So you want to build an empire? Crack that growth code ✔. Let’s get into the vault!

[Antifragile]

The problem with most businesses is that leaders think that success is like a secret code. If you keep trying different combinations you’ll finally crack it and open the safe and get all that valuable content from it.

While partly true, it is generally false. Yes, there is some experimentation required in every business. Yet success leaves clues and can be followed. In other words there are undeniable things we must do to be successful and we already know most of them. In fact, I’ll argue that business success is 80% following these to “unlock” your vault and only 20% tinkering with new things.

I am writing this to describe as best as I can what I believe the 80% to be.

For contrast, if you ever feel you are not fully in control over your company, like the company is running you! Yes, that’s when you know that the 80% known rules aren’t being followed. It’s typical to then worry about the company’s very existence into the future. Hard spot to be.

Things that don’t matter:

• Size of the company
• How long you’ve been doing it
• Money or other resources
• Some specific “culture”
• Some specific industry

I am inspired by the Predictable Success model, something I’ve used since around 2012.



Full credit goes to Growth Consultant Les McKeown

The reason why this graph matters is that it matters whether you are in White-Water or Treadmill to know the right moves to correct to get into Predictable Success.

Reminder on what each stage looks like

Early Struggle - at the inception of a company, struggling because need to have enough cash to keep going and making sure there is demand for what you do! More companies die at this stage than any other.

Fun - you have cash, enough to keep pressure of going out of business off. And you know there is demand for what you do. That’s when a lot of credit goes to the top dogs who “built this company” and there is a lot of freewheeling.

Whitewater - company becomes complex, shift from getting sales revenue in the door to actually being profitable. This requires processes, policies & systems! Unfortunately it’s always hard to put these in place, it takes longer, implementation and making them stick is just hard.

Predictable Success - you set and achieve your goals consistently here. You know exactly why you are successful and you use that information to sustain growth.

Treadmill - when you swing too much into processes and policies, creativity declines. A lot of energy goes into stuff but little gets done, like walking on a treadmill. You are getting the exercise but aren’t moving forward.

The Big Rut - when your process & administration becomes more important than results! Bad spot to be.

Death Rattle - extreme bureaucracies have their way right before bankruptcy.

What are the 80% known things that all companies must do to be successful?

1. Decision making. The ability to make and consistently implement decisions.
   Example: companies that are sitting on top of a managed chaos aren’t in Predictable Success! Instead, there is a sense of flow - decisions are made without placing a burden on the company with a process. And note that I am not talking about some “general” commanding and controlling an army. Companies that are truly successful have a decentralized and delegated decision making - no micro management required. And on top of that, what really matters is the execution of decisions made. Everyone at the company pulls in the same direction and executes.
   
   
2. Goal setting. The ability to set and achieve goals.
   Let’s put it another way - when you put your foot on the gas of your company, the car better move forward. The opposite is when…There is almost a sense of helplessness. You can say whatever you want to say to your staff but if the car doesn’t move forward, it’s not Predictable Success. In contrast, goal setting is a process that is just a part of the operations of the company. It is natural and is not impeded by resource-sucking, do-it-last-minute events initiated by founders. Once goals are set, the whole company moves relentlessly towards achievement of that goal.
   
   
3. Alignment. Structure, process and people are in harmony.
   When people in the company spend time to navigate and manipulate processes and/or structure in order to get things done… yeah, that’s a problem, isn’t it? In White-Water it just means that processes and structure are underdeveloped. It leaves staff to not only work on things they must do to achieve company goals, but also to compensate for lack of process and structure by creating their own. It’s not just wasteful on time (duplication etc), but could also be misaligned to the founders’ ideas. Contrast that with almost like a railroad tracks. People have optimum degree of autonomy and freedom necessary to keep the company vibrant and innovative, but there are enough controls and systems to manage risk, avoid duplication, and prevent the company from becoming vulnerable to a few “Big Dog” superstars. We want to have an interconnected and organic matrix of structure, process and people.
   
