Aggressive Growth Plans Actually Erode Low “Capacity” Companies

Stretch goals often destroy the companies that go “all in” to pursue them.  When leaders sustain a laser-like focus on driving key outcomes (i.e. revenue, cost cutting, etc.) they are more likely to damage their company than they are to achieve their goals.

We call this sustained focus on target outcomes the “Payoff Tradeoff”.  Executives or managers press their teams so hard to generate results that they set in motion a tragic course of events.  It can happen within any department and any team in a company, but it is most visible when it happens in Sales.

For example, in the push to achieve moon-shot corporate growth, sales teams begin pressing to close everything near the end of the pipeline.  For a short time, revenue improves and that attracts the attention of leadership. More pressure is applied because progress is perceived. But, in the blitz to close business, the primary function of quality prospecting and qualifying leads has been neglected.  The greater the pressure to generate the sales “payoff” the weaker the base of the pipeline becomes.  Opportunities begin to be harvested prematurely; or worse, misrepresented in forecasts.  Now there is weakness at the top and bottom of the pipeline.  The ‘numbers’ provided to leadership look like growth is on the horizon.  They double down on pressure to meet numbers. But they are about to spiral downward.

The imbalanced focus on the “Payoff” comes at a “tradeoff” with Primary and Traction activities—and it is these less glamorous activities that sustain health in the long run.  Depending on how long this phenomenon is allowed to continue, it can weaken or even destroy a company.  Sadly, many promising and visionary leaders fail to understand how their “inspired” leadership actually caused their demise.

Look no further than the recent examples of Yahoo! Wells Fargo, Samsung, Sears…

Shoot for Greatness! (but achieve it through balanced, strategic steps).

Growth Follows Increased CAPACITY

What is capacity? Since healthy growth follows increases in capacity, it is important for business leaders to clearly understand the definition of capacity and how it is generated.

Simply put, capacity is determined by the resources you control and your capability to use them effectively. The process for Increasing capacity literally contains just two steps:

  • Increase your capability to use current resources effectively.
  • Acquire more resources.

This simple, fundamental cycle is the foundation for growth, maturity and success for any business. It seems so basic and obvious that it should “go without saying”; and yet, violation of this principle in one way or another is at the root of almost every missed business expectation.

Acumen partners represents optimized capacity for any department in the form of [link] PRODUCTIVITY CHAINS. Putting them into action depends on two factors:

  • Effectively connecting the Payoff from one productivity chain to the Primary Activity of the next (which creates PRODUCTIVITY LOOPS).
  • Selectively increasing capacity based on the maturity level of your business.

Understand your Productivity Loops

Every business has eight critical functions that must be balanced to achieve growth.  Regardless of your company’s stage in its lifecycle, all eight functions have a role to play.

OnTarget™ Business Maturity Model

From the moment you conceptualize about making money by [insert your idea here], you have entered the first stage of the business life cycle—the Seed Stage. Asking anybody for money, either to fund your prototype or buy your first service, and BAM! you are a Start-Up! 90% of companies that fail after this point do so primarily because of poorly executed decisions not because their business idea was bad.

As your business progresses, the priorities, objectives and decision factors that play into achieving the next milestone change as well.  Understanding the critical actions you must take at each stage of your company’s maturity is often the deciding factor between early success and failure.

While every company’s experience in the marketplace is unique, understanding the priorities and options at each stage can make your travel through the business lifecycle much smoother and more rewarding.

The shortest path to growth is optimizing Productivity and Capacity.

Done correctly, increasing capacity literally pays for itself—and more. Remember the first step for increasing capacity is to become more effective with the resources you already have. Increasing effectiveness is a process that frees up resources (like money) while delivering the same or greater outputs. Only after resources are freed up can you invest them to purchase more resources. Once the process is clearly understood by leaders and managers, it can be continually applied in a controlled manner throughout your company. That is how you invest in your own company’s success.

Industry-specific knowledge is not a requirement in the early stages of increasing capacity. As the key principles are adopted they will begin to affect the deployment of resources. It is after this that industry knowledge becomes a requirement. For our clients, this is the point of engagement where qualified Subject Matter Experts (SMEs) are introduced.

Employee buy-in is obtained by answering the age-old question: “What’s in it for me?”  In Acumen Partners’ framework, we refer to this as the Right Way dimension of your company. Creating a culture that fosters employee buy-in is an important part of driving growth. The principles for buy-in are heavily researched, well understood and should be a part of your company’s management philosophy.

The Right Way dimension of the OnTarget Baseline will provide insights into how you are progressing in achieving employee buy-in.

The level of sophistication required to measure capacity varies from company to company. Where good accounting systems and other processes are employed, the subjectivity of capacity measures can be virtually eliminated. For companies with less sophisticated systems, the accuracy of capacity measures is determined on how you choose to gather the appropriate data.

Remember, subjectivity is not necessarily a bad thing. This is particularly true for startup and early growth companies.  Acumen Partners is happy to help you find the right balance.

As the old adage says, “There are no silver bullets.” Acumen Partners begins each engagement with an OnTarget baseline that clearly establishes your company’s strengths and weaknesses as well as your relative capacity in many areas. Then the work begins. Acumen Partners will work with your company to make thoughtful decisions about how you can achieve the most rapid capacity gains. We will help you understand how to employ effective methods that you and your team will continue using long after Acumen Partners is out of the picture.

It is always a good time to put an “organizational improvement” program in place. The first step never changes: get a baseline measure of your company and the market so you know where to begin. From there you start with bite-size, 90-day efforts to lay a foundation of experience and systems that will grow as your company does. Whether you are a large, multimillion corporation or a small, agile startup the process is the same. Just get started.

That depends on the size of your company and the complexity of the challenges you face. In most cases, progress begins with teams, departments or focused challenges. Success in these areas provides the capacity and buy-in to extend these new skills deeper into the company.

Every Acumen engagement begins with a no-obligation, thorough benchmarking exercise to ensure all parties within the company understand your circumstances in the same way.  Many times, this brief engagement is all that is needed.  Most companies possess the resources to succeed.  Several just need the perspective to get past their current hurdles.  However, there are those times when circumstances are more complex.

Either way, all engagements start with getting the cards on the table.

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    Garth HansenCapacity