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November 8, 2017 - January 30, 2018
(24/year) Topgrading author Brad Smart found separated A-player executives from B and C players.
who have the capabilities to delegate and predict
systems and structures (physical and organizational)
complexities in communication and decisions that
Marketing: the failure to scaleup an effective marketing function capable of attracting new customers, talent, advisors, and other key relationships to the business
chooses a Big Hairy Audacious Goal (BHAG®)* to achieve in the next 10 to 25 years. To break up the journey, the leadership team sets a series of three- to five-year targets divided up into annual goals.
“most people overestimate what they can do in one year and underestimate what they can do in ten years.”
Gail Farrell liked this
So, to start implementing the 4D Framework, the first question is, “Which of the 4 Decisions — People, Strategy, Execution, and Cash — needs the most attention next?” Start there! We have a complimentary individual 4 Decisions Assessment available at scalingup.com to help you determine your starting point.
You want to delegate these functions to people who fit your culture and pass two tests: 1. They don’t need to be managed. 2. They regularly wow the team with their insights and output.
Strategic thinking requires a handful of senior leaders meeting weekly (it’s not sufficient to do strategy work once a quarter or once a year) in what Jim Collins calls “the council.” It’s a meeting separate from the standard executive team meeting. Rather than getting mired in operational issues, the strategic thinking team is focused on discussing a few big strategic issues including those outlined in the SWT and 7 Strata tools summarized below.
Execution planning, in turn, requires a much larger team engaged in implementing the broader strategy. Setting specific annual and quarterly priorities, outcomes, and KPIs is best if middle management and frontline employees are involved. They are closer to the day-to-day operational issues of the company, and their participation in setting the plan creates better buy-in.
What prevents this in large companies is politics; what blocks it in growth firms is friendship. Members of the team must embrace its diversity (the more the better) and be willing to challenge each other in making decisions and exposing the brutal facts.
We recommend that each senior leader formally talk to one employee each week and ask, “What should the company Start/Stop/Keep doing?” Pay particular attention to the “stops.” These are the roadblocks you need to eliminate from the company to keep people motivated.
We suggest that each senior leader formally ask customers questions that are more about gathering market intel, especially about competitors, than discerning whether they like your particular product or service.
The quickest action you can take is to have your CFO give you a modified cash flow statement every day detailing the cash that came in during the last 24 hours, the cash that flowed out, and some idea of how cash is looking over the next 30 to 90 days. This will keep cash top-of-mind and give you a great feel for how cash is flowing through the business.
Scaling up successfully requires leaders who possess aptitudes for prediction, delegation, and repetition.
Whatever challenges exist within the organization can be traced to the cohesion of the executive team and its capabilities in prediction, delegation, and repetition.
frequent interaction with customers, competitors, and employees. This is much easier when
senior team so they can spend 80% of the week engaged in market-facing activities.
the strength of the top leader becomes the weakness of the organization.
From 50 employees on up, the senior leaders must develop additional leaders throughout the organization who share the same values, passion, and knowledge of the business. This way they have enough talent to whom they can
many leaders confuse delegation with abdication.
“to keep the main thing the main thing” — to keep the organization on message and everyone heading in the same direction.
As these subsystems grow, they must continue to segment, or they become too big and insular and thus experience the problems we see with large bureaucracies. Just as living cells need to be near nutrients, companies
When your company reaches 50 employees, you still need space and phones, and you suddenly also require an accounting system that shows more precisely which projects, customers, or products are actually making money. Between 50 and 350 employees, your information-technology systems need to be upgraded and integrated. And above that, you must revamp them again, as the organization attempts to tie all systems into one comprehensive database. Otherwise, a simple change of address by a customer can unleash a series of expensive mistakes.
lack of an effecting marketing department, separate from sales (accounting is the second — discussed
Marketing is critical to both attracting new relationships (customers, talent, advisors, investors, etc.) to the business and addressing the increased competitive pressures (and eroded margins) as you scale. To prevent margin erosion, marketing’s role (with lots customer input) is to determine the right what we should be selling to the best who’s; and how best we should sell at the right price. And because marketing strategy equals strategy, the head of the organization is usually intimately involved in these decisions.
marketing rolee
Product, Price, Place, and Promotion.
