How to Identify a Company that Has Potential to Scale?

In Feb 2016, MIT released a report on the state of entrepreneurship and its impact on the US economy. The report is titled A New View of the Skew: A Quantitative Assessment of the Quality of American Entrepreneurship. In a nutshell, the study raised a very important point for policy makers to note:

Quantitative measurement of entrepreneurship (no of start-ups per country) tells us nothing about the future of an economy because it is not start-ups but scale ups that matter.

Start-ups are too diverse in nature, and hence hard to pin ‘how to help’ whereas scale ups have certain characteristics that can be identified and to indicate potential.

Thus, the key question shifts to this – how to identify ‘potential’ in a company?

I believe potential can be spotted in two areas. One is in the mindset of the owners, and the other is in the ‘framework’ of the company.

Mindset

I will address this question with a point raised in this report as well as from my view as a business coach with Gazelles International, an organisation at the forefront of working with Scale Ups across the world. Gazelles International is founded by Verne Harnish, one of the best minds on how to scale a business. Harnish is also the best-selling author of the books Mastering the Rockefeller Habits and Scaling Up, two award winning business books that are the culmination of his 34 years of experience helping businesses to scale.

The first point I want to address is the mindset of the business owner and the management team. Harnish teaches in his masterclasses that in his years working with Scale Ups (companies who grow 20-30% a year, and who double their growth every 5 years approximately), he observed that the name of the company tells a lot about the intention of the founders. In other words, it reflects the mindset. This point is also brought up in the report by MIT as an indicator of potential – the name counts because there is more to a name than just words.

It signals intention.

One of my personal observations working with companies across Southeast Asia is this – to scale a company requires a business owner to think differently about his business – different from competitors, from culture, from industry. He or she will want to do something differently.

One key difference is how they approach the question of change. To scale up, businesses have to make changes. How disciplined are they in implementing changes is the key? How open are they to change? Most people will say they welcome change, citing clichés like ‘Change is the only constant’, but their approach to strategy and their implementation of things that are different from their usual practices tell us if they have the right mindset to scale. Maybe business leaders are willing to learn, but few are willing to change. Change means to adapt and implement.

In short, to manage change effectively requires discipline. Discipline in thinking and focus as well as in execution.

Framework

A way to determine this is to use the 4 Decisions Framework developed by Gazelles International as an indicator. Gazelles International has helped more than 2000 companies around the world to scale. The 4 Decisions Framework identifies 4 areas a company must do well in in order to scale. While not all companies will use the term ‘The 4 Decisions’, the characteristics identified in the 4 Decisions serves as a good indicator of whether a company has the right foundation for higher growth.

The 4 areas are:

Strategy – All businesses not only need a clear strategy that differentiates, but it must also be positioned to break industry bottlenecks to develop an overwhelming advantage over its competition. As Harnish puts it, a company who has the potential to scale is a company who deals with a ‘big-ass’ problem with a ‘kick-ass’ solution, with people who are ‘smart-ass’.  In other words, Scale Ups have people who think where the competition doesn’t think.

As John Rockefeller said, ‘Competition is a sin.’

The foundation of a good strategy is the right mindset – to not accept industry constraints but to constantly find those problems that competition neglects or resign themselves to accept, and solve them. Besides having this mindset to find the bottleneck, does the company have the tools and skills to find and solve these problems? If they do, the company does not get stuck in the traffic jam of competition and be resigned to accept marginal growth.

I call this the difference between a Keep-Up and a Scale-Up. Scale-Ups run towards the industry’s constraints while Keep-Ups run away from them.

Thus, to identify if a company can be a scale up, one needs to examine this company’s mindset towards strategy – is strategy to differentiate from competition or merely to keep up?

The next question is whether they invest time in delivering their strategic differentiation. Strategy can be simple, but the execution of strategy is time consuming and requires discipline.

What will they do when they find a constraint in the industry? Do they have the time, patience and skills to break it?

Whether a company is prepared to invest time and resources into strategy will tell if it has the potential to be a long-term, sustainable Scale-Up.

In a nutshell: Scale Up potentials see industry problems differently from their competitors.

People – No company ever scales without good people.

Every business should examine if they are held under the tyranny of the organisational chart. We do this by applying what Jim Collins teaches: asking if we have the right people, on the right seats, doing the right things.

What does this mean?

