It’s really sad to see how many businesses fail to realise their full potential. Is it down to poorly defined value propositions, bad design, poor sales and marketing or financial control…sometimes it is. My view is that a company’s growth prospects are inextricably linked to the rate at which the founder, team and leaders can develop themselves. Businesses make transitions at key points of their journey and if the management fail to personally address these changes and the extra demands placed on them, then the “growth ceiling” very quickly presents itself.
It starts with the leader’s ability to undergo personal change and continuously adapt their style and approach to overcome the challenges faced along the journey – self awareness is a must have for all entrepreneurs. In a high growth business the founder has to be clear on what they are good and bad at and build a team around them that compensates for their own personal shortcomings. The inability to delegate is the classic dilemma faced by so many individuals running their own business. This is the very reason why so few companies go on to employ more than 25 employees. Organisational development is a pivotal part of achieving growth, and what do the VCs keep telling us? – it’s all about the team.
My advice to any high growth business/entrepreneur is get the right people in the right seats doing the right things. Having the wrong people doing the right job is so common, and if we are honest with ourselves virtually all of us have been there and got it wrong, big time! A company without an effective team delivers sluggish performance at best – gazelle performance? Not a chance.
Embracing a learning culture and environment where personal improvement is encouraged and supported is non negotiable, but of course this takes time. Staff and the team are the most important component of any business. When we get the right team in place almost anything is possible. Without it growth is stunted and blockages appear – these blockages manifest in long working hours, customers being let down, poorly managed contracts, finances going off the rails, quality dipping, disgruntled staff, poor communications – a feeling of rabbit in the headlights, can’t see the wood for the tress, all familiar clichés entrepreneurs have come to live with. The antidote is investing in people and staff.
Getting the organisational structure and team right is a difficult job and perfection is challenging to say the least. Your organisation is only as good as the people who are part of it, and remember the organisational and team effectiveness will dictate your rate of growth.
For the last few years I have been trying to create a simple model that allows individuals to assess the commercial viability of business opportunities and innovative ideas – irrespective of where this idea is created (university lab, industrial R&D department, current employer or our bedroom) I think there are three primary drivers that need to be assessed and considered when evaluating new ideas. Here are my thoughts:
Commercial drivers (CD) –
who is going to buy the idea/service/product and how do you get it to market?
Human factors (HF) –
who is going to make it their job to get it out there – and is there a team that can make it happen?
Resource Issues (RI) –
have we got the finance, IT, plant and equipment along within physical resources needed to make it happen?
I score each idea on a 1-10 scale in each area. (I have some more detailed sub questions to each area and I have over simplified the above).
I work on the basis of successful mind to market – creating a sustainable revenue stream is down to CD x HF x RI – top score is 1,000 (10 x 10 x 10). In a very crude way it gives me a feel for whether I want to pursue an idea or not. If any score is zero then its back to the drawing board.
So much emphasis is on CD……however, HF needs to be given the attention it deserves!!
I have seen some fantastic academic work in recent years on leadership – Jim Collins, Stephen Covey and all the other usual names. A plethora of tools, techniques and matrices aimed at helping the ambitious entrepreneur become a better leader. I am guilty of being one of the many individuals to come up with new thinking on how to excel at leading others!
The reality is, it’s so damn difficult pulling everyone in the same direction, getting people to buy into your vision, aligning individual skills with the needs of the business, expecting everyone to be as passionate as the founder – just accept it, no one is ever going to be as passionate as the founder of a business. One thing for sure is that as a company grows, a leader/leaders must develop a rulebook – it should be a concise set of statements that defines – how we do things around here! If an employee does not like the rules – it does not make them a bad person, it just means they don’t belong to the community. Modern management science talks about values and behaviours in my own world I call this a rulebook – golf clubs have them, religious societies have them…and many more. Organisations that have been around for hundreds of years have a rulebook of some description! I can almost hear readers cringing at this phrase.
As companies grow – a rulebook is needed to define what is and what is not acceptable. As a company heads towards 7, 20 and 50 employees the people dynamics change and a “way of doing things” needs to be established – if not you end up with a tribe and not a team. For me this is one of biggest challenges leaders of growing businesses face – embedding an ethos/philosophy of what is and what is not acceptable. Managing people, emotions, needs, desires and aspirations, then connecting them with the purpose of a business is so difficult.
Try putting together a rulebook then sharing this with senior managers and staff. Institutionalisation (you may wish to use other words) is a necessary part of creating a long tem sustainable business – a challenge for any leader! Don’t forget you must live by the rule book yourself, if not why should colleagues and staff?
See our company values here >>>
Recent press reports would suggest that our gazelles are finding it harder than other European Countries to raise cash. More than a fifth of companies (many from information and communications technology sectors) failed to get the loan applications approved in recent years. The report which I have yet to find, claims that it provides further evidence of the damaging effects the credit shortage is having on the economy.
Whilst I understand attitudes to funding have changed and the banks have had a severe kicking, I do think we need to look further into the detail. My experience (we have worked with over 3,000 potential high growths!) is that lots of these businesses are just not investment ready and it would be ludicrous to give them cash and indeed subject the founders to PG’s – its for their own good in many instances.
