Making a profit year after year is the biggest challenge facing today's business leaders. Many companies manage to achieve it, others do not, and few consistently exceed it. How is this possible? Is it the work of luck / chance? According to author J. C. Larreche, the answer lies in "The Momentum Effect".
The momentum effect is a phenomenon that allows the maintenance of an exceptional growth of a business. It allows you to produce this growth without the stressful efforts required by most companies.
It is exceptional because it is characterized by a much higher growth rate (compared to market trends), and because it offers unusual growth quality, which consumes less resources, generating greater profit.
The moment is dynamic. In the business world, success can disappear overnight if there is no constant renewal. The ability to create momentum and cultivate it so that it remains, is one of the main lessons explained in this book.
In this summary, we will talk about the moment effect, explaining how it works and presenting a way to use its benefits.
The book, "The Momentum Effect: How to Ignite Exceptional Growth", was written by author J. C. Larreche and originally published in 2008, by Pearson Education, Inc. under the seal of Warthon School Publishing.
The work is the result of a 12-year survey of 350 companies on the list of 1, 000 major companies, according to the American magazine Fortune.
It has 328 pages divided into 4 parts and 14 chapters, in which they mainly address how to continue producing profit year after year and the biggest challenge faced by business leaders today.
The answer to all this is in the Momentum Effect!
J. C. Larreche is a professor at INSEAD, an international business school. His academic work involves cultivating the fundamental skills that maintain the ability of organizations to grow, especially in marketing excellence, customer focus and innovation.
J. C. is the author and co-author of several books and articles, including the main strategic marketing simulator, Markstrat, used by more than 1 million executives worldwide.
He is a renowned consultant, working in different organizations of global importance, most of which are listed on the Fortune 500.
Larreche received many awards, including Marketing Educator of the Year and the European Case of the Year from BusinessWeek magazine.
"The Momentum Effect" is recommended for executives, business owners, entrepreneurs and students in the field.
It is also recommended for those interested in the subject and small entrepreneurs who wish to become big.
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How can you keep your company growing continuously, without stopping or slowing down? Most organizations one day get there, but few manage to maintain it. The company may still be growing, but without the strength and efficiency of before, and suddenly, there is no way.
As explained by author J. C. Larreche in his book "The Momentum Effect", most companies that achieve growth do so in the most complicated way.
It is common for measures to increase profitability to delay high-level growth, while measures that accelerate revenue growth require investment, which can hurt profitability.
"One foot starts running, the other sinks into the mud."
How can I find a way to create exceptional growth? Where's the impulse?
By exceptional, it means to be above expectations, that is, to highlight your company in relation to the rest.
The disproportionately greater growth of some companies makes us even think that there is some secret energy behind people's performance. Energy that seems to feed on itself, without needing many resources.
These companies have momentum, but what exactly does it consist of and how did they acquire it? Author J. C. Larreche investigated his hypothesis that companies that would be successful were lowering their marketing spend. And guess what? He was right.
Studies were made from three companies with different marketing behavior: the first seeks to increase sales with an increase in marketing expenses.
The second remained stable for years, spending the same over and over again. The third company, on the other hand, decreased its marketing expenses over the years.
Given the importance that the advertising tool has, as a supposed ally of companies that want to generate growth, this was at least a significant decision.
The book, "The Momentum Effect", explains that, despite the fact that their proportion between advertising and sales has decreased, these momentarily moved companies have taken the lead.
In a world of increasingly intense competition, it is inevitable that marketing resources will also grow, but if generating profitable growth is an objective, investments must be made effectively.
The question that remains is: what improves the efficiency of investments in marketing?
It is not just a case of excellence in advertising. These companies achieved greater efficiency with their marketing because they exploited the moment effect, creating the basic conditions to start organic growth that feeds on itself: the moment growth.
The current strategy is based on some core competencies: customer focus, excellence and continuous marketing innovation and also requires the interactive involvement of different functions within the company.
According to author J. C. Larreche, the first step in developing the moment is to perceive and create new ideas about the client's routine. However, in order to discover new ideas, companies must explore the space of their consumers, their worldviews and what motivates their behaviors.
The soul of the business is the customer, without it there is no sale, and if there is no sale, there is no business.
It is one of the main points of the moment effect. Customers should be attracted in such a way that they only think about purchasing the product, the offer must be thought provoking.
Powerful offers have depth and breadth. It includes the image, the trust, the "status" acquired by being a "member" of the set of users and all other factors of the value acquired by the customer.
The company must have the ambition to develop offers perfectly aligned with the wishes of its consumers and with the notion that they have of the company itself.
