I never ceased to be amazed that only 10% of growing companies break through the second-stage of growth and scale their business. It’s a failure epidemic that’s symptomatically consistent across all industries and, for that matter, all countries that embrace a capitalistic economy. The crazy cool statistic embedded in our field and academic experience is that the 10% of companies that survive No Man’s Land, a term coined in my partner’s best-selling book of the same title, generate over 85% of the jobs in this country.
Over the past two decades we’ve learned how growing companies fail, but we’ve also learned what the top 10% of businesses do best in order to break through No Man’s Land and scale. Here are the top 10 things that the top 10% of companies do best:
1. The Leadership Team is in Sync on Strategy
We’ve documented that over 92% of company leadership teams are misaligned on strategy, which prevents them from focusing on the right priorities. Often when we meet with a company’s CEO/Founder and inner circle to develop an execution plan, it’s the first time they’ve engaged in an exercise to get on the same page. Inner circle misalignment greatly inhibits effective resource allocation and performance. Top leadership teams know that change must occur and are not afraid to express their opinions. Their team members are in sync on their companies’ primary goal, top priorities, and KPIs.
2. The Leadership Team is Accountable to Performance
86% of companies lack a performance based culture. Most teams realize accountability is a problem, but they don’t know how to make the shift from loyalty to performance. Top companies realize that employee loyalty can start a business, but performance must become the primary measurement of success as a company grows.
3. The Leadership Team can State the Same (Clear) Value Proposition
Customers associate your company’s name with a clear, well defined value proposition so that they can turn to your firm first to fill its needs. Top leadership teams effectively articulate their unique competitive advantage. They understand that a clear value proposition enables the marketplace to decide that their deliverables are worth paying for, above and beyond their business’s cost structure.
4. The CEO/Founder Delegates All Non-Critical Decisions
CEO/Founders only have 100% of their time to offer their business. They must use that time for the highest value activities and appoint other people to do everything else. Top CEO/Founders identify their own strengths and protect them. Those strengths are often the core of the company’s success. Eventually, top companies become good at what the CEO/Founder does best. CEO/Founders spend the majority of their time performing their best use in the business. They delegate non-critical decisions in order for their companies to scale.
5. The Company has Placed the Right Executives in the Right Positions
Strategic hires and fires often need to occur at some point in a company’s growth. Top firms have top talent in leadership roles so they can become sophisticated organizations built around processes such as accounting, operations, human resources, sales, and marketing. Members of these inner circles have proven success in the same roles with companies at least twice the company’s current size.
6. The Leadership Team Prioritizes, Allocates Resources, and Executes Effectively
Top companies identify clear company priorities and assign specific actions to achieve those objectives. They have a trusted decision process that streamlines decision making and drives execution.
7. The Company Invests Resources Effectively
Top companies effectively allocate their physical and human capital to generate the greatest return. Their leadership teams create “what-if” ROI scenarios on potential investments – both tangible assets and potential hires.
8. The Company Utilizes an Effective and Accurate Economic Model
Top companies develop an economic model that projects forward and considers the return on capital deployed, the revenue produced by selling products or services to customers, and the changes these elements produce under different scenarios. The top 10% of companies have an economic model that proves the business will make more profit at higher volumes.
9. The Company Manages Its Risks Effectively
Top companies realize that risk is the primary reason businesses fail to raise capital. These top companies focus on reducing their real and perceived risk by addressing issues regarding the Market Alignment, the Management, and the Model.
10. The Company Has Adequate Capital to Grow
Growth requires capital. Companies often underestimate the amount of capital required to fund their infrastructure during growth transitions. They anticipate the implications of growth and don’t underestimate the amount of capital required to fund their infrastructure during growth transitions.
The First Step
We’ve determined that the best first step to beat the odds and break through No Man’s Land is the willingness of the CEO/Founder to become objective about his/her business on these critical growth issues.
If you would like a complimentary opportunity to generate unique intelligence about how your business stands concerning these growth issues compared to over 500 of your peers; as well as a competitive financial benchmark report from a database of over 35 million private companies, click on this link and request a code to take THE BENCHMARK BUTTON.