Why We Don’t Grow Our Business – Leadership Mindset

We generally ask business teams we are working with, the question: “Why can’t you grow?” The answers are captured and filed away for future reference. We codified the data into subject matter that fell into three categories – Leadership Mindset, Organizational Skillset, and Operational Toolset. In our previous article we defined these “SETS “. In this article we will explore the major factors that prevent a growth mindset and some remedies.

Chapter 2. Leadership Mindset

By leadership, we mean that level in the organization responsible for the profit and loss of a business, and those who provide guidance and direction to the growth project teams. They are generally made up of business, marketing, and technical management. They control budgets and allocate resources. They report up through one or more functional vice presidents reporting directly to the CEO. The factors below best describe the leadership behavior that – in the minds of the project teams – are the primary causes for growth failure.

· “Too Little, Too Late” – ignoring the time factor.
· “Beware the Cannibals” – fear of losing control of the current business.
· “Stuck in Today” – inward focus with a silo structure.

These growth failure factors are not independent of each other and also not independent of both skillset and toolset issues, however they cry out loudly for fixing. We will examine the factors one-by-one and suggest approaches for changing leadership mindset that causes these behaviors. Survey tools and workshops can help leadership teams to both identify their growth mindset and impact on growth success rates. as well as engaging implementation mechanisms to transform leadership mindset into one that fosters and drives business growth.

“Too Little, Too Late”: Many projects take too long from concept to commercialization. Too many projects result in under resourcing with people working on too many projects. Teams spend too much time getting to and through gates. One team said, “It takes longer to get a meeting with the growth board than it does to do the work necessary to meet the stage requirements”. Actually they kept score and counted 57 elapsed days waiting for meetings to get through the first two gates vs. about 55 elapsed days of the team’s actual work time. The project was eventually rejected for fear of potential cannibalization of existing products. Later a competitor entered the market with a new offering similar but not as robust as the one rejected. The top three remedies are:

1. Prioritize what you work on. Resource to win, and if necessary reduce the bets to those that are most critical to success. The key is to require robust project charters with clear goals, defined business impact, required resources, and criteria for success. Quality of the concept description is a good barometer. If they can’t describe it, they don’t have a valid concept.

2. Simplify your process. Over the past several years most have added and added to process when they should be simplifying. You only need three decision points: the first after a robust market validation to clearly define the opportunity to enable the business case; the second after business case generation leading to product development; and third following product development leading to launch. Utilize coaches rather than process facilitators. Coaches take up less time, cost less, and focus primarily on content and getting results.

3. Utilize multi-functional teams, particularly technical and commercial. Often time is lost by poor communications between technical and marketing. Join them at the hip and save valuable time. Increase project leader’s communication capability. Decision makers need to know what they are deciding before reaching the decision points, and teams need to know the issues.

“Beware the Cannibals”: Many times growth initiatives fail at the same time existing businesses begin to lose growth, share, price, and position. Leadership focus is on the existing business attempting to blunt or forestall the tailspin. Growth resourcing grinds slowly and budgets are trimmed to the bare minimum. The fear of product cannibalism takes on an even greater influence in business decisions. The key here is to innovate with fewer, safer, faster, and simpler projects. Forget the homerun and start hitting singles. Demonstrate you can grow again.

1. Focus is king. Prioritize on the basis of speed, agility, and simplicity. Select the top few you can afford to resource for success. Generate charters that reflect the new growth strategy. Set timelines tight. Get technical on board to help set product specifications that can be developed quickly.

2. Invest in high quality upfront market validation. You need to get it right the first time. It is critical that you get a good understanding of value (price they will pay) and impact on existing business during this part of the process. Build your business case before investing in any technical development. Don’t waste what few resources you have. Evaluate the impact of the business case on your business strategy.

3. Get a few key customers involved early. Risk the fear of disclosure for early adoption. Naturally you would not do this if working on a homerun. Accelerate ramp up by using your sales force and key distributors more aggressively. They could use this as an offensive weapon against the price pressures of their current situation. Move your project teams on to the next set quickly. Repeat, repeat, and repeat until you have blunted the competitive erosion, and then begin to engage the bigger ticket concepts.

“Stuck in Today”: We dug into the main causes of inward focus and came up with one major issue – stuck in today’s business model. “We know who are customers are, what our customers want, and will pay for. If something changes they will let us know”. This head-in-the-sand attitude is one of the most difficult to address because it assumes your customers are in the same place you are and if not, they will let you know so you can react. Leaders who behave this way don’t recognize they have a problem until it is too late to act. An outgrowth of inward focus is the silo structure usually manifested in functional organizations not in sync that result in misaligned priorities across the business.

