Who's to Blame When Growth Stalls?

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Your people are, of course, not idiots, but I suspect that, like you, they are average human beings. That means they bring to the table their own strengths and weaknesses, their own ideas and opinions, and their own biases and perceptions. If you've done your recruiting job right, they also have a great deal of intelligence and motivation. What they may not have, when growth stalls, is confidence—in you, in the company, and even in themselves. Self-doubt isn't a disease that strikes only CEOs or those in the executive suite. Anybody who has been psychologically invested in your company's historical success—and its current trials—is struggling with it emotionally, no matter how well they hide their feelings.

vicious cycle

The problem, to quote a philosopher a few thousand years older than Drucker, is that "illness strikes men when they are exposed to change." (Herodotus, 484-420 BC). Going backward is unfamiliar terrain to businesspeople who are accustomed to success. It's frightening, it's confusing, and it's decidedly unrewarding. As long as denial, doubt, and fear—and in some cases, sniping, finger-pointing, and other destructive behaviors—are wreaking havoc with your internal dynamics, you'll remain stuck in the vicious cycle.

It's easy to overreact in this situation. Although bad management apples may cause some of the harmful conduct, your first reaction should not be to lop off heads. As your company struggles, everyone on your team is trying to muddle through in their own unique way. Take a deep breath and reflect coolly on the situation before making abrupt personnel moves that may end up making matters worse. And be prepared to give grace.

Sounds a little touchy-feely, doesn't it? But it should not be a surprise. A company is not only the source of its staff's livelihoods, it also represents a considerable amount of their personal identity. If it's failing, they're failing, and their natural reaction is to act out of fear or defensiveness, which is why your corporate culture may not seem as fun and functional as it once was.

the power of emotion

Management consulting firm Accenture (ACN) has done significant research focused on "high-performing companies," those at the opposite end of the spectrum from the stalled companies we studied. Their research provides an interesting reinforcement of our work. One of their findings emphasizes the importance of what they call a company's "emotional field." Accenture's Jane Linder says: "Emotion is the silent partner behind organizational success, especially when it comes to the capacity for continuous renewal. Although executives may regard effective project management as something that demands rationality in the extreme, Accenture research has established a direct link between employees' emotional engagement and their performance."

That's as true on the downside as it is on the upside. Linder explains that denial of workplace emotion doesn't make it go away but instead causes it to go underground. This is the situation in which many companies find themselves when growth falters, and it's the root of much internal conflict. Arguments over strategy and tactics abound as members of the management team cope with their emotions and view the stalled growth elephant from their individual perspectives. Even the best-intentioned people can pinball between an honest desire to right the company as a whole and their interests in protecting their own turf and budgets. Should we lower prices or stand pat? Announce layoffs or hold tight? Use cheaper ingredients or move upscale? Cut the marketing budget or invest to grow?

Because the destructive internal dynamics associated with stalled growth are psychological, the first step of the solution is psychological as well. Job one is to ensure that trust, consensus, and clarity are reestablished among your senior management team. It doesn't sound sexy, but you can not effectively address the tectonics shaking up your company, let alone the issues of loss of focus, loss of nerve, or inconsistency, without first getting everybody to the same table, literally and figuratively. It begins with a common understanding of the task at hand.

Excerpted from "When Growth Stalls" by Steve McKee, copyright 2009. This material is used by permission of John Wiley & Sons. When Growth Stalls is now available at all major booksellers.

Steve McKee is president of McKee Wallwork Cleveland Advertising, a firm that specializes in helping stalled companies rekindle growth. He is the author of the new book, When Growth Stalls.