I recently read a terrific new book by Les McKeown called Predictable Success. While the title makes McKeown’s book sound like the antithesis of When Growth Stalls, I was amazed by the parallels between his work and mine.

Of the many passages that caught my attention, this one in particular stood out: “Just like any other complex entity, the Predictable Success organization is far from perfect—it will make mistakes, hit roadblocks, and is just as exposed to the impact of external events beyond its control as any other organization. The difference is in how the Predictable Success organization responds to those difficulties.”

I couldn’t agree more with that statement, and two recent announcements in the business press prove the point.

The first is about the incredible second quarter results announced by Whole Foods, where same store sales rose 8.7 percent. That’s a far cry from the company I wrote about back in August that was distracted by its 2007 acquisition of rival Wild Oats and the drawn-out antitrust battle that resulted. In a Wall Street Journal article around that time, Whole Foods’ founder John Mackey was dismayed by how the company had lost its way, saying “We sell a bunch of junk.” It was then Mackey decided to refocus the brand back to its natural foods roots. Less than a year later, here we are talking about the “predictable success” that resulted.

The second is Ford’s recent announcement that it was shuttering for good its 71-year-old Mercury brand. Ford has done a tremendous job under CEO Alan Mulally of sharpening its focus as a company, but was unfortunately unable to resuscitate a brand that had become unfocused since its 1960′s heyday.

In his book McKeown quotes Jack Welch, who said, “The only way to change people’s minds is with consistency.” Whole Foods recognized the error of its inconsistent ways and quickly recovered, while Mercury languished too long in its own and has paid the ultimate price as a result.

Business is a contact sport, and there are many things that can derail a company for good when growth stalls. But as McKeown points out in his book, each of us can increase the odds of attaining “predictable success” if we’ll stay as alert to what’s happening within our organizations as we do to external events.

Thousands of years ago King Solomon said, “Know well the condition of your flocks.” It’s as good advice now as it was then.

April 26, 2010 was a big day for Apple. That was the day it surpassed Microsoft as the most valuable technology company.

Kids who have grown up with the iMac, iPod and iPad may greet the news with a yawn. But those of us who remember the early days are somewhat stunned. Who would have thought ten years ago (let alone twenty or thirty) that Apple, which proudly refused to compromise its way to market share, would ever overtake big, bad Microsoft?

Nobody knows what’s going to happen from here, whether this is a temporary blip or a permanent changing of the guard. But as I look at the future prospects of both companies I can’t help drawing a parallel to similar organizations in another rapidly-changing, highly-competitive sector.

Microsoft is GM. Apple is BMW.

Microsoft, like GM, is big, covers just about everything, and makes products that work well most of the time but have a spotty quality reputation and for the most part don’t excite anyone.  Apple, like BMW, sticks to its core competency, is relentless about design and performance, and as a result is able to command a premium price.

Microsoft, like GM, seems to think building better products is enough, not understanding (or in denial about) the legacy of mediocrity associated with its brand. Apple, like BMW, is completely clear about the power and value of its brand and the vital importance of remaining true to it.

Take two stylish new cars, identical in every respect. Badge one with one of GM’s brands and attach the BMW brand to the other. Which one will people prefer? For which will they pay a premium? Do the same with a new computer or wireless device using the Microsoft and Apple logos, and ask the same questions. The difference is attributable to the brands, the meaning and value of which are driven by the quality and performance of the products to which they’ve been attached over the decades.

I don’t suggest anyone write Microsoft off. The company is run by really smart people, and it’s possible they have the next killer app in the garage right now. But Apple is smart, too, and it understands the whole-brain dimensions of its industry better than anyone.

None of us—and none of them—can predict the future. But I have more confidence that Apple and BMW understand people better than Microsoft and GM. For companies whose focus must always be on the next generation, that’s the holy grail.

Now that we’re well into 2010, how’s your company doing?

Are your objectives clear? Is your team operating like a well-oiled machine? Are you focusing on your core? Are you taking prudent risks?

