To Accelerate Business Growth and Evolution
Why this approach? To realize key deliverables:
- To align businesses, leaders and teams, with natural processes and hierarchies, which make business evolution and growth inevitable and energizing (e.g., “seeing the fastest paths to success”).
- To simplify the complexity and fatigue, which are symptoms of misalignment.
- For leaders to intentionally work on their businesses rather than just in their businesses.
- For leaders to work interdependently in a conscious and effective way.
- For leaders to become accountable for the evolution and growth experience of the enterprise.
The underlying vision
The underlying vision for this approach is to develop conscious leaders in high-performance businesses, who are focused beyond survival and beyond growth, and lean towards contribution.
Asking leaders who are busy worrying about survival to pursue a higher vision is unsustainable and a waste of time. No wonder many experienced business leaders may pooh-pooh vision and mission statements.
To sustain any higher purpose, most people need first to resolve their survival and growth concerns. As such, the fastest path to a contribution focused on business is learning how to survive < learning to grow < learning to contribute. Working counter to this “fastest path” or hierarchy is exhausting and likely non-sustainable.
Consider: what are the implications of this fastest path for mission-driven businesses struggling for investment?
What is a vertical perspective?
Vertical business growth occurs when a business-system becomes more aligned with a natural hierarchy or process and as a result, performance shifts to higher sustainable levels. Horizontal business growth is growth due to greater efforts within existing constraints. Vertical business growth is the process of business evolution.
For leaders, there is always tension between operating from a vertical perspective versus a horizontal perspective:
- Vertical: What is the underlying natural process or hierarchy? How do we evolve to the next level?
- Horizontal: How to be more effective and efficient within the current way of working and doing things?
Consider: how frequently do your business leaders work from a vertical vesus a horizontal perspective? What are the implications?
What is strategic alignment?
Strategic alignment is an ongoing process identifying and aligning with the natural hierarchies and processes that make business evolution and growth inevitable.
The goal of the strategic alignment process is to focus leaders on addressing those issues and questions which will have the greatest overall positive impact on business evolution and growth.
The fastest path to business evolution is to define, and in this order: clarity of purpose < an effective system-of-roles & interdependencies < effective ways-of-being < clear strategies < optimized workflow & resources.
Here’s an example of this logic applied to a business that has stopped growing:
- Our founder sees the business as an extension of his will and his needs (clarity of purpose).
- Because we have a command-and-control leader, our leadership team has never been accountable for thinking strategically, and therefore, has never learned how (system-of-roles).
- Our leadership team does know how to think strategically, so our strategies are unclear (ways-of-being).
- Our strategies are unclear, so the right activities are not happening (strategies).
- The right activities are not happening, so we have stopped growing (workflow & resources).
- The Most Critical Alignment Issue: If the founder does not change his leadership style the organization will not change and not grow.
This example shows how the strategic alignment process can take leadership teams straight to the toughest but most important conversations.
Consider: are there any un-discussable topics preventing your business from evolving and growing?
Anatomy of a Business
What is a business and what is business growth?
A business is a system-of-roles, designed to develop, sell and deliver products and services to customers with partners.
A business can be visually represented as a triangle, called a “business triangle.” Different types of business have different types of triangles.
Business growth is acceleration in throughput in a clockwise direction around the business triangle.
Advantages of this definition:
- It aligns with the fastest path to business evolution.
- Business growth is the result of people working interdependently in an effective way.
- A business is a continuous learning loop.
- Every individual can assess how their role contributes to business growth.
What is the fastest path to business growth?
The fastest path to business growth is making those changes to a business that have the greatest impact on business growth first. It is to: optimize competitive advantage < maximize scalability < ensure sustainability < optimize returns:
- Competitive advantage: being chosen by all key stakeholders (e.g. customers, partners, employees, investors, and the larger community.)
- Scalability: the speed around the business triangle.
- Sustainability: the ability to mitigate risks and to attract and capitalize on opportunities.
- Return: the ability to generate value above costs.
For example, a leadership team needs to decide whether to invest in developing a new product or hiring a new quality manager. As the new product brings greater competitive advantage and scalability, it is the investment that will result in fastest growth.
What is the fastest path to competitive advantage?
Competitive advantage is a measure of how often a business is chosen by key stakeholders. As such, it is a measure of potential market share. The fastest path to competitive advantage is to become the provider-of-choice, become the partner-of-choice, become the employer-of-choice, become the investment-of-choice, and become the community member-of-choice.
For example, let me tell you about Amazing Pen, Inc.’s amazing pens. Just holding our pens makes you smarter and live longer and, of course, they write flawlessly. Every person who is not allergic to nuts wants one of our pens. The best companies in the world want to help us bring these pens to the market. The best talent wants to work for our company. Potential investors are throwing cash at us. And every city wants our facilities in their community. We have an almost perfect competitive advantage in our target market (nut allergy-free pen users) and a potential market share of 94% of the people on the planet.
What is the fastest path to scalability?
The primary constraint is the one function in a business that most constraints speed around the business triangle. In other words, resolving the primary constraint is the fastest path to scalability.
Imagine each of the functions on each of the sides of the business triangle as having a speed limit. The function with the lowest speed limit is the primary constraint.