It means that everybody is clearly aligned to an outcome that is significant to the business, with the right action KPIs assigned, and that person is clearly the best person to fulfil those actions and deliver those results; in other words, fit people to actions that can be taken rather than fit people into roles. Companies traditionally fit CVs to roles, but we need to move beyond that to fit people i.e. unique strengths, talents and interests to critical actions and outcomes.

Most businesses I know do not have the patience, or more importantly, the mindset to ask themselves honestly if everyone they have is that ‘right’ person on that ‘right’ seat doing that ‘right’ thing? A person who fulfils these 3 criteria is an ‘A’ player; someone who is a natural in creating value in that given capacity.

This process is tedious and requires a different way of looking at staffing and recruitment. But companies who invest in this process to find ‘A’ players gain 3 times the value of a person who is merely ‘staffing’ the role.

Kip Tindell, CEO of The Container Store believes that only ‘A’ players should be hired. Everyone in his company from the store assistant to the management team is carefully selected through a rigorous process. For example, even if you are a junior front line staff, you go through as many as 9 interviews. The Container Store, as Kip says, “sells empty spaces in boxes”. Yet it is has grown huge enough to be listed in the NYSE. For sixteen years, The Container Store was consistently voted in the Fortune’s List of ‘100 Best Places to Work in the USA.

Their secret, according to the company’s president – hire only ‘A’ players. The Right Person, on the Right Seat, doing the Right Thing.

Another aspect of having the right people in the business is to have people who are continuously learning. Here, Harnish starts at the top; he observed that Scale Ups usually have a leadership team that never stops learning. He calls them ‘Rabid learners’. The leaders are not only industry experts in their own right, but they learn and learn, and in doing so, encourage their colleagues to grow and learn. This is even more critical in the 21st Century where things are changing faster than before. Businesses can be made obsolete overnight, so learning is the only way to keep scaling.

Are you intentionally building a system with the 4 ‘Rs’ – Right People, Right Seats, Right things and Rabid Learners?

A company that has the right people policy is poised to scale up.

In a nutshell: Scale Ups are not afraid to invest a lot of time in finding the right people to put on the right seats, to do the right things.

Cash –  Cash flow is the oxygen of all businesses. Cut it and a business, no matter how good, dies.

Do you have a strategy to ensure that cash flow is smooth? Most businesses I know accept the payment terms of their industry as something cast in stone.

They often complain, ‘But the industry is like that.’

Do you have to accept that?

Can you be intentional about getting a better cash flow than your competition? Business strategy, by definition, is the intention to achieve differentiation. So we need to be intentional about getting better payment terms than the industry standard if we want an advantage over our competitors in this area. One way to do this to understand and shorten your Cash Conversion Cycle. Which part of the cycle can you work on to shorten it?

Besides a cash flow strategy, it is also important to have a money value strategy. What this means is to understand whether you are getting the best value out of your business model. Is your business model building company value, or is it merely creating profits? If there is a hierarchy of revenue, is your revenue stream giving your company it’s the highest valuation? Thus, for a business to scale, it must have a smooth cash flow, as well as a money value strategy to ensure that the business can grow smoothly and achieve its highest value.

In a nutshell: Scale Ups constantly find ways to improve cash flow, and constantly question and improve their business model.

Execution – The last, but not the least, is how a company executes its strategy. Be it business strategy, people strategy or cash strategy, it all hinges on Execution to get things done systematically. Hence I consider this the most important decision amongst the Four Decisions.

In Gazelles, we put in place three things that help keep a company on track. They are Priorities, Metrics and the Rhythm. These three things form the ‘Execution Culture’. Do you have a great execution culture? Or is execution haphazard and frantic? Are meetings more a waste of time or a time when things get done?

The first step to develop a great execution culture is to understand the differences between a task and a priority in order to develop focus.

Tasks are often mistaken for priorities. What are priorities? Priorities differ from tasks by having a direct leverage on results. Which action has the biggest impact on results? Which action needs to be completed before other actions can take place? When we fire-fight, we are focusing on tasks. When tasks are not differentiated from priorities, businesses become stuck on a treadmill – they work very hard to keep up but they don’t scale.

The Rhythm is like the heartbeat of the company. Irregular heartbeat can cause death in humans, so it is the same for companies. The Rhythm keeps the organisation focused on priorities that will drive the strategy of the company. Without a rhythm, most companies get lost in the day-to-day fire fighting.