Olgivy’s 4Es of Marketing. One
Experience, Exchange, Everyplace, and Evangelism. Spend time each week working on how to execute better
the time it reaches $50 million in revenue, an organization should have enough experience and a strong-enough position in the market to predict profitability accurately. It’s not that profit hasn’t been important all along as the organization grows. It’s just more critical, at this stage, that organizations generate predictable profit, since profit swings of a few percentage points either way represent millions of dollars.
build a predictable revenue and profit engine in an unpredictable marketplace and world.
Divide big teams into smaller ones aligned around projects, product lines, customer segments, geographical locations, etc., based on the idea of getting everyone in the organization into small teams and as close to his or her respective customers as possible. This is a way to increase the surface area of the company, giving the maximum number of employees a chance to interact with the marketplace.
delineate the differences between accountability, responsibility, and authority.
those who have advanced up the ranks find that they’ve taken on increasingly more accountability for things they have less and less real control over — until they reach the top and find they are liable (often legally) for anything that goes wrong in an organization that is expanding beyond their day-to-day reach. This is why leaders get paid the big bucks — to bridge this ever-increasing gap between accountability and authority, using their skills of communication, persuasion, education, visioning, etc.
matters most in life are the depth of your relationships with friends and family; and the sheer number of people you’ve helped along the way. These represent true measures of wealth. Financial wealth, then, is seen as a resource for fostering your relationships.
legacy what matters
The key is focusing on short-, medium-, and long-term achievements relative to the people listed in the relationship column.
planning a weekly date night with your spouse and booking some alone time with each child once a week. For
a general rule, you can move people up or over into these functional positions at any time. However, if you need to bring someone in from the outside to fill a senior leadership position, you should do this only once every six to nine months. It takes this length of time to find the right person, get him comfortable in the position, and transfer the DNA of the organization into his psyche. In turn, the new executive will need this amount of time to positively
Because leaders have a tendency to hold on too tight, strangling the efforts of those around them.
find people who exceed their own capabilities in their area of strength, to prevent the company from stalling.
means they are to monitor the situation, ensure that customer-satisfaction feedback is gathered and reported to the leadership team at the weekly meeting, and alert the team if there are issues.
critical to zero-base your KPI decisions. Do this by covering up the names listed in the “Person Accountable” column (metaphorically or physically) and then decide on KPIs for each function that align with the business model of the company. Then consider if the person in the job function has the skills and aptitude to deliver on those KPIs. A mismatch might indicate a potential problem.
kpi
the case of the head of the company, it’s simply the ratio of all the other boxes on the FACe tool that are right (i.e.,
Who is accountable for overall revenue? Who is protecting gross margins from overly zealous pricing concessions? Is anyone watching telecommunications expenses? And for those enamored of formal organizational charts (we’re not — in growing firms, they tend to be outdated by the time they are printed), consider rotating the P&L clockwise 90 degrees and aligning each executive with one of the major line items (CFO owning profit to
good companies tend to share their titles, whereas executives at strong and great companies share what their accountabilities are in a very measurable fashion, e.g., “I am accountable for driving revenue into this company.”
navigate this organizational transition, the functional heads, who have been used to driving the business, need to adapt. They need to become more like coaches/advisors to the business unit leaders, rather than acting as their “bosses.” In turn, the heads of the business units need to lead as if they are individual CEOs. You don’t want weak “yes-people” heading up your business units.
leadership shift
Used to making unilateral decisions, many will have to switch their style from telling to selling as they spend more time outside the organization garnering best practices and then sharing what they’ve learned among the business unit leaders.
The person to whom all these process leaders report is usually the head of operations (a COO type). Operations people are generally systems-focused. You want a head of operations who is obsessed with process mapping and improvement — or better yet, experienced in implementing Lean.
Although time is not the only KPI, it does drive efficiency in your business and customer satisfaction and is the key measurement in the Lean process of designing and streamlining processes.