1. Recognize that you may not know what your customers need because they may not know what their customers want. Thus, you will need to learn the larger market unmet needs, and the current gaps in your customer’s value proposition, and consider aiming your value proposition at the customer’s customer. Do not fall into the trap creating internally generated product concepts, or even worse new products until you have completed building the market analytics.

2. Open your thinking to new and different business models including building increased service into your value proposition. Understanding real value is fairly straightforward, and begins with interviews that utilize an outcomes approach, and focus on the entire value adding chain values beyond how they value your existing product.

3. Incorporate “Market Driven” across the entire organization. Break away from a product forward strategy limitation. With a business orientation aimed at specific markets, resource allocation can be more clearly defined, and all functions can know their role in achieving a common market back strategy and innovation process. Decisions are driven by your emphasis on meeting customer values, how you go to market, and how you position your business in the competitive arena.

If you recall from Chapter 1, our thesis is that all growth barriers arise from either or all of Leadership Mindset, Organizational Skillset, and Operational Toolset. In Chapter 3 of “Why We Can’t Grow Our Business”, we will address Organizational Skillset in more detail as a basis for successful growth. Stay Tuned!

Leading With The Right Questions

Have you ever noticed how many questions you ask in a typical day? Even the simplest decision can follow from dozens of questions? Most we ask and answer without even thinking about it? They reside just under our awareness in almost everything we do. Sometimes we don’t know what question to ask because we don’t know what we don’t know. Questions lead to answers and answers to outcomes.

So, if you want to improve your results, start with the questions you are asking. It doesn’t matter whether you are solving an individual problem, making a decision, leading a project team or executing on strategy, the outcomes that you see in front of you today answer the questions you have already asked. Change the questions and you begin to change the result.

Leading with the right questions requires a willingness to make your real questions transparent and then to follow the markers that enable you to refine and adjust them until they land the right outcome. Let’s look at the way questions affected the growth of this start-up company scenario.

In four years, Ben had taken his company from 2 people working at a kitchen table to 400 people with 25%+ profits. His business model had created explosive growth and was quickly recognized and emulated by others. No surprise here. Ben assumed that he could continuously innovate and reinvent his business processes ahead of the competition. Then he hit a wall. Growth stopped and profits softened.

He began asking questions: Do we have the right team? Ben knew that entrepreneurs often hit a wall at certain thresholds of growth so he seeded his executive team with people from larger companies who in turn asked: Do we have the most effective business processes? He engaged in business process redesign which resulted in more efficiency. How do we develop more esprit de corps and teamwork? He redesigned his company so that it was team-based, he trained people in teaming skills and engaged in teambuilding at all levels of the company with modest success. However, there was very uneven energy and enthusiasm – most of which was a carry-over from the initial explosive growth. Do we have work space that will enable us to continue to grow? He moved his company into newer, larger and more beautiful quarters. Do we have the right image? With the help of the marketing consultants, he changed the company name and logo.

He now had beautiful quarters, a polished image, efficient processes, staff that knew how to perform as a team (should they so choose) and a more focused strategy. Neither profits nor growth budged. Clearly, the results indicated that Ben had not landed the right question.

It doesn’t matter whether you are focused on strategy or simple decisions, when you don’t like the results you are getting, it is time to revisit your outcome question before you turn to questions about what it takes to get there. But how do you discover the flaws in your questions so that you can shape a new one? There are three markers that guide you to the right question. They can be summed up in the following words: pull, energy and flow and they apply at every level.

The first marker is pull. This is the attraction or influence you experience in response to something that matters to you. All questions create pull. The gripping corporate questions are those that have compelling values. These questions are squarely focused on big value to the customer or client … value that sets you apart with the customer and creates stretch for the organization. These questions profoundly resonate with what matters to everyone in the organization. You don’t have to talk them into it. They get why it matters. Great outcome questions are also inclusive. They rise above differences. They therefore, pull unity of purpose.

Look around you. Do the right, most important things matter? Do people “get it?” Are they unified and fired up? These are the indicators that your question has powerful pull.

The second marker is energy. An energized workplace is alive … crackling with ideas. A non-energized workplace is deadening. The difference is palpable. The greater the pull, the more it energizes and compels people to action. Look at the energy. Is high energy the norm or just the exception? Is it self- reinforcing or do you need a crisis to kick up the energy? Low or intermittent energy indicates that you haven’t landed the “right” outcome question.

