crappy pair of sunglasses that were like, for $3 or I had to pay $250 for a pair of Ray Bans or whatever else. And Ray Bans are nice. I have a pair of Ray Bans and they're very nice, but it's like, seemed crazy. And then I discovered these other ones, and darn it, they work really well. They don't crush you and you don't feel bad if you sit on them in your car. The truth of the matter is they last a long time. And somehow when you spend $50 on a pair of sunglasses, you keep them for 10 years. But the ones you spent $200 on, you usually lose them in about three weeks. So I'm glad that somebody came along and said, I think we can satisfy the market without making people pay too much. And I like good or sunglasses.

I like.

I like the theme of companies that are missing vowels. Leader Goodr Crumble Cookie is up next.

Wow.

Well, I had this very discussion. I mean, they. The Gooder sunglasses are catering to my demographic, which is, I don't mind losing $25 sunglasses once a month. That's fine. I'm gonna lose them anyway. And so that works for me.

But we. And somehow we never do, you know?

I know that's true.

How fashionable are they? Let me ask that.

Yeah, they look good.

All right. I'm gonna check them out.

Yeah, I don't advise people to do it, but I'm sure if you put a little fake, little thing on there from another brand, just put it on the lens, people would go, wow. I once had a pair of like $25 sunglasses. And. But I grabbed a case, in fact, I have it right here in front of me, a Maui Jim's case. And my son used it and he took out these 20 sunglasses. He put them on, but it came out and his friends were like, those are cool. Are those Maui Jims? He goes, no, they're like something else. And they're like. They thought so. It's so much of it is just perception.

I love that Tracy just asked the three of us if they are fashionable. That is like my doctor asking me to read my ekg.

Yeah.

Well, I should know my audience.

Yes. That's right. That's right. All right. Hey, everybody, thanks for joining us on AT the table. We appreciate it. Always, your input and your loyalty to listening. We love sharing our ideas with you and we appreciate hearing from you. So thanks, everybody. We'll talk to you next time on AT the table. God bless.