One of the key components in my career search has been joining an organization with a high growth rate. This has prompted me to think about what steps businesses can take to scale a “killer” idea into new markets. Below is a loose framework with a couple examples. Does it resonate with you? What examples come to mind to strengthen or disprove the theory? I look forward to your comments, and I hope that my lesson for success doesn’t sound too much like the Underpants Gnomes.
1. Generalize your competitive advantage. Start by making an abstraction of what makes your businesses viable. Like any tough problem, the answer will be obvious in retrospect. It might be helpful to answer key questions on your strategy first and then generalize it. Also Jim Collins has written some great books comparing companies and what contributes to their success or failure.
2. Translate across barriers to new markets for growth. What are the barriers that stand between your strategic advantage and new growth? These barriers could be functional (e.g., moving from finance to HR), geographic, or up/down the supply chain. Peapod by Stop & Shop, salesforce.com, Lean/Six Sigma as management fads, and Starbucks VIA/Verismo are all examples that spring to mind.
3. Deploy with operational excellence. Regardless of the market you choose (or create), your team will need to expand with speed and efficiency. Michael Porter argues that operational excellence is a prerequisite, not a strategic advantage. Jack Welch reminds us to “pick a general direction and implement like hell.”
During my ten plus years in industry, I have seen countless examples of (and even been part of a consulting team working for) organizations failing because they are trying to run before they can crawl. Working on the wrong things is never a deliberate choice, just a failure to accept the current reality. This post isn’t about trying to out-jargon the smart, motivated fellows who have defined organizational culture in nuanced and clever ways. This post will help you assess where your team stands in its evolution and help you focus your energy on the right changes.
I’ll summarize the stages of any organization’s evolution in four words: Integrity, Discipline, Excellence, Innovation. Money, careers, and trophies are lost by getting the first two wrong; success and magazine cover articles are gained by getting the last two right. You can assess your own organization by asking “where does my team’s energy go?” Let’s look at the major phases in an organization’s evolution:
The Age of Integrity: “we meet our commitments.” Before establishing Integrity, life is hand-to-mouth, as the team’s energy goes into getting customer orders shipped, making payroll, and keeping software and equipment operational. Turnover is high, moral is low.
Establishing integrity means not burning down your refinery, not harming patients in your hospital, or not hacking into voicemail to write stories in your tabloid.
To move through the age of Integrity in your organization, try creating basic values and operating principles for your organization, lead by example, and make it clear that people who cannot uphold those expectations must leave. The process industry offers rigorous tools like Sutton’s book on PSM as examples.
The Age of Discipline: “we do routine things routinely.” Before establishing Discipline, life is unpredictable, as the team’s energy goes into managing the SNAFU of the day. Heroic leaders thrive in this environment, swooping in to save the day, while frustrated employees shrug their shoulders and wait for the day to end.
Establishing Discipline means always getting planned maintenance done on time, or always getting invoices out the same day without errors. Routine aspects of your business do not take disproportionate or varying levels of effort.
To move through the age of Discipline in your organization, try setting up the natural work teams in your organization like pit crews: they have clear responsibilities, effective tools, a sense of shared goals, and time to train and practice. Save everyone’s brain and brawn for the problems no one’s encountered yet. The Marine Corps embodies this belief in Warfighting.
The Age of Excellence: “we perform better than the best.” Before establishing Excellence, efforts go towards achieving budgets and benchmarks. Pet projects, activity-based improvement programs, and self-promoting corporate banners abound. Behind the proud facade of any “top quartile” organization is the fear of being discovered as an impostor, when a truly excellent competitor surges past. Collins’ How the Mighty Fall offers great lessons from businesses getting stuck in this phase.
Establishing Excellence means never setting sights on the industry average or best in class, but knowing these are artificial limits and looking far beyond.
To move through the age of Excellence in your organization, try rewarding people for exposing opportunities that go beyond budgets and benchmarks, and ensure the organization has a robust set of problem solving tools available to realize those opportunities (hint: the tools don’t have to be in bestselling books or contain Greek letters, they just have to get results).
The Age of Innovation: “we harness creative destruction to surge ahead.” Before establishing Innovation, organizations chase diminishing returns and evaporating markets. Risk aversion, which has been an asset so far, becomes a liability which hamstrings facing nimble competitors.
Establishing Innovation means never letting a pipeline of novel products and never shutting down the internal Skunk Works that spawns new processes to provide a competitive edge.