🦖   Eat Predators First
🚧   Capacity Constraints
🚨   Isolated Numeric Goals
🦖 Eat Predators First
If your company doesn’t move quickly, it risks being eaten. What is the predator — internal issues, competitive issues, market issues — that will eat you if you don’t eat it first?
Charlie Munger calls this an “Inversion Process.” He advises leaders to look at a strategy or problem by working backwards.
He explains, “Instead of looking for success, make a list of how to fail… Tell me where I’m going to die so I don’t go there.”
When you know what can prevent you from reaching your objective, you can develop a plan to overcome or avoid those obstacles. This will lead to a sounder, more achievable growth strategy.
Where many leaders get it wrong is they focus on time-based goals. For instance, we want to grow to X revenue in Y years. These can be framed as 3 year, 5 year, or 10 year aspirations.
Goal setting is powerful, but limited, especially in this marketplace. Goals are easily displaced by uncertainty. Instead, make uncertainty a predator that you can tame.
What are your company’s #1 and #2 predators, and what is your plan to eat them before they eat you?
One Stat to Watch
82%
82% of small business failures are due to poor cash flow management, according to a 2005 study by U.S. Bank.
🚧 Capacity Constraints
Growing to the next stage or size of your business is a significant shift.
Companies have predictable revenue plateaus: $1 million, $3 million, $10 million, $30 million, $100 million, $300 million, and so on. Breaking through these revenue plateaus requires investing in the infrastructure of the next level.
It often feels like you are throwing the baby out with the bathwater as you push through each plateau. The team, systems, and approach that got you to $10 million are not the same at $30 or $100 million.
As you examine your business today, consider the infrastructure of your next logical plateau:
- Leadership & Management
- Systems & Processes
- Assets & Infrastructure
- Market Capabilities
- Organizational Capacity
- Brand & Channels
For each area, assess the operational gaps. What will it look like at the next level? Use this to frame your Capacity Constraints and strategic investments to grow.
Where does your company need to invest a disproportionate amount of time, energy, and resources to build its capacity for the next level to get to the next level?
🚨 Isolated Numeric Goals
Be wary of a business plan that sounds like:
- 25 in 5: $25 million in 5 years
- 30 by 30: $30 million by 2030
These “strategies” may sound catchy, but they are risky.
Isolated numeric goals are only motivating when your company is on track. If your company is growing quickly and on pace to achieve “50 in 5,” it’s a motivating goal.
As soon as you hit a bump in the road, the phrase can haunt you:
- If you fall behind, the number becomes even more daunting.
- The team can rebel if crossing a revenue plateau is too painful or expensive.
- The leadership team can lose credibility if the organization fails to stay on pace or misses the goal entirely.
Richard Rumelt defines strategy as “a coherent approach or plan of action to overcome a significant challenge.”
The goal may help you aim, but your strategy lies in understanding and defining the growth challenge, the obstacles along the way, and the actions and policies your organization will take to overcome them.
Good strategy is not about catchy slogans. It’s about making clearly defined commitments to change to achieve your goals.
🤔 Thoughts on Today’s Issue?
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