Monday, May 07, 2007

How can large companies continue to grow?

May 2007 – This month’s post is a bit late (and short) as I’ve been working on a final paper for my international business class. We’re studding international companies like GE, IBM, and Exxon. It simply amazes me how large these companies are. In fact I’m so amazed by their size, I wrote about how large companies can grow for my mid-term.

Imagine this; GE had $160 billion dollars in sales last year. The pesty shareholders, which is a group I consider myself part if, demands companies like GE grow at double-digits. Double-digit revenue growth, double-digit earnings growth, double-digit this, double-digit that, and so on. We want almost $17 billion in new sales next year or about the same as Kenya’s gross domestic product. Yes that’s right! GE needs to grow sales this year that are valued the same as Kenya’s total value of goods and services. Exxon’s story is even more impressive (or overwhelming). Exxon needs to find $44 billion in new sales this year. That’s about the same as Slovakia’s gross domestic product. Amazing!

So how do these companies continue to grow at these rates? To be honest I don’t know. There’s probably not one single reason these companies continue to find and expand businesses at double-digits. That being said, I’m pretty sure there is one defining attribute; great people. And if I was to copy one thing these companies did, I’d hire great people.

A few years back I read Jim Collin’s book “Good to Great.” I’ve read a lot of business books and from what I can remember, most of them are pretty boring. Not “Good to Great” though. It’s by far the best business book I’ve ever read, and I’d be so bold to say it’s one of my top ten books of all time. Mr. Collin’s is in pretty good company given I’ve read almost all of Bill Bryson’s books, who may be the greatest writer who ever lived. Any way, my favorite chapter in “Good to Great” is the section on getting the wrong people off the bus and the right people on the bus. I’m guessing GE and Exxon have the right people on the bus, which helps them define where they need to drive to find all these new sales. The top notch talent they have are able to help the company continue to grow the businesses at these incredible rates.

In conclusion, if you’re looking to grow your large conglomerate at double-digit rates, make sure you start buy hiring great people who hire great people. If you can do this, coming up with new sales ($17 billion) that surpasses the gross domestic product of 83 countries (as of 2006) is trivial.