The third marker is flow. Flow occurs when the pull of a great challenge is combined with the skill and expertise to make it happen. When a team is in flow they think, communicate and act almost as a single organism … with little or no resistance. Communication seems effortless and intuitive. Mihaly Csikszentmihalyi, who performed the original landmark study on flow, observed that people often tap previously unrecognized, individual and collective resources when they are in flow. They find the experience deeply fulfilling … even memorable. When people experience flow, they long to repeat it.

Flow is the most subtle indicator of whether you have landed the primary question, because it also requires high individual and organizational competence. But look for high commitment and focus. Look for agreement on what matters and a high level of intensity about it. These indicate that your question is capable of creating flow.

Now let’s look at how pull, energy and flow worked for Ben. First, he lost track of what he was pulling. He needed to raise the bar with a big value question and instead he changed the subject to performance questions. His questions were all focused on organizational competence. That’s fine if you have landed the outcome question. But he had not. The most important requisite of pull, compelling values, had receded into the background. Rather than creating unity, his questions dispersed and dissipated energy. For this reason, in spite of his team-building efforts, the unity of purpose that creates flow never materialized … not even sporadically. Instead of kick starting a new round of profit and growth, he was running in place.

Ben could have asked a question that mattered to everyone and that would have pulled everyone onto the same page by raising the bar on value as Steve Jobs did when he returned to Apple. Performance and growth would have followed. Great value questions connect people to the customer or client. They are so compelling that they create their own success. They don’t need to be plastered on posters for everyone to know what they are. They are even self evident to the customer. You don’t have to own an Apple product to infer that their questions are about products that have simple, clean, eye-popping design and that bring the customers who use them to their own cutting edge. You may not find their questions on a poster, but you can bet that everyone at Apple gets it and that it pulls extraordinary performance.

A question about how to create extraordinary service that sets his company apart from the competition would have galvanized commitment and sharpened the focus for both Ben and the people in his company. He would have then been able to address issues of organizational competence with a new set of eyes. Powerful value questions pull people’s desire to efficiently find the right people, build solid relationships, build on each others’ ideas, use processes that follow efficient paths and develop work habits that are uncomplicated and lean.

These can be captured in five critical areas of proficiency: social networks, social capital, conversational competence, interactive processes and individual processes. Csikszentmihalyi stressed that flow only occurs in the presence of superior high competence at the task. For groups and organizations, that includes these five proficiencies. Rather than throwing the next best thing against the wall to see if it would stick, Ben would have been exploiting the pull of his big value question to drive the attainment of mastery required in each of these organizational competencies. He would have asked specific questions of each.

Social networks: Ben would have made sure that people knew how to discern and set in motion the optimal social networks pulled by his primary question. He would challenge people to ask: “If we had no constraints in the form of silos, bottlenecks, lines of authority or other limitations, who would we go to?”

Social Capital: Ben would have asked: “How do we continuously add to the bank account of mutual respect and trust that can sustain divergent, out- of-the box ideas?” The broader the thinking pulled by the outcome question, the greater the bank account of social capital required. The test of social capital is the diversity of ideas that can be sustained.

The Quality of Conversations: Big questions require out-of-the-box thinking. They move people to reach for and leverage their very best joint intellectual resources. Ben would have insisted that people ask: “Do our conversations produce shared meaning, discovery, new understanding and common ground?”

Interactive processes include not only the tools that are used to promote group consensus and effective decision-making but also the array of activities through which people engage in conversations. They add value to the extent that they create simple almost invisible paths of least resistance. So Ben would have used the intense pull of his big question to stimulate a corporate mantra: “Does this process add value or create waste?

Individual work and thinking processes are the foundation upon which people are able to collectively develop great ideas and move them forward. These processes include everything from how to structure time and organize work to how to attend to each subject without the bleed-through of distractions. They are the engine of contributions that are just-in-time and that represent the best thinking of each contributor. Ben would ask: “Do individual work and thinking processes enable people to step up?”

Ben’s job, at this point, would be to help people translate what is now only a predisposition into daily reality in the workplace. He would have encouraged people to trust their instincts, create fluid networks, insist on solid relationships and blow the whistle on silos and other barriers … and he would have backed them up. He would have insisted on the norm of making interactive and individual processes lean and simple.

He would have stayed riveted on the question: “Are we demonstrating the required mastery in each competency area to deliver on big value?” He would have then focused: training, coaching, facilitation, process redesign and support systems precisely where they were needed. He might have implemented some of the very initiatives that followed from his initial questions … but each would now have been driven by the measure of competence required to deliver on his big value outcome question. The scatter-shot approach would become a thing of the past.

