Top-line growth: leadership requires making this the priority.

• Author: Ames, B. Charles
• Position: Putting In Place the Right Board for the 21st Century

FOR A LOT OF COMPANIES, the era of downsizing has paved the way to profit pickup by reducing costs. However, unless cost-cutting is followed with an aggressive plan for top-line growth, not much lasting value has been created. A key challenge facing directors in almost any company is to ensure that management is following a strategy that will lead to consistent top-line sales growth. This is often easier said than done because building volume and market share is harder to accomplish than cutting costs.

The first step in the exercise of responsible board leadership in the post-downsizing era is to ensure that management has a strategy for growth that is geared to the realities of today's world. We are now playing a new ballgame with a much tougher set of rules, much faster competitors, and much more demanding customers. The second step is to ensure that the rules of this new game are understood by management so that the strategy is successfully implemented.

The boardroom is an excellent place to reaffirm the principle that a business is defined more by the requirements of customer groups and competitive offerings than by existing products, technologies, or management experience. Management's thinking is too often constrained by what it makes and what it knows (based on experience), which can easily be out of sync with today's rapidly changing markets. One of the biggest challenges of the board today is to draw on the varied experiences of its members to realign priorities and create the incentives and approaches necessary to make executives at all levels within the organization think and act as market-driven managers.

It all begins with strategy development. Leadership means quickly going beyond the slickly packaged briefing material and asking fundamental questions which should form the basis of any corporate strategy:

* What are our customer needs?

* What are the competitive offerings?

* What are our capabilities and costs to meet the requirements of selected markets?

* What is our sustainable competitive advantage?

* What is the plan to achieve continuous improvement in costs and productivity?

* How are we ensuring that all key managers are actively involved in developing business plans and are committed to their successful implementation?

There is nothing particularly complex about what it takes to build substance into strategic planning. However, to make this strategy work from the boiler room to the boardroom -- in other words, to be a...