2.0 The Course Forward

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Beating the Odds

The Course Forward

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Beat the Odds

Introduction

The second of 3 presentations on our core technology – FAST and SUSTAINABLE business growth.

The Course Forward focuses on the critical elements to move your company from Start-up to Reinvention. The Stages of Growth are predictable, but not guaranteed. Getting there from here must be managed.

The Stages of Business Growth – managing your ramp-up from inception to your 1st reinvention

Core Business Processes – building infrastructure just-in-time, creating capacity for ongoing reinvention, achieving niche and market leadership

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Stages of Growth

Stages of Managed Growth

• Dream2Plan

• GoLive

• NextAct

• BigFast

• ProfitTaking

• Reinvention

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Stages of Growth

• Dream2Plan Principles have decided to go for it creating a business plan. No

systems are in place but should be mapped out in concept. Plans are fuzzy on the details; a business concept driven mostly by a vision or dream. Personal inventory ("gut check") must be performed to determine whether there is enough conviction to weather the storms; staying on course with a lack of systems and lack of support and managing capital to sustain the business until proof of concept. The essence is a core team – a nucleus of the company to come, a product or service “good enough” to sell, and speed to market.

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Stages of Growth

• GoLive The doors are open - cash is created by pursuing any and all

opportunities, the company is relying typically on a few key accounts to fund their start-up (along with external sources of capital such as banks or investors). There is typically a struggle to complete the product or service to sell at an acceptable quality level. A lot of mistakes are made, and often products or services will be replaced with better ones. Leaders/Founders are hands-on and participate in the day-to-day work. "Info-structure" is non-existent except for accounting and order-entry systems. The essence is sales, sales, sales with major involvement from the owner(s) to reduce the buyer's risk of doing business with an unestablished company.

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Stages of Growth

• NextAct Company is on a high - just survived the first cash drought, the

products/services have been proven, and sales are now increasing. Dreams are now bigger - if you can succeed doing it for a few, why not for millions or even billions? The business is strongly sales-driven wanting to consume and devour everything in its path. Every opportunity is pursued, deals are often made without knowing fully whether or not the company can deliver. Everything is "now!" Lack of information or poor velocity of information affects executive decision-making, often causing more fires. Change is driven by disasters, direction determined by which disaster is the biggest. The essence is to revisit the plan, finalize legacy decisions, and build capacity for growth.

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Stages of Growth

• BigFast The business starts looking and feeling like a "real" company. Accounting

and information systems are in place, and the corporate culture shifts from entrepreneurial leadership to management. Some of the entrepreneurial drive is reined in - controls are put in place around work flows and behaviors that are out of bounds. There is a definite contrast and feeling of "old vs. new" inside the organization. For the first time the company has been able to seriously consider its long-term potential. Bad news tends to move far slower than good news. Turf protection and turf wars may exist. Based on a Growth2Capacity Plan created in Stage III, the company experiences true "hockey stick" growth. For the first time the business begins to realize its true potential. The essence is ensuring a balance between sales, production, and receivables – growth must be managed to be sustainable.

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Stages of Growth

• ProfitTaking The optimum growth position where the company achieves balance

between control and flexibility. The company operates in a clear, focused, and committed matter. Front-line and customer-facing employees are the eyes and the ears of the company. Bad news moves as quickly (or quicker) than good news. The corporate culture is balanced equally between Leadership and Management. Executive time spent "on" the business vs. "in" the business is around 50/50. The infrastructure works. Company is in a constant stage of change which is supported and encouraged. The essence is to maximize profits by eliminating waste and unnecessary costs AND executing the end game: sell or grow. Procrastination or no decision always leads to decline.

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Stages of Growth

• Reinvention The company is focused on building the next Growth2Capacity plan

by creating two types of innovation teams: internal and external. Both groups are comprised of employees, suppliers, subject matter experts, and customers. Internal teams upgrade/build processes to obtain a position as the lowest cost producer. The external teams improve the existing offer or create new products and services. By reinventing the firm collaboratively, the company minimize costs and risks because improvements have been tested and worth the investment. The essence is to rethink and re-engineer all parts of the business as the company loops back to Stage III. The NextAct, and the cycle continues.

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Core Processes

Companies or organizations are more than just economic entities, they are networks of people living within an open society. These societies need structure to succeed and building core processes is the method of ensuring that success. There are 5 major categories of processes required to build and sustain a modern organization. In a mature organization all 5 are present, in new and growing companies each should be built at the appropriate time. The five major categories are:

FINANCIAL

PRODUCTION

SALES

STRATEGY

PEOPLE

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Core Processes

Financial F1. Financial Accounting. One of two financial processes that

prepares financial statements for decision makers, stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Primarily used by external stakeholders and is a trailing indicator or metric of past performance.

F2: Managerial Accounting. The second of two financial processes concerned with the internal use of accounting information to improve business decisions. It is designed and intended for use by managers and employees and is a real-time metric of current performance.

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Core Processes

Production P1. Production & Service Execution. The first of two product

(products & services) and execution (service) processes focused on building it right the first time. Most organizations select a quality methodology (TQM, Lean, Six Sigma, etc.) that matches their business model. They employ those principles for (designing) engineering or (improving) re-engineering a process.

P2. New Product & Service Development. The second of two processes for the development of new products and services. Not the traditional R&D, but D&R (Development & Research), a collaborative development process with clients, suppliers, and experts to upgrade or create new offers. The prerelease offer is tested with existing accounts before introduction to new customers.

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Core Processes

Sales C1. New Clients. One two sales processes designed to attract new

customers. It includes building brand awareness, conducting marketing campaigns, selecting the appropriate sales model, and managing the sales funnel. It usually requires investing in a scalable CRM (Customer Relationship Management) package to support a detailed and obsessive attention to the entire sales process.

C2. Organic Sales. The second of two sales processes is designed for selling to existing customers. Sales growth with existing accounts is more cost effective than acquiring new customers and the prime source of process and products & services improvements. Success of this process depends on identifying the most profitable customers and understanding who and why.

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Core Processes

Strategy S1. Strategy Formulation. One of two processes for determining

long-term brand identity, creating strategy or direction, and making decisions on allocating resources including capital and people. It is based on brand, the business model, and market segmentation to create a yearly plan.

S2. Resource Deployment. The second of two strategy processes it focuses on making resource decisions. Also known as budgeting, the objective is to ensure major yearly initiatives are fully funded and everyone in the organization has line of sight to achieve business results. It has all of parts of the company building implementation plans and competing for funding based upon results promised.

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Core Processes

People R1. Selection & Development. The first of two "people" or

relationship processes, it focuses on the selection and development of relationships. The relationships include employees, suppliers, and investors (customers are handled in the sales processes). The first component is about attracting and selecting the best and the second about developing the relationship so it is mutually beneficial to everyone involved.

R2. Performance Management. The second of the people processes is concerned with measuring and managing relationships. Regardless of whom, it drives frequent conversations on performance, providing timely feedback, and managing consequences.

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Your Management Challenges

Conduct periodic benchmarks to determine progress on managing the predictable challenges of your current growth stage

Shift your role based on Growth Stage – attend to the critical issues, not just the urgent by spending more time working on the business and less in it.

If understanding the management challenges Fast and Sustainable Growth to achieve Niche or Market Domination is your objective – view presentation #3 – Changing the Game