Corporate Discipline: The Secret to Sustainable Growth

A lack of corporate discipline led to bad results and the weakest economy of we've seen since 2008; it's time to instill the right levels of discipline, so companies can sustainably grow, regardless of economic conditions.

As I’ve reflected on my 2023 personally, I’ve recognized the need for additional discipline in my life to achieve my goals and create the balance I so desire.? Throughout the year, I continued to find myself immersed in activities that didn’t bring me joy, I worked entirely too much, sacrificing family time, and my eating preferences led me to a not-so-great bloodwork review with my doctor in November.? I really have no excuse for the lack of discipline, other than I made quick decisions across many moments that mattered and didn’t think through the impact of those decisions, before taking action.? I chose to sleep later too much and exercise on my own, causing me to miss out on extrovert time with my workout buddies.? I chose to work on behalf of my company and clients to eek out one more dollar of managed revenue, knowing that my family also wanted to spend time with me and the family capital gained by spending time with them probably would have paid back exponentially more than the additional work time.? And I chose to eat the quick handful of chips, rather than taking a few extra minutes to make healthy snacks or meal prep to ensure a more disciplined diet.

2023 also turned out to be the year that many years of undisciplined corporate behavior reared its ugly head.? After 12+ years of continuous growth, following the 2008 economic crisis, we saw many undesirable outcomes that comes from a lack of corporate discipline.? We saw big tech (and many other legacy organizations) lay off large percentages of their workforce, in an effort to cut costs they probably should have never incurred in the first place.? We saw retailers deliver marginal customer experience gains, after investing billions of dollars on transformation table stakes like a mobile applications and self-checkout, only to see consumer confidence continue to diminish.? We saw businesses and business units shut down, after sizable investments, because companies didn’t consider the risk of investing in businesses well outside of their core when they made the initial investments.? In the end, employee loyalty diminished, consumer confidence went down, and while the stock market remained strong, the economy felt worse than it had in ten years for most people on Main Street.

Instilling discipline is no easy feat.? It takes commitment, accountability, and consistency.? Individuals and organizations must establish clear expectations, define how they will hold themselves accountable for those expectations, and then consistently measure themselves against the standards they set.? As I thought through the areas where I needed more discipline, I quickly realized that I needed a mechanism to track my personal progress in 2024 and developed a spreadsheet that I input information into daily, forcing me to acknowledge where I am succeeding and where I am falling short.? Corporations can use similar guiding principles, to make sure they define the desired outcomes, measure consistently, and act when the leading indicators show a lack of discipline.? Without corporate discipline, we will continue to see large swings on economic performance, focus too heavily on quarterly outcomes, and further frustrate a generation of employees who now prefer to work for themselves, rather than trusting large, stable organizations, like previous generations.

So what is Corporate Discipline?

Corporate discipline involves intentional organizational decision making, centered around investments made in organic growth, inorganic growth, transformational agendas, product development, customer acquisition, technology and talent enablement.? Organizations that demonstrate high levels of corporate discipline possess the following:

§? Targeted Strategy, with Clear Investment Strategy: organizations that clearly articulate their core business focus and spend a disproportionate amount of their investment dollars in core and adjacent opportunities see continued growth at a measured pace.?

§? Intentional Transformation Agenda: organizations that transform with purpose and intentionality realize sustained growth, without having to make significant financial cuts in other areas of the business.?

§? Clear, Achievable, and Actionable Measures of Success: organizations that define the outcomes they want to drive, set achievable metrics, and define key action items to achieve their objectives demonstrate better accountability and therefore better discipline.

§? Informed Product Development: organizations that research, develop, and invest in products that their core customers desire (and want to buy from that organization) see steady growth in customer acquisition and product sales.? When they run targeted experiments with real customers, they ensure marketplace value, before making large investments to scale new products.