How do you set a Rhythm in your business that ensures that strategic priorities are executed and accounted for?

Do you have a system to warn you in advance if things are not going well so that you can take corrective action?

There are some companies who have outstanding strategy, the result of a lot of time and effort put in, only to fail because it was not executed well.

Coming back to the point that strategy is differentiation, if we want to achieve a different result from our competitors, then we need to do things differently. We need to look at Execution differently.

How a company executes strategy is a sign of whether it will scale up.

In a nutshell: Scale Ups invest time to set Rhythms in the business. They don’t allow things to happen by chance. Nor do they miss opportunities because they got too busy with day-to-day things.

Conclusion

There are many ways to determine a company’s potential. Some people look at market size, demographics, macroeconomics and trends etc, but all these are meaningless unless a company is poised to seize the opportunity. There is only so far a business can grow by being at the right place at the right time, or by the entrepreneurial guts of the founders. A business’s potential should be determined by whether the company has the right mindset and skill set towards growth.

In other words, do they have the right approach to scaling up? Their mindset and actions will tell. While they might not have everything laid out in a nice package as explained in this article because business is always messy, but intention is always seen in actions. Thus, as long as a business owner or leader demonstrates an intention to build the characteristics of a scale up in his business, there will be potential for higher growth.

 

 

 

Promises are Meant to be Kept – And Here is how Businesses can Do It!

Singtel_new_logo

Source: Mothership.sg

This week Singapore Telco Singtel announces the launch of a new logo. The new logo is part of a re-branding exercise, which includes a new Brand Promise:

Let’s make everyday better

According to their CEO, the re-branding exercise was launched to counter unhappy customers, with some even calling the telco ‘Stinktel’ to highlight their unhappiness over poor customer service. The new Brand Promise promises better service and more caring attention to the little things that conveys to the customer that Singtel cares.

Readers can read the details of the change in this article: https://sg.news.yahoo.com/singtel-just-unveiled-logo-looks-023544688.html

What however intrigues me is the use of the term ‘Brand Promise’ instead of ‘Branding’. And if Singtel is truly intent on fulfilling a Brand Promise rather than just build brand equity or create brand awareness, I applaud them. From the view of a business coach, Brand Promises are one of the most important ways to build raving fans and loyal customers. It is one of the first few things I help my clients build to gain a strategic advantage over their competitors.

So What is a Brand Promise?

It is a promise – A promise meant to be kept. Every time a transaction takes place, it is an exchange of money for the promise of something. That ‘something’ is expected. In today’s world. where transactions go beyond the simple barter trade, what we implicitly promise in the transaction involves the tangible product you sell, and the experience that comes from dealing with you, as well as the experience of using your product after the transaction. It does not end when the service concludes or when the product is consumed. People blog and write about their experience long after they finish their deal with you.

While Branding gives association and awareness, a Brand Promise is a bond that is established firmly between you and the customer. It is a bond that you must honor. It is a commitment that your brand, representing your company and all who are associated with it, will deliver what was paid for in both tangible and intangible ways.

For example, one of the premier airlines I take for business trips and the rare holiday messed up its luggage loading badly during a family vacation. More than fifty people did not get their luggage. While the flight was great e.g. flying comfort, food, cabin crew service, the way they handled the troubled customers was horrendous! They simply did not care. Emails took as long as a month to get a reply. Compensation was paltry for the inconvenience caused. And the worst experience I had was to deal with the automated, templated email replies to queries. By the end of the experience, I could memorize their standard reply word for word. It was as though this award winning airline is run by robots!

They wanted very much to tell me they DID NOT CARE! Remember, a contract with the customer is no longer restricted to the moment the product is consumed or the service is used. The whole experience, including post-service, is equally important!

While this airline has great branding involving winning several awards and international rankings, it broke its Brand Promise. Period.  I’m not impressed with its ranking when I’ve discovered they don’t care at all when they made a mistake that affected me. I’m not expecting perfect service; things happen especially when transporting a few hundred people. But a broken promise, even if its an intangible one, is something never forgotten. In fact, it is the intangible promises that are more critical than the tangible ones.  A Brand Promise, whether official or not, is equally real to the customer. And it left a sour taste in me for a long time as a customer.

