The four fundamentals: intent, method, market and product or service standards
1. IntentIn the first instance with a new start, this could be as simple as a wish to find an alternative employment. In others it is a dream and a plan waiting to happen. Moving on to the first stage in graduation, ie at early maturity, all those who decided that business and all its risks were not for them will have gone or at least shelved their growth aspirations. In most cases the remaining business configuration still has the founder/s at the helm and intent is not the issue, not the main barrier. The intent has always been there and is reinforced (in ups and downs, perhaps) as they get motivated by their success so far. My observation is that it gets harder to maintain the corporate desire as maturity is achieved. This is for two main reasons, either/or:
a. Profits and wealth may render the owner/s satisfied with their lot. Further growth may seem risky, not what they wish in terms of lifestyle. In very many cases this is not a conscious decision; in fact, they have not realized that they have become risk averse and conservative. That is why I use the expression ‘comfortable maturity’ to define this stage. This is where a business has its place in the market and it is profitable, and seems to be able to keep up under its own momentum, ie without a lot of strife and upheaval.
b. There is an organization structure gathering around the owner/s and the duty of motivating each other and the people in the business has partially transferred to these people, some of whom are not shareholders. They may not have the drive or the confidence or even the remit (!!) to continue to ask for change and greater effort even though the owner still has the desire.
Obviously, many organizations do get past this stage. They will usually put in place a semi-formalized process (a habit) which ensures good teamwork, a common culture and set of values. This can only really be facilitated by very good communication and passion from the top. They may use bonus schemes or other reward schemes in addition,and will therefore be on the way to medium size. Whatever schemes are installed, there has to be a genuine passion and commitment from the top team to keep changing and growing. Intent is not a default position.
This is about objectivity, professionalism, structure, good This is about objectivity, professionalism, structure, good operating and control systems, and wanting to do things well. A vital part of this can be the MD’s attitude to delegation and involving/trusting other people. Many entrepreneurs fail to make this transition because they do not really have management skills, or do not want to let go at all. If they do not expand the management team, they have to work harder themselves and they constrain the growth because things don’t get done. There are many things here which I believe can snuff out feeble intent, but the good news is that those who have the passion will overcome weaknesses in management, for that is what we are talking about. This is about management, not vision or strategy. Here are some issues which will almost certainly have to be addressed:a. The people: An organization which has people with the right attitude as well as the necessary functional skills will always outdo the others. All part of the same point is that they must be charged with the responsibility to do the job and be led well by the MD/CEO.
b. Dealing in facts: Almost all of the larger organizations have extensive information systems, the best of which will provide revealing information on all business processes automatically and virtually in real time. I have seen many mature businesses which have an IT weakness and do not set high standards of information provision. By this I mean that the key performance indicators are too infrequent,too late and do not reveal enough about root causes. This has a serious effect on the growth and improvement mechanisms of the business because so much time is wasted in arguing or finding out what the facts are. It slows them down and can demoralize managers. Obviously, the larger and more complex the organization, the more important this becomes.
c. A continuous improvement process (ie more than an intention) which sets the business constantly looking for ‘the gap between what is and what could be’. This process adds review meetings and a positive style of running meetings to the good information mentioned above. One cannot happen without the other. They don’t have to have a problem to make them look for a solution. Loosely speaking, planning and targeting forms part of this process, but the core of it is process management, viewing the business as a series of horizontal processes and recognizing that the involvement of the people in the process is paramount. You may be surprised but I have seen dozens of organizations of all sizes which have stacks of good information but do not use it because they do not have a formal continuous improvement process which runs on information and targets.
Continuing to be aware of market trends means that an organization is served up with one opportunity after another. Keeping in touch through customers and own people seems the obvious way to do this, but there is an information highway on the World Wide Web to make things much easier now. This whole subject seems to be a game of two halves. The first half is full of threats for the newer businesses which will founder if they do not check that there is ‘prospect for profitable growth’ before they enter the market. The second half is about opportunities for the established business if they constantly keep on the lookout in the market for product development or market development ideas.
4. Product or service standards (and later, brand)
These should suit their passion and capability. This is not just about what they do but how well they do it. Good marketing will keep an organization on the ball with the product or service for which there is a market, ie a potential. But that is not enough.There are lots of examples of organizations that go on and on growing because they have done something special with their capabilities. The best way I have seen this put is that a world-class enduring organization chooses to be in businesses doing:
a. things they are passionate about;
b. things they could be the best (in the world) at;
c. things that drive the economic engine.
Although this may seem a million miles from the small or medium-sized business issues, it contains some vital clues. What drive the economic engine are products and customers that deliver good gross margins. Some small businesses are not aware of which products and customers earn them the profits. That could be a fundamental oversight.
If a business is not passionate at a corporate level about what it does, customer care will suffer. Customers do get the message! If it is not very good at what it does it will not grow easily. This is a matter of the whole offering to the customer.