   
4. Accountability. Employees become self-accountable, in addition to being externally accountable to others.
   
   This is the single most important characteristic of a successful company!
   In a company that’s at Predictable Success level, everyone from senior staff to reception have a strong sense of self-accountability towards their own and team’s responsibilities. When employees have decision making, they buy into the success of his or her own and teams’ activities. It looks like this: people want genuine achievement (not just checking a box), there are few turf wars, no one works in “silos”. Groups and teams work harmoniously and cross functionally, sharing knowledge and experience, building a social network that supplements the more formalized org structure. Information flows freely, communication is working well. The sub-benefit of this is that it makes no room for time wasters. Mediocrity and underperformance stands out so clearly that such individuals have nowhere to hide. This accountability doesn’t happen from just wishing it. To get there, the structure and process must demand it and deliver on it. From hiring, to mentoring and coaching - its the core to success.
   
   
5. Ownership. Employees take personal responsibility for their actions and outcomes.
   
   Unfortunately, most business owners will feel like they are pushing a rock up hill and that if they ever let up, it’ll start rolling down and all that progress made will be lost. Sounds familiar?
   In Predictable Success, the reverse of this is true. The ability to set and achieve goals, having structure, process and people in harmony, and the culture of self-accountability at the core leads to … company growth and development is achieved by everyone taking ownership and pulling together. Leaders in Predictable Success aren’t fighting fires, fixing things and compensating for poor performance of others or doing things because “I can do it better than anyone else”… they oversee, allocate resources, innovate, support and motivate those who are on the front lines.

Say you find yourself in White-Water stage as a company. To get to Predictable Success you have a lot of work to do.

Like David Neeleman (JetBlue) once said: “You found the company, you run it, then it runs you.”

Ugh… isn’t fun anymore. And this is where so many people exit - sell, move on or walk back to “fun” stage.

But if you want to get bigger and I mean BIGGER (@Kak inspired phrasing)… What you need are the systems and processes to enable the company to deal effectively with complexity. They key here is the right balance of systems and processes - not too many but not too few either.

Up until now, an organization chart was probably just a notional idea. Now, you must design it as a genuine tool for management. Now is the time.

But don’t we have systems already, you may ask? Why isn’t this a self-correcting problem?

Mostly because of the disconnect between sales & operations. There are gaps and this is where work falls through the cracks. It also means there isn’t a clear line of sight. Think about reporting: who reports to whom? Who does the actual work? Do you have 2 VPs but only one acts like a VP? Do you have a warehouse manager who’s actually acting like a COO? Or a CEO / Founder who’s not a good medium size business CEO? Ahhh… sigh…

What is the danger of us doing nothing? Staying at this stage is dangerous because:

• Employees are overworked and have no slack in their day
• Mistakes become more common
• Founders find it too intense and “not worth it” at some point
• Working for an organization in Whitewater is highly stressful and leads to employee turnover.

Breaking through Whitewater into Predictable Success​

“The only way to change people’s minds is with consistency” - Jack Welch


Starting with the Org Chart



The underlying issue is dealing with complexity. It comes with having more employees, more products, more complexity! To find the way out think, what’s the difference between this and and simpler company? Decision making. Making and executing decisions is much harder in your company now. In particular: who should be involved in any specific decision is just not clear. The process for making a decision is multiplying itself, more people get involved and it takes a lot longer.

Solution: build a machine for Decision Making.

What does it take?

It takes turning the company from a personalized outward expression of the founder - an organization greatly depended on founder’s intuition, experience, wisdom and knowledge! Turning it into a highly effective organism in its own right that can operate independently of the founders (owners). An organization that is in itself a machine for decision making.

Out of the 6 areas you saw in the drawing above, start with the Org Chart.

Sounds easy, right? Start with titles, show who’s the boss, draw some lines and done. But that’s useless. It’s not about seniority! It lacks how the business is actually run.

Communication flows differently than the reporting lines and actual decisions are made outside the boxes on the org chart. The problem is lack of congruence between theory and reality. Founders will say the right things but may or may not do them!

Instead, implement 3 mundane but essential changes:

1. Redesign the org chart to reflect operational reality. This calls for hard questions and honest debate. Even if there is a possibility of offending someone with questions, good questions must be asked! Is there a conflict between titles and how responsibilities are actually being managed? The org chart must reflect REALITY of how things are first! Not how we think things should be. Bottom line: separate positions (titles) from the people and just focus on the positions that are needed for the company to function as Predictable Success stage. Recognize that to be successful the company needs key positions and those positions must be filled effectively.
   
