Category: Growth and Turnaround

You may not have heard of The Lean Startup by Eric Ries. It’s a book that’s spoken of a lot in the startup world but less so in the mainstream business world. That’s a shame. Not only is it an interesting business book in its own right but it also has some important lessons for businesses that are beyond the startup stage.

Indeed, in the competitive world of business, unless you are consistently getting better, it’s only a matter of time before someone takes market share away from you. Which is to say, even established, successful businesses will benefit from the practices mentioned in The Lean Startup as they work to remain competitive in their market(s).

We think there are two particularly important practices that are relevant to post-startup businesses (from local to multinational). The first of these is “getting out of the building” to speak with customers about the pain/gain your product/service provides for them.

The details of how to do this are well beyond the scope of this short write-up but at the 30,000 foot level, it means gaining a better understanding of what your customers value and why they’re willing to part with cash to buy from you.

If you do this well, you may be surprised to find a variety of different reasons customers buy from you. Cataloging the different reasons why people buy will help you start to “archetype” your customers and, in turn, customize your interaction with them so as to maximize meeting their specific needs. If you can achieve even modest success at archetyping your customers accurately, you will take a huge step toward maximizing both your income and your customer loyalty.

The trick is that just asking your customers is probably not good enough to figure out what they really value. Which brings up the second practice: forming hypotheses about what they value and then rigorously testing each hypothesis.

For example, you may think your customers value your great service (your hypothesis) when some value your pricing alone, while others value the convenience of buying from you, while still others value the status of saying they bought from you or their relationship with a particular sales agent. You can test your hypothesis by altering the level of service, for example, and see if doing so changes buying behavior. While most customers have multiple factors influencing their buying decisions, buying behavior is the gold standard (no pun intended) for evaluating what value they hold above all others.

Testing hypotheses is the best way to really understand your customers better. It’s hard work to do it well. But it can take most of the guesswork out of your marketing efforts and will give you the best chance of staying competitive in your market(s).

Doubling your bottom line is no easy task. You know that, or you wouldn’t be reading this. We get that.

What we see in the marketplace is that most all organizations work on being smart. They work hard in technology, operations, marketing, finance, etc. Using skills learned while getting an MBA.

Many of us gravitated to areas where we could calculate improvements. Figure something out. We work hard to be smart. Being smart may well drive your current bottom line.

There is another tool CEOs can help their organizations employ, beyond smart. That is becoming healthy. What does that mean? What do healthy organizations look like?

They’re places where morale and productivity are high and politics are low. People enjoy coming to work 9 out of 10 days.  Employees are passionate about the organization’s purpose and share a core set of values. It’s where priorities and expectations are crystal clear, for everyone.

Since these are the items can’t be calculated, we tend to shy away from them. There’s the rub. One way to approaching doubling your bottom line is to ensure your management team is a healthy, high functioning one. We all want to think that’s the case, but we must be brutally honest which is best for the organization.

So where do you start?  We believe the CEO is responsible to make sure that the right people are around the management table. We define “right” as meaning they share the core values, they have the right experience and skills. They are okay with being wrong, and only want what is best for the organization.

An effective management team provides the most leverage to achieve organizational goals.

Top managers set the pace of the organization. You know that. They beat the drum within the organization. We must work actively to develop the management team. No doubt they are good people; they have the right background the necessary skills. But few have been trained, really trained to work well together.

We often take teams though Pat Lencioni’s Five Dysfunctions of a Team. This is an effective way to get folks working better together. It provides concepts, tools and language to use to improve team functioning.

Back to the CEOs, it’s her job to manage the management team. One of the CEO’s main responsible is to bring good decision-making unit to the table. One CEO we know sees himself as just one other vote around the table. Letting the team identify and passionately debate the big issues.

This CEO does hold a veto, which is seldom used. The process itself, however, is part of team development.  Drawing people out to get a more robust perspective and engages more minds. Better decisions result.

So in closing, promote, develop and ensure the health and effectiveness of your entire team. Double your bottom line by being both smart AND HEALTHY.

For more information and a gratis discussion please contact us at www.vitalgrowthllc.com. Thank you.

by Dr. Donald N. Sweet:  First and foremost, a CEO must actively develop her/his management team. The strength of a team is that collectively it provides perspective that one or two people just can’t have alone. Important issues require multiple viewpoints to improve our probability of success. So developing the team to make and execute better decisions is critical to the health of the business.

Practically speaking, the CEO begins developing the team which is already in place. Sure someone may be in the wrong seat and that should be fixed. In smaller organizations that often requires some time to accomplish. Nonetheless, progress can be made with most anyone who currently sits in a management role.

We believe that the management team, not the CEO, should manage the business. We have seen teams become more effective when the CEO is just one more member of the team making decisions. Yes, they should have a veto vote on any issue. That said, we suggest veto votes be used sparingly. Good teams make better decisions.

Don’t confuse this process with consensus. This is not about everyone agreeing on an answer or direction. This is about everyone passionately debating important issues to arrive at a better solution. Once the direction is set, the entire team must support it. That is part of the CEO’s team management job, too.

When working with CEOs we often use Pat Lencioni’s Five Dysfunctions of a Team book and process. Helping folks put aside their egos promotes healthy organizational results. In essence we want management team members to say something like, “I don’t need to defend my turf/silo any longer; I’m in this for the best of the team.”

We also want them to say things like, “Yes, I have functional responsibilities, but they’re not my first concern. Running the business as part of the team is my first concern; my second is how I bring my functional resources to bear to improve that effort.”

We believe developing management teams is the greatest leap forward any business can make. We believe the CEO’s main job is developing his or her management team. It all really does start at the top.

The next post will provide some guidelines for team selection and improved effectiveness. Making sure you have the right people in the right seats is critical to organizational success. Finally, clarity regarding priorities, expectations and responsibilities greatly improves team effectiveness.