Much has been written over the years in regards to the defining factors that most influence business success. Clearly bold, passionate, and visionary leadership is one. Other reasons include listening to the customer, solving real customer problems and adept competitive positioning. All are spot on, but from my perspective, the not-so-obvious missing factor that serves as the glue for the other factors is evolution. Very simply, the discipline and intentionality for every component of the business ranging from people to process to product all evolve over time.
From a people perspective, the leaders of a million dollar entity cannot be doing the same things in running the company as they will be doing when the company grows to 30 million dollars. The leadership team must consciously evolve or find new leaders that are comfortable, capable and eager to meet the challenges of an ever-changing job description with new layers of complexity and demands. This axiom is true not only for the executive team but for the entire team. High performance companies cannot stand still. Evolving and upping everyone’s game is the hallmark of great companies. For employees that are comfortable with standing still and are not actively seeking both professional and personal growth, management should be eager to help them find a more suitable and tolerant company to stand still in.
From a process perspective, as the company transforms itself, management must be vigilant at driving business process improvement and methodology best practices. Finding major improvement opportunities in the business is a key part of the business evolution and transformation process. For example, the information, analysis and tools used to effectively serve 100 customers are diametrically different than those used when serving 1,000 customers. Finding constant ways and means to add efficiency and leverage to the business while minimizing cost is critical. The next task is to repurpose those dollars saved into the highest value initiatives that then become a catalyst to enhanced shareholder value.
From a product and services point of view, evolving the company is all about the mastery of knowing when and how to pivot. It’s about constantly refining and rethinking how you currently bring value to customers, and where you might bring value in the future. We all know that the first version of a business start up plan takes many different shapes and forms during the maturation and customer validation process. Skillfully and consciously being opportunistic and managing the process is what transforms interesting companies into great companies that earn the right to become investment grade.
As the product vision continually realigns with market needs and opportunities, other business drivers must also transform. Specifically identifying the sources of competition and the ideal target markets allows the company to recognize where it can best serve its customers and maximize its unique positioning. From a competitive perspective it is critical that the leadership team be unbiased and thoughtful as they assess their competitive positioning and differentiation strategy. Make no mistake; there will be direct and indirect competition. Someone always will be competing for the same budget dollars that you are. Suggesting that there is no competition is not a viable strategy, particularly when one considers that if there is no competition, you’re probably solving a problem that does not exist. The job is to understand your key competitors as well as yourself and then find positioning that clearly and honestly differentiates you. These views must evolve.
A final thought on business transformation relates to the correct selection of target markets as your company evolves. It is vital that you segment your market and are intentional about finding where true low hanging fruit might exist. This addressable market must be large enough to provide desired business growth expectations and a market size that at some juncture might interest potential equity investors. It is key that in the market you select you are not just perceived as innovative or advanced, but more importantly, you perceived as needed. Isn’t that what business evolution is all about? It’s about consciously transforming the entire business, as well as transforming people, process and products with the goal of creating a legacy of competing in markets where your customers need you and appreciate you.