   
2. Define key management responsibilities clearly Once the key positions (not people!) have been clearly identified, the next step is to define what is required from each of those positions - the duties and responsibilities of each key role. Again, it’s important to separate position form the person. The question isn’t’ what is expected from say “John” or “Bob” but what is expected from a “VP product design” or “COO” or “CEO” or “President” or “Manager of Sales” etc. This may require writing out job specifications. Not that different from job description, but with input from key team members. If a VP is providing a genuine value, they should be involved in designing the job specification. Added benefit is that if you ever lose a person, you know exactly who you are are seeking for a replacement. This must be reasonable set of duties and responsibilities for each position and include quantitative metrics whenever possible. Have a way track progress, motivate and encourage those who need to grow into newly defined roles. Expect that this causes some conflict but is a necessary step.
   
   
3. Institute appropriate management teams and meetings Who needs to meet with whom in order to get effective decisions made? Do we need regular “all staff” meetings? What is “regular”? Who will chair it? What will be discussed? What happens if designated chair isn’t there? What other meetings happen in the org that doesn’t involve owners or even top management? Who needs to meet and when? And remember, we ONLY want those systems and meetings that are necessary! How do we know what’s a necessary meeting? Thankfully the structure of writing out job responsibilities speaks to who must talk to whom to make decisions. Those are needed meetings. And we won’t get it right on the first try, but with little experimentation I think we can dial it in quickly. Entrepreneurship … tinkering.

That’s it for Sunday long post. If FLF finds it helpful, more will come. It was inspired by a thread shared on the INSIDERS by @amp0193 sharing his story and challenges. I think those who’ve been in business for a little while and stalled on growth may find it helpful too. Look forward to your feedback.

 

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[jclean]

The problem with most businesses is that leaders think that success is like a secret code. If you keep trying different combinations you’ll finally crack it and open the safe and get all that valuable content from it.

While partly true, it is generally false. Yes, there is some experimentation required in every business. Yet success leaves clues and can be followed. In other words there are undeniable things we must do to be successful and we already know most of them. In fact, I’ll argue that business success is 80% following these to “unlock” your vault and only 20% tinkering with new things.

I am writing this to describe as best as I can what I believe the 80% to be.

For contrast, if you ever feel you are not fully in control over your company, like the company is running you! Yes, that’s when you know that the 80% known rules aren’t being followed. It’s typical to then worry about the company’s very existence into the future. Hard spot to be.

Things that don’t matter:

• Size of the company
• How long you’ve been doing it
• Money or other resources
• Some specific “culture”
• Some specific industry

I am inspired by the Predictable Success model, something I’ve used since around 2012.

View attachment 50311

Full credit goes to Growth Consultant Les McKeown

The reason why this graph matters is that it matters whether you are in White-Water or Treadmill to know the right moves to correct to get into Predictable Success.

Reminder on what each stage looks like

Early Struggle - at the inception of a company, struggling because need to have enough cash to keep going and making sure there is demand for what you do! More companies die at this stage than any other.

Fun - you have cash, enough to keep pressure of going out of business off. And you know there is demand for what you do. That’s when a lot of credit goes to the top dogs who “built this company” and there is a lot of freewheeling.

Whitewater - company becomes complex, shift from getting sales revenue in the door to actually being profitable. This requires processes, policies & systems! Unfortunately it’s always hard to put these in place, it takes longer, implementation and making them stick is just hard.

Predictable Success - you set and achieve your goals consistently here. You know exactly why you are successful and you use that information to sustain growth.

Treadmill - when you swing too much into processes and policies, creativity declines. A lot of energy goes into stuff but little gets done, like walking on a treadmill. You are getting the exercise but aren’t moving forward.

The Big Rut - when your process & administration becomes more important than results! Bad spot to be.

Death Rattle - extreme bureaucracies have their way right before bankruptcy.

What are the 80% known things that all companies must do to be successful?

1. Decision making. The ability to make and consistently implement decisions.
   Example: companies that are sitting on top of a managed chaos aren’t in Predictable Success! Instead, there is a sense of flow - decisions are made without placing a burden on the company with a process. And note that I am not talking about some “general” commanding and controlling an army. Companies that are truly successful have a decentralized and delegated decision making - no micro management required. And on top of that, what really matters is the execution of decisions made. Everyone at the company pulls in the same direction and executes.
   