- The Good Life Lawn Care company can SELL 200 units but can only DELIVER 100 units.
- They hired another salesperson and now the business can SELL 300 units.
What is the return on this investment? It is at best zero, but less because this new salesperson will create more complexity, further lowering DELIVER capacity to say 80 units.
In this example, the primary constraint to growth is in DELIVER. Only changes to the business that solve the DELIVER constraint will increase overall business growth.
Primary constraint to growth rules includes:
- There is always a primary constraint.
- When it is resolved, a new primary constraint will begin to emerge.
- The leader who owns the current primary constraint is said to be “in the hot seat.” Being the owner of the primary constraint can be a great leader development opportunity – the growth of the firm depends on them.
Consider: where is the primary constraint to growth in your business? Who owns it? When it is resolved, where will it move?
What is an enterprise?
Most organizations are enterprises, which means they encompass multiple businesses. An enterprise can be visually represented by a matrix, called an enterprise map.
The rows represent different businesses, and the columns have distinct functions. The stars show the current primary constraints to growth.
An enterprise map is like a chessboard; all the moves that you can make to evolve or grow a business can be shown on an enterprise map.
What is a system-of-roles?
A system-of-roles is how perspectives, authority, tasks, and consequences are divided among roles.
In enterprises the roles include: board / owner, enterprise leader, business leaders, function leaders, and project / process leaders.
In is normal for one person to play multiple roles at the same time. In the ideal system-of-roles:
- No roles are missing. Every goal, strategy, issue, opportunity, decision, and relationship have a clear and capable owner (e.g., there are no orphan issues).
- The hierarchy is clear and effective. An enterprise leader (i.e., CEO), for example, does not undermine those lower in the hierarchy by dipping down to overrule decisions or to raise personal needs above the needs of the businesses or functions.
- Situations where one person is playing multiple conflicting roles at the same time are minimized. For example, no business leader can hoard resources for themselves to the detriment of other business leaders.
- The critical tensions that are needed to drive innovation are present. For example, no function can overrule other functions to the detriment of business growth (i.e., a product that works for marketing but does not work for sales and operations would never be forced through the business.)
- Protocols are negotiated. Protocols are agreements between roles for how to work interdependently in an effective way. Types of protocols include: decision-making protocols, conflict resolution protocols, and meeting protocols.
An enterprise map is an effective way to show how responsibilities are divided within a system-of-roles.
Evolutionary Stages and Ways-of-Being
What are the evolutionary stages of an enterprise?
The evolutionary stages of an enterprise are predictable. Each individual stage represents a different configuration of the elements in the fastest path to business evolution presented above (purpose < system-of-role & interdependencies < ways-of-being < strategies < workflow & resources).
For example, the diverse types of purposes at each stage include:
- Individual contributor: how do we keep people happy?
- Command & control: how do we focus people on results?
- Connect & collaborate: how do we enable people to work interdependently in an effective way?
- Evolutionary: how do we transform individually and collectively to evolve to the next level?
Similarly, each stage has diverse types of system-of-roles & interdependencies, ways-of-being, etc. Some rules that govern enterprise evolution include:
- At each stage, the overall potential for performance increases significantly. For example, connect & collaborate enterprises can usually innovate more and faster than command & control enterprises.
- An enterprise cannot evolve beyond the evolutionary stage of the top leader and team. For example, the top-leader in an individual contributor enterprise, who is concerned with keeping everyone happy, is likely to react negatively to people in their organization who have a command & control leadership style. As such, business evolution is an inside-out leadership journey.
- An enterprise cannot skip evolutionary stages. For example, an enterprise cannot evolve to a connect & collaborate stage if the top leader is not capable of using a command & control leadership style when it is required.
This “how to evolve an enterprise to the next level” conversation is the most difficult conversation for an enterprise leader to lead. In this conversation, individual strengths, weaknesses, and aspirations often conflict with the needs of the enterprise. Power politics are normal. For example, this conversation would include issues like: merging organizations, developing leaders, rewards and punishments, and succession planning.
Consider: what is the evolutionary stage of the top leader and team in your enterprise? What are the implications?
What is vertical leadership?
Vertical leadership is the mindset required to sustain the business evolution conversation (e.g. to successfully navigate naturally occurring power politics).
The fastest path to vertical leadership is: responsible for self < accountable to others < accountable for developing others < accountable for evolving the system.
How fast an enterprise can evolve is a function of the number of vertical leaders in an enterprise. Vertical leadership is the mindset required to successfully navigate the “how to evolve an enterprise to the next level” conversation.
Consider: how much vertical leadership is there in your enterprise? What are the implications?
What is an evolutionary milestone?
An evolutionary milestone is the moment when a higher level of performance becomes sustainable.
- A young leader gives her first successful sales presentation. From that milestone on, she now knows that she has the competency to sell.
- A leadership team brings a new product to market successfully. From that milestone on, the team knows that they have the capability to evolve out of their old industry.
Some key questions can guide this conversation:
- What have been the evolutionary milestones in your development as a leader?
- What have been the evolutionary milestones in the evolution of your enterprise?
- What are the next milestones in the evolutionary path for you and your enterprise?
Consider: what might happen to the potential market value of a business if the leaders are able to document how their investment choices contribute to evolutionary milestones and to resolving primary constraints to growth?