Every Company Needs to Formulate and Track its Brand Promise

Your Brand Promise, whether you have strategically worked out one or not, is taken seriously by your customers. Even if you do not have one, your customers expects it. If you don’t have one, they will create one for you. When you have a Brand Promise that works, it will give you tremendous advantage because it essentially becomes an emotional bond tying your customer to you every time the Brand Promise is kept. And when you have one, you can strategically manage it and use it to your advantage.

Creating a Brand Promise

From the customer’s perspective, they demand it whether you have it or not. A Brand Promise can therefore be a strategic, calculated move to win you loyal customers.

How do we create a Brand Promise? Firstly, do you know your WHO? You need to define your Core Customer, and the clearer you can articulate your Core Customer, the better.

Who is your Core Customer? Is your business, and your Brand Promise targeting a want, a need or a fear? What is your customer really buying from you? For the case of Singtel’s customers, are they buying a phone and a line or are they buying convenience, lifestyle, status and connection with friends and family?

Next will be to break down the Brand Promise into supporting metrics and KPIs. This step is extremely important, because it tells you whether your company is delivering on its Brand Promise or not. In developing metrics, keep it to a few critical ones. As a rule of thumb, your metrics for Brand Promises should focus on a few areas ONLY:

Productivity, frequency and customer satisfaction are common ways to set the Brand Promise KPIs on.

Too many and you lose track of what is important. In my course of work, I notice some companies love to have complex metrics – too complicated to tell them what is really happening!

When setting Brand Promise KPIs – KISS (Keep it short and sweet)

And the presence of KPIs and measurables will differentiate your Brand Promise from a slogan. Slogans are meaningless, but Brand Promises are powerful. They are powerful because they are promises, and a promise kept is a bond made between the buyer and the seller. You want to establish more of such bonds and strengthen them, because it is always easier to sell to your fan than to a stranger.

I am excited to see businesses move from using Branding to win customers to using a Brand Promise. As a customer, I am most definitely thrilled when a promise is fulfilled.

I applaud Singtel in their move from branding towards Brand Promises. I look forward to the day when more companies build great brand promises.

And if you want to know how to build a great Brand Promise to take your business further, help is just an email away!

Tis the Season for Strategic Planning…and Why It Might Fail

With the end of 2014 coming, I have been busy working with companies to plan for 2015. Working with them closely and observing how they craft their strategies to move forward and put execution plans in place, I admire their grit to survive and excel in their industries. I applaud their efforts and I am committed to help them succeed. Yet as I observe more and more companies, I would also like to highlight the common problems faced by companies in crafting their strategies, so that we can avoid them altogether.

Bad Habits

some bad habits masquerade as good practices, and this inhabits strategic thinking. Strategic thinking is first and foremost about how to differentiate your business from others. It is about identifying your core customer and then asking what can you do to meet the needs and the fears of this core customer, and then aligning every resource you have, and developing new ones, to meet these needs better than your competitors are able to. But inevitably, this runs counter to a lot of old practices like trying to satisfy your customer’s every wants. Like chasing fads and not focusing on your core strengths.

What got you here, won’t get you where you want to go – because as businesses grow, it becomes complex. Competitors notice you. Others see you succeed and think they can join in the bandwagon. Organisational complexities increase. You need systems and processes, a new way of thinking, a fresh understanding of who your client really is, and build new processes and competencies to take your company to the next level.

Yet, while leaders know all these, they invariably fall to practices they are used too. Leaders do not act on strategy, but do what they are used to do. For example, even though a company I work with had identified three core competencies to develop for 2015, it invariably forgot about its commitment to develop these competencies and focused on doing what it used to do – try to be good in everything! However, one may be forgiven if strategy is made into something too complex to follow, which makes it therefore easier to fall back to old habits of running the business.

What you can do to avoid falling into the trap of old habits:

1. Find a simpler way to formulate your strategic plan.

I am unreservedly for the One-page strategic plan developed by Gazelles International. The plan is simple enough to follow once it has been crafted together with a certified coach. Business operations are already complex, we don’t want to add to it with a plan that nobody understands. Some of my clients, before they implemented the Rockefeller Habits and the One-Page Plan could spend 10-12 hours on management meetings, which are inevitably ineffective and confusing. Simplify the whole process!