   
2. Goal setting. The ability to set and achieve goals.
   Let’s put it another way - when you put your foot on the gas of your company, the car better move forward. The opposite is when…There is almost a sense of helplessness. You can say whatever you want to say to your staff but if the car doesn’t move forward, it’s not Predictable Success. In contrast, goal setting is a process that is just a part of the operations of the company. It is natural and is not impeded by resource-sucking, do-it-last-minute events initiated by founders. Once goals are set, the whole company moves relentlessly towards achievement of that goal.
   
   
3. Alignment. Structure, process and people are in harmony.
   When people in the company spend time to navigate and manipulate processes and/or structure in order to get things done… yeah, that’s a problem, isn’t it? In White-Water it just means that processes and structure are underdeveloped. It leaves staff to not only work on things they must do to achieve company goals, but also to compensate for lack of process and structure by creating their own. It’s not just wasteful on time (duplication etc), but could also be misaligned to the founders’ ideas. Contrast that with almost like a railroad tracks. People have optimum degree of autonomy and freedom necessary to keep the company vibrant and innovative, but there are enough controls and systems to manage risk, avoid duplication, and prevent the company from becoming vulnerable to a few “Big Dog” superstars. We want to have an interconnected and organic matrix of structure, process and people.
   
   
4. Accountability. Employees become self-accountable, in addition to being externally accountable to others.
   
   This is the single most important characteristic of a successful company!
   In a company that’s at Predictable Success level, everyone from senior staff to reception have a strong sense of self-accountability towards their own and team’s responsibilities. When employees have decision making, they buy into the success of his or her own and teams’ activities. It looks like this: people want genuine achievement (not just checking a box), there are few turf wars, no one works in “silos”. Groups and teams work harmoniously and cross functionally, sharing knowledge and experience, building a social network that supplements the more formalized org structure. Information flows freely, communication is working well. The sub-benefit of this is that it makes no room for time wasters. Mediocrity and underperformance stands out so clearly that such individuals have nowhere to hide. This accountability doesn’t happen from just wishing it. To get there, the structure and process must demand it and deliver on it. From hiring, to mentoring and coaching - its the core to success.
   
   
5. Ownership. Employees take personal responsibility for their actions and outcomes.
   
   Unfortunately, most business owners will feel like they are pushing a rock up hill and that if they ever let up, it’ll start rolling down and all that progress made will be lost. Sounds familiar?
   In Predictable Success, the reverse of this is true. The ability to set and achieve goals, having structure, process and people in harmony, and the culture of self-accountability at the core leads to … company growth and development is achieved by everyone taking ownership and pulling together. Leaders in Predictable Success aren’t fighting fires, fixing things and compensating for poor performance of others or doing things because “I can do it better than anyone else”… they oversee, allocate resources, innovate, support and motivate those who are on the front lines.

Say you find yourself in White-Water stage as a company. To get to Predictable Success you have a lot of work to do.

Like David Neeleman (JetBlue) once said: “You found the company, you run it, then it runs you.”

Ugh… isn’t fun anymore. And this is where so many people exit - sell, move on or walk back to “fun” stage.

But if you want to get bigger and I mean BIGGER (@Kak inspired phrasing)… What you need are the systems and processes to enable the company to deal effectively with complexity. They key here is the right balance of systems and processes - not too many but not too few either.

Up until now, an organization chart was probably just a notional idea. Now, you must design it as a genuine tool for management. Now is the time.

But don’t we have systems already, you may ask? Why isn’t this a self-correcting problem?

Mostly because of the disconnect between sales & operations. There are gaps and this is where work falls through the cracks. It also means there isn’t a clear line of sight. Think about reporting: who reports to whom? Who does the actual work? Do you have 2 VPs but only one acts like a VP? Do you have a warehouse manager who’s actually acting like a COO? Or a CEO / Founder who’s not a good medium size business CEO? Ahhh… sigh…

What is the danger of us doing nothing? Staying at this stage is dangerous because:

• Employees are overworked and have no slack in their day
• Mistakes become more common
• Founders find it too intense and “not worth it” at some point
• Working for an organization in Whitewater is highly stressful and leads to employee turnover.

Breaking through Whitewater into Predictable Success​

“The only way to change people’s minds is with consistency” - Jack Welch


Starting with the Org Chart

View attachment 50312

The underlying issue is dealing with complexity. It comes with having more employees, more products, more complexity! To find the way out think, what’s the difference between this and and simpler company? Decision making. Making and executing decisions is much harder in your company now. In particular: who should be involved in any specific decision is just not clear. The process for making a decision is multiplying itself, more people get involved and it takes a lot longer.