Everyone needs to share the same objective in the company, it is essential that everyone focus on satisfying, retaining and involving customers. Excellent examples of this are inspiring leaders, such as Richard Branson at Virgin, Steve Jobs at Apple and Sam Walton at WalMart.
The book, "The Momentum Effect", says that general and effective mobilization also involves a sense of urgency. It is essential that team members understand the essential need to work together and mobilize to reach the expected goal.
According to author J. C. Larreche, the discovery of irresistible ideas builds the moment. It is the first step in the process of projecting the moment. Everything that follows afterwards depends on the quality of the ideas.
Companies have to bear in mind the importance of taking a systematic approach to finding new ideas.
Findings that are irresistible must be translated into effective actions that generate momentum. You need to investigate ideas in terms of that attractive value and equity and use that information to create powerful offers.
Most organizations retain a lot of knowledge, cooperativeness and common goals among the team, the question is to mobilize these aspects to discover ideas that customers cannot resist.
A good business is aware that its consumers have unmet needs before they even realize it. This has happened with many innovations, such as automobiles and computers.
The book, "The Momentum Effect", clarifies that the discovery of ideas about customers to boost the moment requires a different procedure from the methods used by large companies.
These methods used by large organizations are based on analytical processes, and the problem is that if it is an overly analytical approach, companies that do it tend to improve what they already do, not explore new paths.
Truly irresistible ideas will be discovered by exploration, not analysis.
The intersections between a company and its customers, that is, the moments when they both meet, are called the moment of truth by Jan Carlzon, former president of Scandinavian Airlines.
It is not important to know who causes them, where, when, why or how these meetings take place, but that they have to happen. The experiences that customers have about a product or service are shaped by the number of hours of truth.
The chief executive of Procter & Gamble quoted:
"We competed for two hours of the truth. First, whenever the customer makes a purchase, we are running for an election and we can win his vote or not. The second moment of truth is when he uses our products and is satisfied or not. Being aware of these responses is fundamental to the company's focus."
Customers need to have vigorous satisfaction with their relationship with the company. Why vigorous? The author J. C. Larreche explains in his book, "The Momentum Effect", that many businesses have clients whose relationship does not go beyond the transactional aspect, there is no emotional connection.
To generate the moment effect, it is vital to have a much deeper and more committed relationship than just buying and selling. Your goal is the most intense satisfaction possible, for the customer who can't imagine anything better. That is vigorous satisfaction.
This customer satisfaction is essential, as it is the principle that the company is creating momentum among them. If a company has high satisfaction among its consumers, it is likely that the moment of the customer has already started.
From there, it is possible to accelerate that moment, but if customer satisfaction does not exist, the moment will never be present.
The customer is always at the center of the moment strategy, but although the customer moment is the main source of sustainable profitable growth, companies will not feel the full force of the moment effect if they do not mobilize all their employees.
Just as it is necessary to create an external moment to realize all the potential that customers have to offer, it is also necessary to create an internal moment to mobilize all the energy that your employees have to offer.
The moment helps employees and managers who are more motivated to make their colleagues do their best. The internal moment is present in thousands of actions, whether small or large, that further accelerate the moment of the client.
Author J. C. Larreche clarifies that everyday actions build the future of a company. Some are the result of detailed analysis and well thought out decisions, but most are always the result of spontaneous behavior.
All organizations have a set of reflexes (instant and automatic responses) that improve our efficiency by allowing us to act without thinking.
According to the book "The Momentum Effect", the important thing is to ensure that these corporate reflexes are constructors of the moment. If so, the company manages to grow harmoniously with its own energy.
In "Little Red Book of Selling", Jeffrey Gitomer says that the word "value" is difficult to define and understand. What's more, giving and adding value are words that many salespeople have a hard time understanding, let alone providing.
According to the author:
"Many people think that value is something that the company provides. Some small additional service, something adhered to the product, a subtle reduction in price, even something 'free'. They are Wrong."
These things are not values. Value is made for the customer, in favor of the customer.
According to the authors of "Innovatrix", Clemente de Nóbrega and Adriano Roberto de Lima, a company becomes sustainable, in the sense of self-maintenance, when it is able to systematically innovate more than its competitors.
In the end, it is always up to the market to validate or not the company's efforts to innovate.
Finally, author Mitch Anthony, in his work "Selling with Emotional Intelligence", says that many negotiators make the mistake of trying to reach the best deal by thinking only on their side. They fail to consider the long-term impact that the business can have on the customer relationship.
We hope you enjoyed our summary and are able to keep your company growing by following the teachings of author J. C. Larreche. Leave your opinion in the comments, your feedback is very important to us!
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