Poorly thought through applications, business models just not viable and inexperienced management teams are also part of the reason for the lack of funds being pushed into the market. Whilst funding is harder to extract, there is cash for well thought through propositions, period. Many of the high growth potential (gazelle types) companies need to be nurtured, mentored and supported – we must look at the quality of the business plans falling onto the desks of VCs and funders, maybe then we would get a better view of the world. My advice to anyone seeking funding is:
1. Can you evidence a viable business model with customers that want to buy what you are offering?
2.Have you got the team in place – thinkers, doers, sellers and controllers
3. Do you have the resources to make it happen and do the financials stack up? More importantly would they stand scrutiny.
4. Can you articulate 1-3 clearly, concisely and convincingly.
If you can’t then dont blame the banks!
Bravery and courage are important traits of successful entrepreneurs. All too often there is a very fine dividing line between success and failure, the implications on either outcome can equally profound. Rene Carayol, a leading management thinker and person I truly admire talks about the need to sometimes practice “scary strategies”. These are methodologies that need to be employed in order to achieve a breakthrough or pursue big personal/business intention. They often involve raising the bar and extension of our natural comfort zones. Scary strategies are particularly appropriate in difficult selling situations where there is a real need to demonstrate competitive advantage e.g. dislodging an incumbent supplier from a long-standing relationship or as a small business pitching against a global brand.
In considering the deployment of a scary strategy we must pay due recognition to:
– Challenging the status quo and encouraging the customer to change their outlook, in other words try to change their mindset
– Bringing a different approach or one that is unconventional but truly brings benefit (however, there is a fine dividing line between genius and madness)
-Challenge existing practices that are old-fashioned and out of date
Scary strategies should be considered when all traditional methods of winning business have failed. Doing something memorable that is innovative, inspiring and displays a real sense imagination can sometimes win the day.
An approach taken by major London ad agency in the 90’s is one of the best examples I have come across. In the days of British Rail, the top management turned up at the agency ready to be pitched to. An uninterested receptionist, filing her nails, made them wait in the foyer, which was decorated with coffee-stained tables and overflowing ashtrays. The minutes ticked by and nobody came to meet them. Furious at their treatment, the BR managers were about to storm out when an agency Director and his team appeared. “That’s how the public sees BR,” the Director told them. “Now let’s see what we can do to put it right.”
Ambitious high growth entrepreneurs should spend at least 3 days of their official working week living in the customer’s world. Viewing the market place from the desk is extremely dangerous, being immersed within your industry and the needs of your customers provides real-time market intelligence. This helps to tailor propositions specifically to the wants and needs of your market place; it also supports new product and service development. Gazelles companies create a massive gap between them and their competitors because they deploy innovation and imagination to problems, this inspires and very often leads to development and evolution of propositions that the customer didn’t even know they wanted! They occupy uncontested space. Others will soon start to copy and replicate – your job is to stay one step ahead of the game.
High growth businesses we have studied stay close to their key stakeholders. More specifically, they spend time
- Looking at the factors that impact their customer’s performance – this provides opportunities to provide new solutions
- Understanding their customers strategy – this facilitates a partnership working model
- Looking at how they can help improve efficiencies, reduce costs and enhance performance.
Getting close to the market helps to drive what I term “customer lock in” – that phase of the supplier/customer relationship were there is a true partnership, mutual respect and a genuine win-win. Moving to lock in can absorb an enormous amount of time effort and energy, however the rewards can be big. It also makes it very difficult for competitors to move in and occupy your space. Being embedded means any new entrant would have to untangle lots of relationships, systems and processes to get a foothold. A word of caution – never take relationships for granted and be aware of performance vs. KPIs. Customer complacency represents a real danger zone for businesses. Lock in delivers true competitive advantage.
I am a firm believer that the UK has some of the best universities in the world. However, does a game plan to raise the bar of performance feature within their strategic plans, particularly in relation to what happens when they wave good bye to their graduates. We turn out amazing talent, equipped with knowledge and expertise in writing highly intellectual theses and essays. But what happens when they try to get a job. As an employer and interviewer of graduate talent, what comes across my desk every day is CV’s that lack depth, an inability to articulate a point of differentiation and to be honest a document so generic it misses the point. The resultant effect is we send out piles of “no thank you” letters, this must be highly discouraging to those poor graduates who thought their degree was a passport to the world.
Well I think its time for a rethink of how we make the talent pool more ready for the work place – many universities have a careers advice service, but just how effective is it? Employers are looking for a tailored CV, crisp and to the point, giving evidence led narrative, supported by an interview where the applicant is prepared and up for the pitch. Attitude is just as important as qualification.
So where does the responsibility lie for job readiness? Is it the employer or the university? My view it’s the latter. If it’s going to be the growth SMEs that create new jobs, I believe it’s the universities role to turn out more rounded graduates ready for the work place. Those who have been taught the importance of self motivation, the power of communication, researching employer needs and writing CVs that hit the spot. If we don’t get a grip of this we will end up with graduates whacking out hundreds of CVs and applications with many of them receiving the obvious replies – this will manifest into bright sparks becoming depressed and ultimately lacking self worth. A thought for policy makers.