Fulfilling your potential
No matter how great your Growth Potential, it's you and your senior team's ability to get things done that really counts. Otherwise, that potential will remain untapped and your window of opportunity will be lost.
The following 7 Growth Probability Indicators (GPIs) will establish whether you and your senior team have what it takes to realise this potential and maximise Shareholder Value.
THE 7 'Effective Execution' GPIs
A multitude of factors, both inside and outside the world of work, will influence how much time and effort you are prepared to invest to fulfil your organisation's growth potential. If you are a business owner then the same applies to the amount of financial risk you are prepared to take.
These factors change over time, so this area can be a 'minefield' if there are multiple shareholder directors and/or family members involved. I have lost count of the number of challenges I've seen that stem from this single underlying issue. Your fellow shareholders may now be at a very different stage of life to you, have a different attitude to risk or simply be seeking a different work/life balance.
Even if everyone is in tune, it pays to make sure that this also aligns with your growth goals. Work/life balance is important but I haven't seen many businesses achieve sustained, profitable growth when all the senior team are doing a strict 9-5 shift and won't take calculated risks.
You might be part of a great senior team that has got you to where you are today. But that does not necessarily mean that the same senior team can get you to where you want to be. It defies logic to make this assumption - yet this happens in many growing organisations. There are countless, hardworking people in senior positions whose areas of accountability will soon outgrow their capabilities and qualifications. They may have done a fantastic job so far but risk being exposed as you grow further. This doesn't just apply inside your organisation - it might apply to your accountant, bookkeeper, solicitor, consultant, non-exec etc.
You may want to show loyalty but that would that be at the expense of the organisation and/or the individual. Will the inevitable stresses of being unable to cope really help you or them in the medium term? You can't address this until you have a clear view of the professionals that you need in your business and a plan for how you will attract and/or develop this new talent as the business scales. You also need a plan to help those who will need to be freed from (or better supported in) some of their current responsibilities. These individuals will often breathe a huge sigh of relief when you finally broker the conversation.
Finally, as your team continues to evolve, your plan must ensure you minimise the impact of any disgruntled individuals compromising your interests e.g. by sharing trade secrets. Do you have the right processes in place when someone joins the team? It’s often too late to tackle this when they leave!
Many organisations fall into bad habits when it comes to management meetings, quarterly boards and 'off-sites'. Things get stale and the quality of the discussion weakens over time. This can have a direct impact on the quantity and quality of the decisions being made.
Some board members seem to forget how to listen to their fellow directors. They think they've heard it all before so, instead of listening, they are preparing what they are going to say next. Meetings become less a place for enlightened discussions and more a stage where people come to perform. They drag in their usual 'baggage' and 'soap boxes' and then drag them out again at the end, ready for the next meeting.
In the very worst cases, certain discussions are simply avoided, which can only weaken the organisation over the long term.
Put simply, a business can only get stronger if the senior team can express and listen to different views and explore them in a constructive manner before reaching a decision. Once a decision is made, it's then critical to then present a united front to the rest of the organisation.
Make a conscious effort to become a more active observer and listener in your next two or three meetings:
Some organisations don't have a meaningful Business Plan; others get bogged down in a cumbersome planning process and it becomes the main deliverable of the year.
The most important thing to note about any growth strategy is that it will have very little effect until it is implemented! So, it's important to agree and monitor a plan that covers the short, medium and long term. However complex or concise your plan is, it's crucial to measure performance at the departmental and individual level. That way you can learn from what you do; improve target-setting, address training needs and 'correct your course' as things inevitably change.
More worryingly, far too many organisations have a culture where failing to deliver the plan becomes the norm. So, if a department or senior individual accepts but then routinely fails to deliver targets, then this must be addressed. If you just 'roll your eyes' and accept it then, not only will it continue, it will most likely 'infect' the whole organisation.
Sustained growth doesn't come without risk.
Every organisation has External Risks: For example, changes in legislation or raw material prices or an aggressive move by a recently-funded competitor targeting a key customer or infringing your trade mark or patented technology and Internal Risks: For example, the loss of a key employee or the failure of a critical piece of machinery or disclosure of confidential information.
Managing risk isn't a precise science but thankfully, many risks can be eliminated, minimised, shared or transferred with a bit of advanced planning.
The importance of proactively managing these risks increases as a business grows. Yet, from my experience, many growing organisations fail to even discuss, let alone rate, prioritise and document, these risks.
Decades on, I still vividly recall one of my MBA lecturers drumming home the message 'Cash is King' every Friday morning. That expression is never more true than in a growing business. All growing businesses need cash - and as they accelerate their growth, they need even more cash.
So, unless you and your fellow shareholders have very deep pockets, you will need to find 'fuel' for your growth journey. The amount of cash required will be dependent on the investments you need to make, the industry that you are in and your 'Working Capital Timeline'.
As a starting point, you must be able to model your future cashflows to understand when you will need cash and for how long. There are many ways of getting this 'fuel' from bank loans, invoice discounting and regional grants to investment by Angels, Venture Capitalists or 'The Crowd'. Whatever your preferred option, it will be difficult to secure many of these without first preparing a compelling growth plan.
I hear a lot of senior teams talking vaguely about 'getting some funding' but this vague statement of intent will not be of any practical use when that time comes.
Start to build a picture of the funding/financing options available and weigh up what combination of these might be right for your business and in what order. There are pros and cons for each route, so speak to your accountant and a variety of experts.
Whatever you do, don't just follow what a fellow entrepreneur has done. Just because it's right for them does not mean it's right for you and your business.
Unless you have an immediate cashflow issue, this is, by far, the single most important GPI to be considered before your next phase of growth.
It doesn't matter if you have given yourself poor ratings on the other 12 GPIs. All of these can be addressed over time. But, if you believe that the others in your senior team don't share your view of where things stand today, then it will be virtually impossible to make meaningful progress in the right direction.
From my experience, this represents the single biggest brake on any business that aspires to grow. At best, it slows you down and becomes a millstone around your neck. At worst, it creates a 'hole below the waterline' that will ultimately sink the ship!
Make this GPI the first that you address. All the others can wait.
Would you like to stop the guesswork and find out how the rest of the senior team would actually rate all 13 GPIs? Click here to find out more.
|Growth Probability Matrix guidance in respect of intellectual property has been developed in partnership with the Intellectual Property Office.|