Solution: build a machine for Decision Making.

What does it take?

It takes turning the company from a personalized outward expression of the founder - an organization greatly depended on founder’s intuition, experience, wisdom and knowledge! Turning it into a highly effective organism in its own right that can operate independently of the founders (owners). An organization that is in itself a machine for decision making.

Out of the 6 areas you saw in the drawing above, start with the Org Chart.

Sounds easy, right? Start with titles, show who’s the boss, draw some lines and done. But that’s useless. It’s not about seniority! It lacks how the business is actually run.

Communication flows differently than the reporting lines and actual decisions are made outside the boxes on the org chart. The problem is lack of congruence between theory and reality. Founders will say the right things but may or may not do them!

Instead, implement 3 mundane but essential changes:

1. Redesign the org chart to reflect operational reality. This calls for hard questions and honest debate. Even if there is a possibility of offending someone with questions, good questions must be asked! Is there a conflict between titles and how responsibilities are actually being managed? The org chart must reflect REALITY of how things are first! Not how we think things should be. Bottom line: separate positions (titles) from the people and just focus on the positions that are needed for the company to function as Predictable Success stage. Recognize that to be successful the company needs key positions and those positions must be filled effectively.
   
   
2. Define key management responsibilities clearly Once the key positions (not people!) have been clearly identified, the next step is to define what is required from each of those positions - the duties and responsibilities of each key role. Again, it’s important to separate position form the person. The question isn’t’ what is expected from say “John” or “Bob” but what is expected from a “VP product design” or “COO” or “CEO” or “President” or “Manager of Sales” etc. This may require writing out job specifications. Not that different from job description, but with input from key team members. If a VP is providing a genuine value, they should be involved in designing the job specification. Added benefit is that if you ever lose a person, you know exactly who you are are seeking for a replacement. This must be reasonable set of duties and responsibilities for each position and include quantitative metrics whenever possible. Have a way track progress, motivate and encourage those who need to grow into newly defined roles. Expect that this causes some conflict but is a necessary step.
   
   
3. Institute appropriate management teams and meetings Who needs to meet with whom in order to get effective decisions made? Do we need regular “all staff” meetings? What is “regular”? Who will chair it? What will be discussed? What happens if designated chair isn’t there? What other meetings happen in the org that doesn’t involve owners or even top management? Who needs to meet and when? And remember, we ONLY want those systems and meetings that are necessary! How do we know what’s a necessary meeting? Thankfully the structure of writing out job responsibilities speaks to who must talk to whom to make decisions. Those are needed meetings. And we won’t get it right on the first try, but with little experimentation I think we can dial it in quickly. Entrepreneurship … tinkering.

That’s it for Sunday long post. If FLF finds it helpful, more will come. It was inspired by a thread shared on the INSIDERS by @amp0193 sharing his story and challenges. I think those who’ve been in business for a little while and stalled on growth may find it helpful too. Look forward to your feedback.

good summary! reminds me of the book the e-myth.

 

[Mr.Nichan]

good summary! reminds me of the book the e-myth.

I'm currently reading the E-myth Revisited alongside Unscripted . Skimmed the first post and saved it for later consumption since it should be better applied later in my journey. Trying to cut down on consuming too much content to get more time to produce more action.

 

[amp0193]

Accountability is the big one for me right now. Goal setting right behind it.

And the solution for both is project management (and me learning to be a manager).

We had no centralized task/project repository. Everything was in the moment. It kind of works when things are going crazy... you just gotta tackle the next big obvious urgent priority in front of you.

But when things slow a bit, and the urgency goes away, people feel lost.

I rolled out project management software, got all our stuff in there, scoping out details for some upcoming projects, owners for every task, deadlines for every active task (and everything else backlogged), an on-boarding video, SOPs for how to use it, and me being maniacal about keeping it on the rails.

Already had my first aha moment, when at the start of last week, I went through all open projects with an employee, helped him prioritize for the week and gave him the "1 thing that must be done before you go on PTO next week". Well, not only was it not done (but lots of lower priority things were), but I didn't get a heads up that it wasn't done either.

Accountability will be waiting for him when he's back from PTO. Which isn't something he (or I) is used to.

 

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