If you aren’t sure about—or don’t like—the answers to the above questions, click here to take a confidential, anonymous, three-minute self-diagnosis. By answering twenty questions you’ll get a snapshot of how well your company is resisting the destructive internal dynamics I discuss in When Growth Stalls. And you can encourage other members of your team to take it to so you can compare results.

Spend a few minutes today reflecting on how your company is performing and, if necessary, make a minor course correction. It could make a major difference.

The dean of automotive reporting, Paul Ingrassia, published a terrific interview with Alan Mulally, CEO of Ford Motor Company, in Saturday’s Wall Street Journal. Citing Ford’s $2.7 billion 2009 profit, and the fact that it was the only U.S. automaker not to duck into bankruptcy, Ingrassia noted how Ford might even surpass GM in market share for the first time in more than eighty years.

In When Growth Stalls, I document how struggling companies tend to keep themselves down through a combination of a loss of focus, a loss of nerve, a lack of management consensus and marketing inconsistency. I found it interesting that in Ingrassia’s analysis he inadvertently referenced how Mulally has dealt with three of these issues:

Loss of Focus: “[Mulally's] method has been to simplify, relentlessly and systematically, a business that had grown way too complicated and costly to be managed effectively. ’Improve Focus, Simplify Operations,’ reads one of Mr. Mulally’s many charts, which he repeats like a sacred mantra. Soon after his arrival Ford began shedding brands—Jaguar, Land Rover and Aston Martin among them—that the company couldn’t afford to support. Volvo will be next to go.”

Loss of Nerve: “The core Ford brand got an investment infusion to replace aging cars and revive a model lineup that had been heavily tilted toward gas-guzzling trucks.”

Lack of Consensus: “Mr. Mulally has overhauled the often-contentious culture in Ford’s executive suite. Most of his appointees are company veterans, but they’re the sort of people who typically got overlooked when style seemed to count more than substance, as it often did at Ford…Internal surveys show 87% of Ford employees believe the company is on the right track.”

Mulally summed up his recent success with a simple statement: ”It’s all about producing products people want.” That may be true of every company, but too few get it done–especially in the American automotive industry. I, for one, hope Ford’s comeback is a lasting one.

The big news this week in Medialand is NBC’s decision to cancel The Jay Leno Show and move the eponymous comedian back to a late-night time slot. About the short-lived experiment, Jeff Gaspin, NBC Universal’s Chairman of Television Entertainment, said, “I don’t think it’s wrong to take chances…Sometimes they work. Sometimes they don’t.”

Fair enough. But with a little more imagination, NBC might have been able to predict the outcome. The much-hyped decision to launch The Jay Leno Show was made in part based on economics—it’s a whole lot cheaper to produce an hour of live TV than an episode of Law & Order. While the show was profitable for NBC, it’s not terribly surprising that it would lag its competition in the ratings—especially in its first season, when loyal viewers of competitive offerings were caught up in current storylines.

The Jay Leno Show’s low ratings created a “lead-in” problem for NBC affiliates, who rely on audience carryover to provide viewers for their late local news. Michael Fiorile, chairman of NBC’s affiliate board, said NBC’s Leno strategy “has been devastating for a number of late newscasts around the country.”

While that’s unfortunate, it also underscores an unhealthy dependency that too often blinds local news providers to their task. And it provides a valuable business lesson for us all.

Most people tend to think of the television industry as something “other” than the product and service sectors that comprise the rest of the economy. But in reality it’s no different. Television news is a “product” that consumers “buy” (we pay for free TV with our time), and competitors are called to offer their prospective customers an experience that is unique, relevant, and valuable, just like any other business.

When a local affiliate complains about the network not offering a good enough lead-in for its local news, it’s like McDonald’s complaining that the Burger King across the street has better access to traffic. While that may be true, it can also serve as an all-too convenient cop-out. McDonald’s job is not to complain about the way the street is designed, but to get people to cross it–by offering something intriguing and unique (a task the company has performed quite well in recent years).

