Our Growth Strategies

Our Growth Strategies

This is the third in a series of posts that will describe what the CEO Reliance Electric thought about basic commitments, how the organization was going to operate and ground rules for managers. Once again, all the content of this article is based on the work of B. Charles Ames as outlined in his management manifesto titled Basic Management Concepts dated January 14, 1974.

In a multi-business company like Reliance Electric, a one size fits all, master strategy defined by corporate was destined to fail, according to Ames. He did not see a single thrust in the business or an “either or” proposition. He saw a “combination of thrusts” that would create the best opportunity for obtaining the company’s growth and profit objectives.

With this multi-business, multi-thrust concept in mind, Ames suggested a three phased growth strategy that would 1) increase earnings at a rate that was attractive to investors and 2) improve the quality and stability of company’s earnings. To accomplish this he suggested the following:

  • Continued emphasis on our strengths to increase profits from our core businesses.
  • Increased emphasis on products and markets less vulnerable to the ups and downs of of the economy. Service businesses, maintenance, repair businesses, for example, fit here as did all of the telecommunications businesses.
  • Increased emphasis on acquisitions that added to our strengths, particularly in businesses less vulnerable to business cycles.

Ames left the rest up to the individual operating company to decide. He wanted dynamic product and market strategies that were tailored to the individual opportunities of each business. He suggested that each business strive for a momentum in order to “make things happen” rather than wait and react to the competition. He felt we could not win by being defensive. His advice was to be aware of the competition but take the initiative and let them react to us.

Interesting advice, on the competition, regardless of the business or industry.  Just as interesting was the reality that everyone in the organization knew exactly what was expected in terms of job performance. Ames wrote it all down for all of us. And that may be the most significant basic management concept of all.

B. Chuck Ames and his wife Jay currently manage the Ames Family Foundation.  They divide their time between a home in Vero Beach, Florida and a second home in a suburb of Cleveland.