How everyday companies become extra-ordinary performers.
by Keith McFarland, Business School Dean 2008 enhanced by Peter/CXO Wiz4.biz 7/12
Crowning the company – Founder/CEOs need to focus their employees on the company’s success rather than the Founder’s success. As organizations grow, the organization’s ideas, decisions & employees need to focus on building the company. That’s their business & mission. Key areas to focus on include:
• Put the customer first.
• Aim high to motivate the best employees.
• Shift from “commander” to “coach” mode.
• Don’t let loyalty (to underperformers) become a liability. It’s better for them to find a place that they fit in.
• Encourage “open” communication (with an “open” policy between all levels).
• Avoid corporate royalty perks that separate management from other employees.
• Share ownership with everyone.
Upping the Ante – Most companies start by finding and exploiting an unaddressed niche. To become a market leader, Founder/CEOs need to find market “bets” that let them expand into broader markets or adjacent markets. Bets that are smart and relate to the core business lead to cumulative learning. And sometimes, unsuccessful bets still create long-term growth.
Beyond Frugal – Small companies succeed by being nimble. Their size lets them deliver high customer service (since they don’t have too many customers); deliver low cost through sweat equity, hard work, and heroics; and deliver quickly with small, focused teams. As the business grows, all these advantages dissipate. So growth companies need to invest in structural adjustments that make large size an advantage. This may take capital investment, an area in which bootstrapped Founders often run into trouble. They need to differentiate between keeping all costs low and increasing capital or operating expenses in order to keep product costs low.
Scaffolding – Successful CEO/Founders use scaffolding — help and advice from outsiders — to navigate growth & changes. Board members & Investors play a key role: Intuit & Microsoft, for example, raised money expressly for the purpose of getting business advice from experienced investors.
“Insultants” – Myopia and inertia are two big growth killers; people defer to authority and are prone to follow the herd in the company. Address this through “insultants”: not actually people who insult, but people who challenge conventional thinking. To develop these, company leaders should:
• Celebrate product failure, and encourage learning from it.
• Involve people in issues so they can make contributions.
• Focus on defectors — among both customers and employees.
• Use humor to encourage frankness and trust. Openness leads to more input.
So many of the points in “The Breakthrough Company” resonated with my own entrepreneurial experiences that I found myself constantly marking pages that contained great insights. “Upping the ante” was my favorite: One company I worked with grew revenues tenfold in four years by entering adjacent markets to expand its revenue streams. Mark Leslie, Founder of Veritas, calls this “strategic transformation,” and he credits it for making Veritas a multibillion-dollar bootstrapped success story.
Comments: Any ideas you’d like to share on how to become a Breakthru Company?