Apr 11, 2019

Growth is a must, but watch for the trap

By Joe Duran

Photo credit: Getty Images

After spending many years cheering my three daughters while they play club volleyball, I decided it would be nice to learn to play properly myself. After all, there are a couple of courts right by the ocean, and it would be fun to play with them. Of course, being a 50-year-old guy isn't exactly peak time to learn to do something athletic, so there was that.

I found a recently graduated collegiate player who was willing to work with me, and I began with lessons on Friday afternoons and games on Saturday mornings.

Growth of any kind, whether it's personal or professional, must start with one simple act: the decision to do something different to improve in some way. But in our industry, where pretty much every firm wants to grow, remarkably few create the growth-oriented culture required for it to happen.

The biggest enemy

I have been a part of building two multibillion-dollar wealth management firms, both of which grew very quickly. I am often asked why some firms stop growing. In my opinion, there is one reason above all else. The enemy is called "good enough."

Good enough breeds complacency and stagnation. Good enough makes us believe that since we are competitive today, it will stay that way into the future. But of course, that's not true.

Think about our industry. In the '80s, it used to be good enough to work at a brokerage firm and buy stocks for clients charging a quarter per share, but that changed. To be good enough in the '90s, you had to shift from charging commissions to charging fees for your services and managing a portfolio of funds or ETFs for your clients (for a 2% fee). Today, to be good enough, you have to provide financial planning and a managed portfolio for around 1%.

I hope you see the pattern and the dilemma for all businesses in our rapidly evolving world: What was good enough yesterday is not good enough today. And inevitably, what's good enough today won't be good enough tomorrow.

Getting into a growth trajectory

The reason most individuals and companies stop growing is because they don't really want to change how they work. Look at some of the struggling businesses like Sears and J.C. Penney, and compare them to constantly evolving companies like Walmart and Amazon.com. Great companies don't settle for good enough, they know that's always a short-term truth.

To grow and keep growing, there are three basic requirements:

• Change. Jack Welch, the outspoken former CEO of General Electric, summed it up well: "Change is the engine of growth." In a competitive country like the United States, changing technology, consumer expectations and economic realities constantly force the evolution of every aspect of every business.

Recent technological advances are only accelerating the pace of change. Every company that sticks with the status quo is being left behind by its competitors with every day that passes. Conversely, every company that adapts to and embraces change has a massive competitive advantage.

The market will ultimately force you to evolve if you're going to survive. Why wait until it's no longer a competitive advantage? Would you rather change later just to keep up, or sooner to be kept up with?

• Courage. It's hard to change, especially if everything is working pretty well in the moment. It takes courage to willfully go through the aggravation and setbacks that will occur when you change how you work. However, it's easy to be brave if you realize the alternative means losing your competitive edge.

In order to grow, you have to be comfortable with mistakes. You have to challenge the people around you to not settle for good enough, and be willing and humble enough to look beyond your walls to learn what your competition is doing better. You have to be honest enough to see what's possible and brave enough to do something about it.

• Discipline. All the best ideas in the world mean nothing without the determination and effort to follow through. Growth is 1% inspiration and 99% perspiration. Real change in an organization must happen from the joint effort of all the employees thinking of ways to make the company stronger and more competitive.

From the day we started our firm, we've followed this motto: "We will be better every Friday than the Friday before, as a firm, as a department and as people." That simple idea reminds people to have a change and growth mindset.

Change has to be bigger than one person. Everybody is part of the work that pushes us forward to evolve. If you feel your business is stagnating, start with one way to improve to get the ball rolling.

Growing into the future

It's been about a year now since I started learning to play volleyball. It was pretty rocky in the beginning but I'm quite a bit better now. I've made a bunch of new friends I play with on the weekends, and my wife has picked up the sport, too.

Our girls will always be better than I am, but I relish our time together in ways that could never have happened if I hadn't challenged myself to learn something new. It's all been a nice reminder that growing is really exciting and rewarding at any age.

This article originally appeared on Investment News “Duran Duran” blog.