That’s where TV news falls down. Local news directors too often live in a “be better” bubble. That causes them to overstate the impact of their slogans, overvalue being first on the scene of an accident, and overpromote their handsome/pretty/ smart/honest/capable/talented/sincere news anchors. If they instead applied their intelligence and intensity (the news directors I’ve met have both in abundance) to seeking new ways to truly differentiate their offerings from the competition, we could see some real innovation in how local news is delivered. I suspect most viewers—and most people in the industry—would agree that there’s plenty of room for improvement.

Jay Leno is proven product whose success is in part dependent on how well he’s packaged and distributed. Local news is no different, and as Gaspin said, it’s not wrong to take chances. If only more news directors would.

As 2009 draws to a close, I have bad news and I have good news.

First the bad news. According to the Wall Street Journal, stock performance in the decade now ending is the worst ever–worse even than the woeful 1930s. For the past ten years, the value of NYSE-traded stocks has declined by an average of 0.5 percent a year. Compare that to the 1990s, when the average annual increase was an incredible 17.6 percent.

Factor in inflation and it gets even more depressing, with the S&P; 500 declining an inflation-adjusted 3.3 percent annually. During the 1930s, stocks showed an inflation- (deflation, really) adjusted annual gain of 1.8 percent. And the decade now ending saw many notable companies fall out of the S&P; 500, for reasons of scandal (Countrywide, Enron), excess (Bear Stearns, Merrill Lynch, Lehman Brothers, Wachovia), misfortune (Circuit City, Lucent, Reebok) and just plain changing dynamics (AT&T, Compaq, Dow Jones & Co., Maytag, Wyeth).

Pretty discouraging, when you think about it. But here’s the good news. The vast majority of American corporations found a way to move ahead during the turbulent ten years past, and all of them–all of us–are the stronger for it. We face challenges ahead, but having muddled through the most difficult decade in two centuries we’ll face little that will surprise us. And those of us who have maintained our focus, kept our nerve and remained consistent throughout should profit all the more.

Here’s to 2010, the dawn of a new decade. May the old one rest in peace.

[Note: Today marks the one-year anniversary of this blog. Prior to launching it last December I wondered--and worried--if I would have enough to write about. If there's any silver lining to the year now past, it's that it provided plenty of content for a blog called "When Growth Stalls." Let's hope next year is a little tougher on me.]

“Most of the world seems to be focused on the Americans who are unemployed. We’re focused on the 90% that are still employed.”

Those are the words of Ron Shaich, CEO of Panera Bread, the 1,300-unit bakery-cafe that has found a way to thrive in spite of the recession. Its formula? A combination of smart financial management and keen understanding of its core customers, most of whom remain gainfully employed (and ever-more attuned to good value).

Rather than cutting corners, Panera has focused on offering more to its broad range of middle income customers, including free wi-fi access and frequent new menu offerings. “In many ways, we’re renting space to people and the food is the price of admission,” said Shaich. Panera COO Rick Vanzura agrees, saying, “A bunch of folks have been cutting quality to cut price to go after the marginal customer. We said a better strategy that addresses a bigger group of people is providing better value.”

The strategy is working. In 2008 (a very bad year for most fast-casual restaurants), Panera Bread grew by double digits. In 2009–the worst economic year in generations–the company managed to keep same store sales from declining, and in the third quarter actually increased them by 3 percent. Food industry analyst Darren Tristano pinpoints why: “Panera’s on-trend with what consumers are asking for: fresh, customizable, convenient, won’t break the bank.”

Panera Bread has been able maintain its focus because of careful cash management. Rather than using debt to expand, assuming the good times of years past would keep on rolling, the company grew slowly and deliberately over the past decade. That kept it healthy from a cash flow perspective and prevented it from having to cut corners or cut margins (or both) when times got tough. As Shaich says, “Every chain is cutting something — portion size, quality, hours of labor. The result is that ultimately the customer feels it.”