2. Revisit your plan regularly

I find myself reminding the business leaders who I work with what was the strategy they had decided on. i also asked them to commit to one particular aspect of strategy they want to see come through in the following year, and to constantly work on that one aspect. if not, it is easy to forget, or to feel overwhelmed by their strategic plan and revert to old habits. If business leaders can focus on one strategy every year and do it well, the impact on the business would be great. Having a coach in this aspect helps, because having a third party to remind you of what needs to be done, and not what you feel like doing will keep you away from bad habits.

Wrong Understanding of Strategy

This is a common problem for most business leaders. They fail to understand that strategy is about trade-offs. They also don’t understand that strategy is about alignment. And most importantly, they think that strategy is a magic bullet. Strategy requires discipline, discipline, and more discipline. I recall a scene from the movie Braveheart, where the Scots had laid an ambush for the English cavalry. They had long pikes that could stop the English charge, but for the plan to work, they had to hold off revealing their weapons until the last minute. A break in discipline would have resulted in either the collapse of their formation, which would lead to being slaughtered by the English cavalry, or the enemy not taking the bait and falling into the trap. The Scots held on to the last minute against the pressure to do what was natural – to run or to fight in ways they were familiar with. But they stuck on to their strategy – and won.

Key points:

1. Strategy cannot be formulated without an understanding of core customer, and what your competitors can or cannot do, what they hate to do and love to do.

2. You can’t have it all, so you need to focus. Focus requires discipline.

3. Strategy is only as good as its execution. And execution is again about discipline.

4. Smart strategy is about trade-offs because we don’t have infinite amount of resources and time. Trade-offs require discipline in thought and action. If not, it is easy to try and have it all, which is the fastest way to lose the game.

 

Wrong Practices

Every company has a system of meeting – the only problem is that meetings tend to take on a life of its own and meander like a river to nowhere. As a result, meetings do not result in clarity, focus and accountability. Every meeting should have these 3 words in mind:

1. Clarity – does the meeting help to clarify what the targets are, and what everyone must do?

2. Focus – does the meeting align everyone to do the right thing for that week/month/quarter, and lead to action being taken?

3. Accountability – does the meeting help everyone be accountable for actions and results?

To develop a new understanding of meetings that work, master the Rockefeller Habits. The habits include a system of meetings called the rhythm, and it helps keep everyone on track. the rhythm helps maintain execution discipline. But what is most important is the agenda of the rhythm: it does not allow the meeting to go off-course, but focuses on Clarity, Focus and Accountability.

Too often, i see companies embark on the journey of developing strategy only to give up, writing it off as a waste of time because they go back to old habits. They claim that strategy is too abstract to work, or it is too academic etc etc, and the result is they get jaded by it. The problem does not lie in strategy, but it lies in the way companies execute it. It is important to keep in mind that strategy is only as good as its execution, and pay attention to its execution, that strategy will work.

And when it works, it will make all the hard work worth it!

Have a fruitful strategy for 2015!

PS: If you need help, it is just a message away.

 

 

Differentiating Your Business through Words You Own (In the Mind of Your Core Customer)

Imagine how business will be like if a mental picture of your company pops up when a potential customer thinks of your industry!

This will draw customers to you instead of you working hard to get to them. But how do you achieve this? How do you own ‘mental real estate’ in the minds of your customers? How do you own the words that are the solutions to the customers’ needs and fears?

Last week, I took a flight to Jakarta to accompany our business guru and founder of Gazelles Verne Harnish for his master class to business leaders. Our Indonesian partners reminded me:

ONLY TAKE BLUE BIRD TAXI!

of course! That goes without saying! Any where I travel to in Indonesia, as a foreigner, I would not even dream of taking any other taxi. In case, you have not seen a Blue Bird Taxi, this is how it looks like:

Source: wikimedia commons

So what’s their secret sauce? This is because Blue Bird taxi owns the words in any foreign travelers to Indonesia’s mind – Safety and Honesty: The two things that matter most to business or holiday travelers. At the airport taxi stand, I did not even consider heading towards any other taxi companies even though I had to wait for a Blue Bird taxi. I know I won’t have to put up with faulty meters and roundabouts to charge a higher fare. This brings to mind that whenever I travel to Vietnam for business, I only take Vinasun Taxi.

