Category: Business Growth

(Click here to read Part 1)

If you can find the intersection of your passion, expertise and market demand, you will have a winning concept.

Chapter 5: The Hedgehog Concept

The bottom line here is to find your company’s sweet spot. If you can find the intersection of your passion, expertise and market demand, you will have a winning concept. Execution is then the key to success. You don’t have to do everything well. If you do one thing better than others, you will succeed (ex. Hedgehog protects itself very well from a fox)

Chapter 6: A Culture of Discipline

I have always believed that to have sustained growth, you need systems and processes. When a company is small, a key person can hold things together, allowing the company to grow. But at some point, that breaks down. It could be that the person is no longer in the position, or the volume is too large to handle. Systems and processes are inevitably needed when the company exceeds a certain number of employees, or when volume exceeds the capacity of a few. Systems should not be put in place too early, or the business can stall.

Discipline is critical to consistent growth, quality and customer experience. When the company understands its sweet spot (hedgehog), then it is only a lack of execution that will bring failure.

Chapter 7: Technology Accelerators

My Bachelor’s degree is in Electrical and Computer Engineering. I love technology – inventing it, using it, evangelizing it, and watching how it changes the world. But, just using technology does not make companies great. Technology can be an enabler or can make things more efficient. Without a sound strategy and process, technology can just get in the way. Once you have the process in place, then consider automating it. Do it manually first (brute force) to prove that it will work, and then use technology.

Chapter 8: The Flywheel and the Doom Loop

Few people today know what a flywheel is, but it is an incredible mechanical invention. The basic concept is that a flywheel is heavy and it takes a lot of effort to get it going, but it also takes a lot to slow it down. Once it is going, small incremental efforts can prevent it from slowing.

This applies in business. It takes time to build momentum, and once built up, it will take something drastic for the momentum to come to an abrupt halt. Yet, if a business tries to go fast too quickly, it can also be stopped quickly. A company is in the doom loop if it tries to find quick fixes and tries many different directions without doing the work to build something sustainable.

 

Once you have your hedgehog, get great people, and start pushing on the flywheel.

Good to Great is not just for big companies. Small companies have to go through the same steps to build a great company, no matter if the goal is to keep it small but profitable or grow it to something that can be sold one day.

One enduring business book that every C-level should read is Good to Great by Jim Collins. Although some of the examples that he uses may be dated (Circuit City from 2001), the keys to creating a great company are timeless. I initially read and applied his philosophies in my corporate job when the book was first published. I recently read it again, and realized that I’ve been consulting to small businesses on these topics for over 10 years. I’ll highlight a few points, chapter by chapter, on what all companies should be doing:

Chapter 1: Good is the Enemy of Great

Historically, the great companies were led by people who worked tirelessly toward a vision that they created. You may have heard that the millennial generation does not have that same will to work for the outcome. They want the benefits of success without willing to sacrifice – “good” may be good enough, but it will never be great.

While I do believe that work/life balance is more important to this generation than any previous generations, I don’t believe that they don’t work hard. They understand the “work smarter not harder” mantra. Let’s also not forget that millennials are more connected than any previous generations, so they are never unplugged. Millennials can make companies great, and this is important since they will be ½ of the working population by 2020.

Chapter 2: Level 5 Leadership

Good to Great was published well before another book that I refer to often, The Five Levels of Leadership by John Maxwell. Collins talks only of the Level 5 leader (humility, strong will, company minded), but Maxwell further defines all of the levels, showing that they build on themselves to get to Level 5. Maxwell’s book came out 10 years later, and I think he benefited from much more research on leadership in those years.

Chapter 3: First Who… Then What

Collins got it right 15 years ago:  great companies have great people. For service companies, everyone has to be an A-Player to be great. Product companies might be able to become great without all A-Players, but only in limited positions.

I’ve been focused on hiring and retaining A-Players my entire career. Collins says: “Get the right people on the bus, get them in the right seats, and get the wrong people off the bus.” Too many companies allow the wrong people to stay, and the negative impact is almost immeasurable. One of the first things I look for when working with companies is to find the people who are in the wrong positions or on the wrong bus. Then I help the company find the right people. While I’m not a full-time recruiter, I help my clients find A-Players and have a great history of doing so. (Read my eBook: Perfect Hire Blueprint to learn how you too can find A-Players.)

Retention of A-Players is also critical, and I agree with Collins’ view that you can’t motivate people. You need to provide the right environment for them to thrive and then get the right people who will motivate themselves.

Chapter 4: Confront the Brutal Facts (Truths)

CEOs can be deluded into thinking that everything is great. Many times the people around him/her don’t want to give bad news (AKA: CEO Disease). This is critical in making decisions.