§? Continuous Customer Value: organizations that offer products and services customers find valuable develop sustainable brand loyalty.? Organizations that adapt what they offer customers and how they serve customers based on customer feedback establish lifetime relationships that can’t be broken by coupons or kitschy commercials from competitors.

§? Ongoing Digital Advancement: organizations that find ways to expand their digital presence and personalize experience for customers, using data around customer buying patterns and preferences make the buying process simple for customers.?

§? Thoughtful Employee Engagement: organizations that listen to their employees, offer them opportunities to grow their skills, and reward them for their valuable performance create a lasting culture and build loyalty in their employees that can’t be broken by nominal raises offered by competitors.

Why is it so hard for organizations to remain disciplined?

This list is far from exhaustive, but in general, organizations face pressures that make it very difficult to remain disciplined for extended periods of time.? Challenges to discipline include:

§? Shareholder impatience and desire for fast growth

§? Executive / leadership turnover (and the strong desire to make instant impact)

§? Competitive pressures and low cost of entry for start ups

§? Shiny object syndrome

§? Rampant desire to transform quickly, without recognizing legacy challenges that impede transformation

§? Misaligned metrics and poor corporate governance

In general, boards, executives, and shareholders want fast results, driving poor decision making and reduced commitment to early strategy.? The pressure mounts when the consumer confidence is low and the economy is struggling, because results are generally slower to materialize and the pressures to reduce costs go up.? Unfortunately though, you can’t short change discipline; organizations either stay committed to the journey and make subtle changes as needed to your growth strategy or you take risky approaches that might not yield the return to justify the risk.

Do any organizations demonstrate corporate discipline?

The past 12 years have been a flurry of growth for many companies, despite the potential major hiccups during the pandemic.? With that said, the number of companies that used the strong financial performance as free license to experiment with new ideas, at the risk of shareholder and employee loyalty proves to be a challenge for our current market.? However there are a couple of examples that I will highlight that speak volumes to the value of consistent, corporate discipline.?

First, let’s take a quick look at Walmart.? The company has grown from $440B in top line revenue in 2012 to almost $640B in top line revenue in 2023, all while maintaining consistent profitability figures between 3% and 5%.? They’ve also doubled down on their commitment to the Northwest Arkansas community, as Sam intended, centralizing many dispersed corporate services in Bentonville, and significantly expanding the campus.? They managed this consistent financial performance through sound decision making, internal (and external accountability), and a consistent approach to growth.?

We can also point to Apple that has consistently grown from $142B in 2012 to $380B in 2023, all while evolving and releasing new products every 12 – 18 months.? While they certainly had more ebbs and flows than Walmart, their consistent discipline around product definition, customer obsession, and core innovation led to consistent growth and a 2023 market cap estimate north of $1T.

So how do you instill corporate discipline?

For now, I’ll share the list of implementable ideas around how I see organizations instill corporate discipline.? Over the coming weeks, I will unpack this topic further, focusing more on how organizations continuously instill corporate discipline and overcome the short – sighted decisions that inhibit it.?

§? Strategic Commitment: Lead with strategy and align all elements of the business to the central objectives, including leaders of your key business units

§? Transformation Clarity Define where and how you want to transform and consistently measure your transformational progress

§? Investor Attentiveness: Share plans with investors and collect honest feedback from them on their view of the corporate agenda

§? Multi-Layered Corporate Governance: Develop and instill sound corporate governance; in a command and control organization, it typically sits at the top and cascades down, while in more progressive organizations, the governance sits closest to the information

§? Centralized Financial Accountability: Manage financial performance and budgets centrally through your Finance function

§? Open Employee Communication: Communicate openly, honestly, and consistently with employees and collect their feedback throughout the process

In the end, staying committed to the strategy set, measuring your progress, and consistently governing the decisions organizations make goes a long way in helping companies remain focused on the desired outcomes and seeing the strategy through to results.? And organizations that put customer and employee satisfaction at the top of the priority list typically get the outcomes their boards, shareholders, and leadership teams demand, because they lead with a human-centric mindset.