Four strategies that led to success prove growth is more an attitude than a process
RICK SPENCE
The Vancouver Sun
Where does business growth come from? Does it spring spontaneously from the marketplace, the changing expectations of customers, or the minds of visionary entrepreneurs?
At a recent conference called Accelerating Growth, hosted by EY Canada, a foursome of successful entrepreneurs explored different routes to business success. If they didn’t achieve consensus, that’s OK: their different approaches prove that growth is more an attitude than a process.
The Toronto conference began with gripping war stories from Geoff Smith, CEO of EllisDon, a London, Ont., construction firm founded in 1951. While EllisDon grew consistently under the autocratic rule of Don Smith, Geoff’s father, the company routinely flirted with insolvency. Geoff, who became CEO in 1996, was named Canada’s Entrepreneur of the Year in 2013 for leading the firm to success and profitability as a $3-billion-ayear construction giant.
Sometimes, Smith observed, growth comes from following trends. He says EllisDon expanded by growing with baby boomers: building public schools, then high schools, then universities, then government buildings, then hospitals. The key was to pursue ever-bigger opportunities with confidence and bluster. For instance, EllisDon won the contract to build Toronto’s SkyDome in the 1980s only after the elder Smith barged into the offices of the private consortium planning to build the stadium, and demanded they open the project to public bidding.
But bluster is never enough. When EllisDon took on the $125-million SkyDome project, Smith recalls, EllisDon was worth less than $30 million. (Lastminute changes would raise the dome’s cost to half a billion dollars). “My dad had rolled the dice again,” says Smith. With EllisDon on the hook for costs if the facility didn’t open on time, Smith says, “If we’d been two weeks late, we’d have been out of business.”
Even after Geoff Smith took the helm in 1996, EllisDon had to lay off a third of its staff — just before Christmas. As he struggled to build a firmer footing, Smith wondered why his senior staff weren’t leaving for more stable jobs. Finally, he asked that question of one executive, who said: “We decided we liked working together, and decided to stay and save the company.” Imagine that, Smith told 100 conference attendees: “The top 15 people in the company got together and decided to save the company, and didn’t tell me.”
That epiphany helped Smith establish a new culture for EllisDon as an employee-owned company. Today, non-Smithfamily employees own 50 per cent of the firm.
Smith was followed by a panel of three local business leaders touting diverse, but equally aggressive, growth strategies. First came Robert Masson, CFO of mattress retailer Sleep Country Canada, who said his company grows by aggressively driving sales. “We focus on topline growth, and hope we make money out of it,” he says. Does that focus work? When Masson joined the company in 2013, Sleep Country upped promotional spending 29 per cent. Since then, he says, “we’ve had 15 consecutive quarters of samestore growth.”
You also have to look for adjacent-market opportunities. After making its name in mattress sales, Sleep Country added accessories such as sheets and pillows. “It’s worked very well for us,” says Masson. “Since 2012, sales in that category have grown at a compounded rate of 16 per cent.”
Michele Romanow, a serial entrepreneur best known as a fire-breathing investor on Dragons’ Den, noted that growth comes with a price tag: You have to do what other people won’t. With one of her first businesses, a sturgeon-caviar business in New Brunswick, Romanow had to buy a boat and even learn to process fish. “Most people wouldn’t do that,” she notes. The payoff: you learn all aspects of your business, your clients’ true needs, how to trim your supply chain so you can be the lowest-cost acquirer of new customers.
The final panellist was Som Seif of Purpose Investments, a mutual-fund innovator who has built a $3-billion business in four years on purpose-driven funds and low fees. Like Smith, he believes growth comes from empowered, entrepreneurial employees. “It’s all about passion and ideas,” he says. “Hire only A-type people, not Bs or Cs.”
“Create the type of environment where people are taught to fail fast, to be willing to be challenged and challenge others. Those things drive people to think about the opportunities you have.”
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