Profitable Growth

I recently finished Ram Charan's Profitable Growth. In this book, Charan gives readers ten ideas they can "use on Monday morning" to grow their business. I normally don't like books that give a "ten ways to…" type of list because either the list never seems to apply to what I am doing, or the points are obvious things like "focus on the customer" or "control your costs." This book isn't like that.

The book focuses on good growth versus bad growth (growth just for the sake of growth) and how to push the former and stop the latter. One major idea is this – give up on homeruns. Those huge once-per-decade-bet-the-company homerun projects are rare. If that is what you spend all your time looking for, the rest of your business will suffer. Be consistent. Hit singles and doubles. Over time, that will add up to steady growth, which is exactly what you want.

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Another big idea is focusing on revenue productivity instead of just cost-cutting. Constant cost cutting can have negative effects, as Charan gives in an example involving salespeople. The top performers at a certain company made $250K a year. The bottom performers were around $100K. To increase profits, some people would want to lay of the bottom performers and "do more with less" by expanding the sales territories of the remaining employees. Charan suggested they hire more top salespeople. Sure, this would actually increase costs, but should generate a slew of new revenue.

The books is a short quick read with lots of good ideas. Ram Charan is one of the top business consultants in the world, and this book shows why.