He would have asked people to join him in paying attention not only to the results of their work but also to the way they worked together to achieve it … the quality of their flow. He would have helped them to recognize that flow is more than simply a marker for refining an outcome question. It is also a reliable barometer of the effectiveness of the people in his company at discerning and executing on the behaviors and attitudes being pulled by that question.

Once Ben leads with the right questions, he can count on a newly energized work force to leverage their very best knowledge, experience and wisdom to move him into a new phase of growth driven by innovation.

If you want to change your results, change the questions you are asking. Follow the markers. Let the pull of the big value question drive execution in the five competency areas.

These principles apply at any scale. They apply to individuals as well as organizations. Notice your outcomes. Pay attention to what you are asking for. Refine your questions using pull, energy and flow as personal markers. Discern the optimal form of each competency. Pull out all of the stops and you will make it happen.

Csikszentmihaly, Mihaly. Flow. New York, New York: Harper & Row, 1990.

What’s Your Magic Number?

The most successful businesses — and certainly, sales departments — have identified their Key Performance Indicators (KPI); individual gateways that directly effect the outcome of a particular process. Then they measure the competency ratios in line with them.

Have you identified the KPIs in your sales process?

A good KPI example in the sales process might be how many times you advance the first sales appointment to the next phase, whether that’s a demonstration, a site visit, a survey or a proposal. Another KPI is how many times you gain a new customer once the first gateway is passed. And when you do gain a new customer, what’s the average revenue you achieve? That’s certainly an important KPI. Because if your average revenue per sale is 40% less than the average peer KPI, you might want to find out why and take focused action to improve it, as you’re leaving money on the table.

And what about the length of a sales cycle in days? Is that conditional or do you have a degree of control over it? If you have a team member that has an average sales cycle 30% shorter than the peer group, uncover and assimilate those best practices out to the rest of the sales team. Less time, more results. That makes ‘Sales Cycle’ a valuable KPI.

On a practical level, KPIs can provide management prospect reactions to their service offering for feedback to marketing and product development, detect problem areas in sales performance and signal the need for strategic or tactical modifications — even an all-out intervention through pinpoint sales performance training.

Perhaps the most overlooked KPI is the individual ‘Magic number’; how many new weekly sales opportunities must be generated based on neighboring KPI’s. Think of the magic number as the fuel in your gas tank needed to get from point A to point B. It’s directly proportional to how far a distance, how fast you drive and your average miles per gallon. Your sales process ‘Magic number’ is a derivative of your average revenue per sale, 1st appointment to proposal ratio, closing ratio and revenue goal. It’s your ‘Activity barometer’ and it should be at 100%.

The following are some tips for improving several sales process KPI’s.

If your current 1st Appointment to Proposal ratio is below 65%:

1. Internally define what your ‘Next step’ objective of the 1st appointment is; a demo, a site visit, a survey or a proposal. Then train to a process and measure the outcome.

2. Decide to start at the ‘Top’ with the fiscal authority that can ‘Call the shots’.

3. Avoid ‘Selling’ your product on the 1st appointment. Instead, outline your diagnostic steps to evaluate the fit between your solutions parallel to their business objectives.

If your current Closing ratio is below 65%:

1. Ask pertinent questions to what the Prospect Company’s decision-making process is, what the internal criteria for change is and what players need to be involved for evaluation.

2. Communicate a timeline and set a specific date for the 2nd appointment before leaving the 1st appointment. Encourage that all management players be present at the next appointment.

3. Catalog risk factors for each management player and develop strategies, tactics, and tools for direct communication to them.

4. Have relevant industry and title reference letters available for ‘Real-time’ credibility.

If your current ‘Activity barometer’ is below 100%:

1. Announce the Competency of converting conversations to appointments as a Key performance Indicator for sales success.

2. Define an appointment setting training objective and set a realistic goal.

3. Develop a training process in line with prospecting scenarios and best practice communications.

4. Don’t sell your ‘Widget’; sell the Business reason to meet.

5. Partner with technology to transfer best prospecting practices into ‘Intellectual capital’ promotion throughout your sales society.

Ultimately, sales trainers and management should work in concert to create a new culture by replacing random sales routines with specific KPI competency training.

Targeted and timely KPI training can make a critical difference to your monthly revenue scorecard. In today’s high sales performance culture migrate away from monthly and quarterly ‘Quota’ focus to daily routines and weekly goals. The opportunity rests squarely on switching paradigms from the required ‘End result’ to the necessary steps (KPIs) to get there routinely. Then build supporting tools for learning and application.

And don’t forget your ‘Magic Number’.