Collins speaks of the Stockdale Paradox (after Admiral Stockdale, who was a POW). The essence of it is this: maintaining the unwavering faith that your company will prevail, while confronting the most brutal facts of the current reality.

For some companies, their business has changed forever because the world has changed. It could be as subtle as customer’s expectations (ex. free shipping), to something more drastic such as lack of demand (ex. daily newspapers). Tenacity is a key attribute of a CEO. As long as there is a willingness to reinvest, the company can turn profitable again with an assessment and a good strategic plan.

(Click here to read Part 2)

As we prepare for millennials taking over the workforce, we can see that changes are already in motion at established companies both big and small. Since they are not experiencing fast growth (including a high energy vibe that is like a magnet to millennials), slower growth companies will need to adapt. As the Baby Boomers continue to retire, how can these companies hire and retain the best young people to fill the gaps?

It wasn’t long ago that Yahoo was a place everyone wanted to work. While their hiring process still only allows high caliber people, the press about the company turmoil is a turnoff for many potential applicants. There are many “Best Places to Work” surveys. Glassdoor is one of the best because it encourages direct feedback from employees, which brings out the extremes (disgruntled former employees). If you haven’t checked out your company there, you should.

Older companies like PWC, P&G and GE have always been known for hiring and grooming great employees. They are also aware that they need to adapt. PWC relies on young business professionals, and they have been on the leading edge of the change. P&G is just starting to react, and will likely have difficulty hiring and retaining young professionals in the near term. GE is making significant progress on its process and image.

GE been airing TV ads (What’s the matter with Owen?) aiming to convince the young generation that there are “cool” jobs at GE. Engineer-like Owen talks about how exciting it is to work there, while the others in the room believe it is a manufacturing company. In a more recent ad, a friend runs into Owen on the street and tries to cleverly give him his resume, and there is another with singing telegrams. This is GE’s way of transitioning perception from an old stodgy company to one where young, bright engineers are trying to get in like it is a Silicon Valley startup. They even moved their headquarters from perceptively dull Connecticut to the more energetic community of Boston.

• GE is adapting its review and compensation processes to make them more millennial friendly.
• PWC has shown similar results from their internal surveys and has published this info.
• GE has moved away from the often copied best practice of annual reviews.
• GE has introduced a phone app for employees to assess both subordinates and superiors continually instead of annually.

A recent survey showed that Millennials expect to have 9 jobs in their working life, and many changes will happen in their early years. Fixed timeframe yearly reviews do not fit into that model, yet a Mercer survey showed that ~90% of the companies have a fixed date when everyone is considered for a raise. “It’s more like employees are serving tours of duty and you need to get them to re-enlist and get them re-engaged,” according to Steve Gross, a senior partner at Mercer.

To compete for bright, young, professional talent, the established companies will have to once again follow GE’s lead. Millennials are forecasted to be 50% of the workforce by 2020. This isn’t just for large companies. Small businesses can adapt to this trend quickly and compete for the best talent available as well. Many small companies have difficulty hiring, and these changes can make it much easier to get the perfect hire.

I’ve been helping small businesses get “unstuck” for the past 10 years. For much of that time I relied on my knowledge and experience to guide these businesses down the right path, and that worked well. But over the last few years, I have become certified in all assessments from TTI Success Insights, a leader in assessments. Earlier this year I was in the first certification training for what is called the Stages of Growth (formerly known as Growth Curve), and have already used this assessment successfully with a number of companies.

Today, by utilizing the comprehensive set of research-based objective assessments, I can not only diagnose the true issues that hinder small businesses, but also have certainty about what will get them unstuck and ready for growth. To have sustainable growth you must focus on the people, processes, and profit design.

Hiring is an important piece of this puzzle – if you don’t have great people, it’s hard to grow your company to the place you want to be.

There are many consultants who will focus on one area and say that that will fix all the issues in a company. As they say, “if all you have is a hammer, everything looks like a nail.” Some consultants tend to focus on only culture or marketing or finance, and they will look at your company through those lenses.

I disagree, because I’ve seen these issues firsthand and have studied extensively how to remedy them. Only a comprehensive objective assessment will identify the true root cause of the issues. I not only administer the assessment, but I also give a detailed debrief of the results to the management team, and help develop the initiatives for the business to reach the next level of growth.

Without an assessment, all you have to rely on is your best guess or gut instinct. That’s why I say, If you’re not assessing, you’re guessing.

Don’t bet your company’s future success on a guess – use the Stages of Growth assessment to determine the true root causes that limit your company from reaching its full potential.

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