Source: Wikimedia commons

The only time I tried my luck to take a non-Vinasun taxi, the driver tried to rip me off. Fortunately, I travel to Vietnam a lot, so i called his bluff. That experience only reinforces the belief – only take Vinasun taxi in Vietnam. Again, this taxi company, like Blue Bird, owns the words Safety and Honesty in the minds of the traveler. Whenever I touch down in Vietnam’s airport, its straight to the Vinasun counter. All the other taxi counters and sales representatives are a blur to me. I make a single-minded, focused, beeline to the Vinasun counter.

Owning the words Safety and Honesty really works doesn’t it? They don’t need taxi touts to bring you to the taxi – you walk there on your own, ignoring and forsaking all others.

Wouldn’t you want a customer to make a single-minded beeline towards your office today?

Would you like to be like Volvo, who owns the words Safety in the minds of car buyers? Just ask anyone who had a near death car accident what car they would buy. Or BMW, who owns Driving Experience? All these companies know who they are selling to, and why. That’s why they developed a strategy to OWN these words in the minds of car buyers.

is this about branding? Maybe? But it goes deeper than that. It goes into knowing your WHO – the core customer whose needs and fears you can meet, and who will pay you optimally for that. It is about them buying from them even before they start the process of shopping because they already know it is you. Because they already feel assured before they even hand over the cash.

If you can capture certain words in the mind of your customer, you win the game even before it starts. Business is all about psychology and emotions. Like Sun Tzu says, you have to win the war even before it starts.

Even before the battle of the taxi touts start, Blue Bird and Vinasun has already won.

Is your business owning a few important words in the industry that make customers head straight to you with no distractions?

Would you like to know how to?

In Gazelles, we teach you how.

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Differentiate Your Business by Saying a BIG Thank You!

This is one youtube video that blew my mind! The sheer audacity of this bank’s move is sure to make them a business to remember forever.

TD Bank in Canada launched a campaign to thank its customers by giving them money, (yes, in the form of $20 handouts), favourite t-shirts, air tickets and even a college fund!

Watch the video here: 

WHY???

Are they crazy? Are they too rich?

I don’t think so. In business terms, it is a differentiating move. In Gazelles International coaching terms, it is a Winning Move. What are Winning Moves?

They are things that your competitor would never do, but your customer will love you to death for it. It is also something that deals with what your customer hates, turning it into something they did not expect but totally love. Beneath the gimicky moves of handing out money and gifts, what really happened is a bank that says, “Hey, you are not a digit for me to squeeze money from. You are more important than me and I recognize that. Your needs are important to me, and I stand with you.” i love the part where the lady gets to go see her daughter (spoiler alert).

It connects on a very human level of wanting to be appreciated and treated like a…human being. Everyone who has been to a bank, and who has been following the news over the last 6-7 years knows how banks really view their customers – like cows to be milked.

So gimicky or not, marketing ploy or not, what matters is it connects. It differentiates TD bank from its competitors by doing something their competitors hate to do. Banks take money; they don’t give money.

A nice winning move – heartwarming too. And millions of views as the video went viral.

Good strategy differentiates businesses. Do you have a Winning Move up your sleeve? Remember, it must be something your customer really wants but your competitor hates to do. Winning Moves are dangerous, but they will make your business GREAT.

Strategy, Execution and Success — Lessons from World Cup 2014

Germany demolished Brazil at the semi-finals of the 2014 FIFA World Cup. While some may have anticipated Germany’s triumph, few would have guessed that the victory would be so utter and the defeat for Brazil to be so humiliating. Even a non-soccer fan like me knows that a 7-1 defeat is something astounding — more so when the vanquished are none other than Brazil, a football superpower. What does this teach us about success?

For one, it teaches us that success is planned for, patiently nurtured and comes as a result of determined execution of strategy.

Bloomberg Businessweek featured an article by Brendan Greeley on 08 July on how Germany reversed its fortunes following its debacle at the European Championship 2000. What emerged after their failure was a simple plan executed brilliantly and diligently.

So, what can businesses learn from this episode?

Without repeating the article here, let me highlight three points that business leaders know, but seldom act on for various reasons:

  1. Success is not the result of individual talent.
  2. Strategy is patient.
  3. Committed execution turns strategy into success.

football - soccer ball in goal

Success Is Not the Result of Individual Talent

“National programme… leave nothing to chance… too precious to leave unfound”

These words in Greeley’s article reveal the secret to Germany’s success. Unlike other teams that relied on star players, Germany developed a core competency that ensured that nothing was left to chance. It is the core competency of spotting, developing and maturing talent. What is a core competency? Core competency, according to Gazelles International, is something an organisation develops over many years that gives it a distinct edge over its competitors. It is something so carefully nurtured over a period of time that it is hard for others to copy or to beat. Core competency is also the engine that helps you to consistently deliver on your unique selling points.

