The Fundamentals of Start-Up Business Success--Part 3

Leaders control their own destiny, the best leaders distinguish themselves when faced with adversity. Earlier this month (December 11 - The Fundamentals of Start-Up Business Success--Part 1), I established five (5) necessary qualities for building and sustaining success. These qualities are brought to life, through consistent action, starting with these 3 primary fundamentals:

1.  Ensure Alignment Through Plans: Every company's highest ranking officer must set the tone by delivering a strategic and tactical plan to all direct reports.  Within one week each direct report must create the same for her functional responsibilities.  These plans must cascade throughout the organization and progress against established goals becomes the focal point for internal weekly meetings. The process must be guided by honesty; it is incumbent on every manager to challenge presented plans, 360 degrees.

For example, I worked with one CEO whose primary if not sole objective was to earn as large a bonus for himself as he could.  At the other end of the chain-of-command spectrum a VP reporting to me was singularly focused on getting promoted.  Of course neither openly admitted to this, which is why the former groused every year about not making enough money in his role while the latter never got that promotion.  Neither the CEO nor VP were able to constructively work with others because they defined success purely through their own personal agendas, where co-workers, supervisors and direct reports were all adversaries. Simply put, it was impossible to align the organization which kept the company from generating reasonable results years on end. Within 6 months of implementing this process, both the CEO and VP were out of their positions as they were unable to support their words with consistent deeds or actions. 

2.  Meaningful Customer Mapping and Segmentation:  You undoubtedly know the percentage of revenue your top 5 and top 10 customers represent.  How does this list compare to prior years, both the names on the list and their impact on your business?  What do you attribute any changes to?  More critically, unless you've previously implemented business plans and disciplined reviews you can't honestly say if any changes are positive.  Though one can build a business by simultaneously growing customer share and market share there must be a driving strategy to manage your business against.  I'm too often called into companies when they've fallen into the last stage of desperation because they misread what was really happening in their business, fooling themselves that "I don't care how we made the number as long as we made the number" is sustainable.  For example, if you expected to grow in 2012 by adding new customers but at year's end you satisfied your revenue target strictly by growing existing customer revenues you should be concerned.

I believe the most important aspect of customer mapping is to identify the degrees and strength of mutual touch points.  How many people from your organization regularly interface with each customer and how wide and deep are your contacts in each customer's organization?  Expecting "relationships" will prevail ignores the competitive global environment and hinging your revenue on a singular (customer) executive contact ignores the reality that C-level executives and senior managers are turning over at faster rates than ever before.

Meaningful customer mapping and segmentation does not merely protect your existing base. When I first did this exercise I discovered that my organization had deep ties to our best customers' Accounts Payable departments.   Following through on this data, I quickly discovered that virtually every AP department in every company hated our industry because our high-volume low-dollar invoices were a pain in the neck to process.  Within a year we added over $100 million in new business by selling streamlined billing while our competitors never knew what hit them.

3.  Competition is Broadly Defined:  Whenever I ask "who is your competition?" I get the same stock answer: like-companies producing like-products for like-customers. Wrong!  Your competition is everyone selling every conceivable product in the world because in building your business what you are first competing for is mind share: engaging a prospect in conversation that may eventually create a customer.  No buying influence can make time to meet with or review materials from every company trying to sell them something. As practical people they will entertain only meetings with prospective suppliers most likely to help them meet objectives where high tech and low tech are lumped into one schedule dictated by (perceived) impact.

The typically narrow view of competition is best evidenced by the myopic sales pitch I now hear in my sleep, those droning promises to save me time and money.  A business, let alone an entire economy based solely on the promise of reducing costs cannot sustain growth.  I can assure you any prospective supplier suggesting they can help my business make money will get serious mind share and if these initial promises prove to be true that conversation will become a fast-tracked priority. 

In industries that are often dismissed as commodities I've had particular success positioning the company to help its customers convert a cost center into a profit center.  This is surprisingly easy to implement as long as your company manages to plans and has a firm grasp of its customer base.

Part 3 of this series features the three (3) effective steps for controlling your own destiny while others fret over fiscal cliffs and things they can't control. Like all fundamentals, they build on one another and are dependent.  

In Part 4, I'll put the finishing touches on necessary basics for ensuring your emerging business success.

Individual and collective commitment to excellence matters most.