Most players in the restaurant industry—in most industries, for that matter—think the current game is all about price. Panera Bread is an all-too rare exception, demonstrating that companies that keep their focus, nerve, consensus and consistency can thrive even in bad times. I’m a fan.

Earlier this year I commented on a decision by Panasonic to rein in R&D; investment in flat-panel televisions and instead expand its reach into the entry-level market (see “Is Panasonic Kissing Its Future Goodbye?”).

The company appeared to be eyeing significant market share opportunities offered up by the 2009 conversion to digital TV in the U.S. It was a bold move, because while it’s easy to cash in your brand equity and go down-market, once the decision is made it’s nearly impossible to reverse course.

Last month another famous brand made that fateful choice. Liz Claiborne, Inc. agreed to license its namesake brand exclusively to J.C. Penney, ending decades-long relationships with department stores like Macy’s, Dillard’s and Bon-Ton. The Claiborne brand has long been in decline, and a Macy’s spokesperson said the retailer could no longer justify expanding the line because of customer confusion between it and the “Liz & Co.” sub-brand that was being sold exclusively at–you guessed it–J.C. Penney.

The Claiborne brain trust may have created their own problem by overextending the brand, a common manifestation of the loss of focus that afflicts many stalled companies. That said, this new decision may work out. It’s not the first time J.C. Penney has partnered with respected, high-profile designers (Polo Ralph Lauren and Nicole Miller, to name two), and Penney is doing better than many of its rivals in this tough economy.

As with Panasonic’s decision, however, this one will be interesting to watch, and will serve as yet another object lesson for any company struggling with stalled growth. Going downscale–where all the value-conscious buyers are these days–can be extremely tempting. But if you do it, make sure you’re extremely comfortable with your decision. There’s no turning back.

It’s a classic When Growth Stalls scenario: start with a fast-growing and profitable company; add an aggressive new competitor that begins to successfully woo the same customers; watch as the previously flourishing company loses its nerve, its focus, and its consistency, leading to languishing sales and lackluster results.

When Gap, Inc. launched Old Navy in 1993, the spare retail chain sporting affordable merchandise and wacky ads was an immediate hit. Rather than risk losing focus at brand Gap (which was near its zenith atop the retail world), parent company Gap, Inc. used Old Navy as a counterforce to the big discount stores that were trying to ride on Gap’s fashion coattails by ripping off its designs.

Within four years Old Navy sailed past the billion-dollar revenue mark, accounting for nearly half of Gap, Inc.’s top line and some 40 percent of its profits. Offbeat commercials featuring has-been celebrities made the chain the talk of the retail industry, as well of teens and young families that comprised its core market.

Enter H&M;, the trendy Swedish retailer, which opened its first U.S. store in 2000 offering discount apparel with a more fashionable edge. Fearing that H&M;’s success marked a sea change in the industry, Old Navy shifted its focus from the basics to more trendy, upscale merchandise. It didn’t work. Sales fell by more than a billion dollars between 2006 and 2008, with last year’s same store sales sinking an incredible 17 percent.

It was then that Gap, Inc. decided to do something about it. As the Wall Street Journal put it, “Returning Old Navy to its roots was the central theme of Gap’s remaking of the brand.” The Journal quoted Old Navy’s interim president, Tom Wyatt, as he reflected on the brand’s original recipe: “We got tired of it. The customer never did.”

Eighteen months ago Old Navy recommitted to its original focus and began redesigning more than a thousand stores, hoping to leverage consumers’ renewed frugality in this toughest of tough economies. Year-to-date 2009 revenue is up 1 percent, due largely to a third quarter same store sales increase of a healthy 10 percent (the first rise in five long years). Pardon the pun, but Old Navy seems to have righted its ship.

There’s no guarantee that, having returned to its former course, Old Navy can count on smooth sailing. The retail industry is too dynamic to let any successful company alone. But Old Navy’s experience is one more point of evidence that when even the most successful concept runs into a rough economy, a tough competitor, or some other external threat, destructive internal dynamics can turn it into its own worst enemy.