The Germans developed a system to continuously raise good players to international level, so it never has to rely on one or two superstars. What should happen if a star gets hurt? Or switches loyalties? With an entire system backing up your success, the chances of victory are higher. You cannot afford to leave anything to chance, so core competencies are critical to ensuring success.

The stars in Germany’s victory are therefore not just the players, but those who committed themselves faithfully over the years to make this talent development system work. In my opinion, the coaches, talent scouts and club managers who supported the programme wholeheartedly and put in their best to make the system work are as important to the success of the team as the players.

Lesson: Develop core competencies, not superstars in your business.

Strategy is Patient

Germany waited fourteen patient years to see the fruits of its strategy. Fourteen years in any business venture is a long time, but strategy takes a long view of things, as compared to tactics, which are short-term. Yet, too often, strategy changes because of short-term issues. This is because business leaders, being human, react emotionally rather than act intentionally. Yet, the whole idea of having a strategy is to prevent knee-jerk reactions that cause confusion to staff and waste resources; strategy keeps your eyes focused on the long term.

Whenever something happens, it is good to remind yourself “What is my strategy”? Focus on the long-term goals you want to achieve, and determine if what is troubling your company now will derail you from those goals. In our business coaching programme, we emphasise the concept of setting a BHAG — Big Hairy Audacious Goal as taught by Jim Collins. This BHAG is a goal that is at least ten years in the future; something you can’t attain at the moment that will stretch your abilities to achieve it. The BHAG is the intersection of what you are passionate about and what you do best. For businesses, it is also based on your profit engine. Without passion or an overcoming belief in what you do, you will burn yourself out. Without setting your BHAG at what you do best, you can’t keep up. And if it does not factor in your profit engine, the business will go broke.

That is why it is important to have a team of wise individuals in the business (what we at Gazelles International call the “council”), to evaluate and recalibrate strategy whenever challenges arise. This council’s job is to give an objective assessment on whether urgent issues confronting the business require a shift in strategy or staying on course.

It takes nerve to stay on course. We see all too often strategy being sacrificed for short-term or immediate KPIs. This is because people are by nature seduced by short-term gains. But if short-term victories are not aligned to longer-term goals, these short-term successes are often detrimental to your long-term goals.

Lesson: Accept that strategy requires patience. Your patience and commitment will be rewarded. Like the Germans.

Committed Execution Turns Strategy into Success

How often have we given up halfway because it was too difficult, too expensive or we got distracted by something easier to attain?

The Germans committed people and resources — everyone from the senior administrators who decided on this strategy, down to the talent scouts who spent their days watching eight-year-olds play, and large amounts of money, to make this work. They committed €85 million a year to sustain this talent development programme, including getting every first and second class club to run their own soccer high school. All these require commitment and faith that the strategy will work. They kept doing it for fourteen years, patiently waiting to see the results, pumping in resources and executing their plan without fail even though no results were guaranteed. What if some clubs stopped supporting the plan halfway? What if there were doubters? Or what if Germany decided to switch to some other sport where it was easier to win medals? Or what if Germany resorted to taking the easier way out like mass importing athletes from third world countries to “buy” medals?

In Gazelles terms, we call it executing with clarity and focus. There must be clarity in what to execute, so that resources can be focused on the action taken. Execution is always goal-oriented and solution-focused in order not to waste time and resources. There is no time to waste pondering why the country did badly in 2000. Look forward, set goals, and execute ruthlessly.

Lesson: The good thing about committed execution is that along the way, core competency is built. This enables long-term, sustainable success that can be replicated.

Conclusion

If the Germans did not do badly in 2000 during the European Championship, would they have devised such a crystal clear strategy and executed it with discipline and commitment? We will never know. But as business leaders, we always need to have a strategy, so why wait till we encounter great pain in our business before we devise one? The golden rule is to build your strategy when times are good, not when you are in pain. This way, you will have a better frame of mind and lots more resources to tap on.

Don’t wait. Ask yourself today, “What is my strategy and how should I execute it?”

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