I must admit that I had to be dragged kicking & screaming by Laurie Pehar Borsh (a truly top tier professional in her field, you can learn more about her business by visiting http://www.ecmgusa.com/ or http://www.personalprproductions.com/) to actually write this blog. Since its inception, I’ve often wondered whether or not anyone was actually reading it. Well, I’ve erased all these doubts thanks to the avalanche of feedback I’ve gotten over Saturday’s “Ted” entry. Maybe it’s the only interesting thing I’ve ever written, but as a result of the reaction I’ve gotten to “Ted” I will use today’s space to set several records straight.

First and foremost I will not allow this blog space (or anything associated with it) to be utilized by people who are trying to settle their own scores. Some people have attempted to post comments alleging someone they know is "Ted"…those will not be permitted here. I write about the situations I encounter because I swim in the deep end of the pool; not many are overly experienced in the deep end nor are they particularly comfortable there. If I can help others navigate their way through these treacherous waters it’s my privilege. In today’s volatile economy we are all better if we can learn from one another, share our useful experiences, and dig out (without the need for government intervention).

I’m amazed at how many people have contacted me to guess who "Ted" is.

I’ve heard from people I don’t know submitting names I’ve never heard of (thank you for reading this blog, by the way---I hope you find it interesting and helpful).

I’ve heard from former and current colleagues with their wild guesses.

Heck, I’ve even heard from at least one guy who insists HE IS "Ted" even though Saturday’s post doesn’t even closely resemble my involvement in his affairs (in this instance, I don’t recall the last time we had lunch or the last time we spoke for 2 consecutive hours…just for openers).

I am as shocked as I likely find it telling that everyone seems to know a "Ted," and some might even see themselves in "Ted." The point of this piece was not to publicly pick on an individual who temporarily re-entered my life after a long absence nor is it intended to provide rumor mill material for amateur Tom Ruskins of the world (another plug: Tom Ruskin is Founder/CEO of CMP Group, http://www.cmp-group.com/, a top-notch investigative and protection agency).

So why are so many people fixated on "Ted" and how do they seem to know far more of them than I ever conceived? I don’t know every motivation or detail, but I’m going to take a stab at it nonetheless.

It starts with one of my core business premises: FUNDAMENTALS RULE. There have been and there remain way too many businesses across too many sectors that are so lacking in fundamentals, in their desperation to get out of urgent trouble they make matters worse. "Ted" apparently hit a universal nerve because a not insignificant number of readers are either working with or for companies that are caught in the vicious cycle of fundamental-less businesses.

Keep in mind that "Ted" was written as part of my Blog Trilogy with August 6th’s “Cultivating Major League Talent” as the opening act. Much of the thinking here has been inspired by one of the most insightful and brilliant people I know, Rich Thau Founder/CEO Presentation Testing (http://www.presentationtesting.com/). Rich and his company do phenomenal work. You may have read about one of his most topical projects in the current Business Week edition. If not, here’s a link: http://www.businessweek.com/magazine/content/09_33/c4143btw375952.htm?campaign_id=rss_null. During a recent discussion with Rich he mentioned that an area he’s personally very interested in is education because it is the foundation for building and maintaining the nation’s competitive edge. EXACTLY!

An abandonment of fundamentals layered over a poorly educated workforce—at all levels—is the recipe for disaster that, I believe, conspires to create business conditions too many of you relate to.

An education is certainly what we get from attending school, but I find continuing and practical application of the many lessons we learn (best evidenced by serious ongoing personal/professional improvement) is most meaningful. The point is we can’t cultivate major league talent if organizations do not instill learning and doing cultures.

Companies can’t expect to post solid results if employees are ill-equipped to contribute, especially in the more competitive global economy. Economies will suffer if bankers stray from sound underwriting principles where the after-effects, among others, are lack of capital, available credit, and unacceptable rates of unemployment.

Undoubtedly stemming from Apollo 11’s 40th year anniversary last month I’ve heard the phrase“If we can put a man on the moon, why can’t we….{fill in the blank with your favorite subject}?” more than I’ve heard it in quite some time. Perhaps an oversimplification, but the catalyst for putting a man on the moon was President Kennedy’s memorable phrase from his September 12, 1962 speech at Rice University: “We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not only because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.” In other words, it takes a focused, educated, tempered-in-fundamentals effort to come close to achieving any goal.

My Blog Trilogy was intended to echo JFK’s words and apply them to business, at least among those who honor me by even occasionally reading my posts. As evidenced by the response I got to “Ted,” there are too many among us, in responsible positions or otherwise, who have unfortunately chosen the opposite path by doing what’s easy and looking for short-cuts.

Building and sustaining achievement is hard, but by following the right formula it's as achievable as it is rewarding. Trying to figure out who "Ted" is, in my opinion, becomes yet another example of obsessing on the easy and unimportant; what matters is our individual and collective commitment to excellence.