Why do organisations succeed? To answer that question, it’s worth asking, ‘Why do they fail?'
The goal of any organisation is to benefit society; through jobs, value creation, innovation, education etc. At Blirt we want our customer’s customers to have great experiences so organisations ultimately do succeed and bring wonderful benefits to society.
The statistics tell us that only 1 in 12 entrepreneurs and their organisations make it through the start up process and find a sustainable path.
That’s less than 9% making it. It’s not a good rate.
What Builds Market Success?
A great resource, which I love, is the The Start Up Genome. The Start Up Genome analysed data from over 3,200 companies across multiple nations over many years and determined some criteria for success.
What are two of the insights gleaned?
1. Those who succeed must have a good product and a large market opportunity. In other words they must be able to set up a scale scenario.
2. Align the 5 growth dimensions and scale these together. In order to achieve this scale, the Start Up Genome identified 5 fundamental growth dimensions:
2.4 Business Model
The Start Up Genome found that the predominant reasons for failure was the premature scaling of one or more of these areas.
For example, too much funding can lead to lazy product development, too many team members can kill creative and resourceful thinking (and cashflow!), too many products too quickly can confuse a market segment and broaden reach too quickly. This list could go on and on....
Scaling a consistent customer experience with all areas of the business in alignment is the key. And, yes, it is extremely hard to do. It is like balancing spinning plates on pencils. (I know because as our little business has grown we have certainly failed and succeeded at this at different points in time).
The Start Up Genome identified 6 stages of growth every organisation goes through - it’s the classic ’s’ curve.
As we work with organisations on building customer experience strategy, we will firstly determine where the organisation is on this curve and then apply the most appropriate customer centric strategies.
For example, there is no point unleashing millions of dollars in executing an advertising program if the lead flow, customer care, CRM and ROI tracking are not in place. Conversely, you may have spent money on building a technology platform but if you’re not putting customers through it, well, it’s just like building a boat and never putting it in the water.
What Should Leaders Focus On?
What should leaders be prioritising during the different stages of the organisation’s growth?
Here is a brief breakdown on where to place some priorities - based on our experience with our clients and products according to the 6 stages of growth.
Focus on developing an idea through the context of Vision and Market (Customer). What’s the opportunity and how might it sit within the market? What might this organisation look like, act like, feel like - what problem are we solving for society?
Really, you are asking the questions of why do we exist and what value do we bring to our customer. As the answers to these questions become clearer you will being to rally people around your problem and you will begin to frame up your brand positioning and perceptions.
You should be spending time and money on knowing, understanding and testing ideas with your customer. Learn quickly and discover the nuances of your customer’s needs and desires.
Focus on validating the idea with potential customers. The objective is to understand if a customer will pay for the service or product developed. The emphasis is on executing (selling!) - simply get a result. I love Seth Godin’s approach in this stage; ‘Build the Sales Deck and go and see if you can sell it! (See Seth Godin’s Start Up School Podcast)
Spend time and money trying to get sales - as quickly as possible. This does’t need to be expensive either. In today’s digital world it can be very easy and quick to determine if there is market demand.
Focus on achieving a profitable business. If a dollar is made in Validation, then a profitable dollar must be made in Efficiency. The emphasis is on Business Model, Systems, People and Culture.
It is during this phase that external investment often comes in to the business, in fact, the Start Up Genome identified that investments at the end of this stage of the business cycle almost quadrupled.
It makes sense, who wants to invest in a business that’s still working out how to make money? Rather, an investor wants to invest in a business that’s worked out how to make money but hasn’t yet triggered a scale and needs their capital, connections and support.
You should be sustaining your customer focussed activities and beginning to spend money on people, systems, technology, process, structure, training and culture. Work out how to repeatably make a return. This is the engine in the organisation that allows you to then pour more oil in and go faster.
Focus on lifting all areas of the leadership and management functions in alignment. The emphasis is a weighted effort on all parts of the Leadership functions with a particular drive on building brand awareness within your market, reinforcing core perceptions and driving a clear strategy in executing customer growth programs.
Getting things like brand clarity, operating rhythm, marketing cycles, conversation ratios, standardised experiences etc are all part of bring alignment across the business in preparation or during the early stages of scale. (Read our article on Brand Architecture in relation to this).
You should be spending money on media (paid, earned and owned), employing new people and taking market share from your competitors.
Focus on keeping an even keel and then begin to plan your investment in the next renewal phase. The emphasis here is on people & culture with an R&D exercise on customers and business model innovations.
The success of the organisation’s ability to renew itself into the next cycle of growth will be it’s ability to build new innovations on it’s current platforms. The people that know your current customers the best ought to be your current team - therefore, the best ideas ought to be coming from the current team.
You should be spending money on your people. Hold them, give them time to think and nurture creative thinking across your team.
The focus is planting or reinventing for the future. The emphasis is on communicating the vision of the new ideas, setting strategy on these new ideas and building the early business model around them.
Really, it’s like starting up again but this time with a little more capital, effort and experience. Every organisation - Profit or Not for Profit - goes through this cycle and really your future growth is really about your ability to sustainable customer experiences time after time after time.
The mistake big organisations make during this phase is to invest heavily in these new ideas without getting the market positioning and customer experience right. There are countless examples of large sums of capital being thrown at average businesses simply because that organisation has been successful in the past.
Here in Australia, we just need to look at the Masters business by Woolworths and Lowe’s to see an over capitalised weak market positioning that grew not by market demand but executives passion for beating a competitor.
Strangely, you should be spending very little on these new ideas and executing on agile principles until you know it can work.
What Next? Where Are You?
What do you do next? If you’re unsure about what to do or where to focus on next, talk to us. Perhaps try Reveal, a small and helpful exercise might be our Reveal program which helps leaders determine where to dedicate time and capital across the marketing and sales function.