Escape Velocity: Defying Business Gravity Requires Deciding Which Opportunities to Pursue
Written by Megan Scanlon
Too many choices can often lead companies down the path of too many distractions.By Margaret Reynolds
Our first article of the series defined the forces of business gravity that hold you back and provided an overview of the steps you need to take to propel your business to “escape velocity” growth.
Our next two articles examined the first steps in the discovery stage in more depth: conducting diagnostics on your business and your market and determining options for growth. Now we address the last step in the discovery stage: Deciding.
Putting a Plan in Place
Without a plan for how you want to grow your business, every possibility becomes an option—and sometimes a distraction. Achieving “escape velocity” growth (or accelerated growth) requires a plan that provides focus.
At this point, we are not trying to determine what the specific initiatives are you will pursue. Rather, we are honing in on the direction you will go. Here’s an example:
You probably have been or will be again, in the market for a new car. The first decision is about what type of vehicle you want. Are you finally in a position to buy the luxury car of your dreams? Do you need a working vehicle that can haul loads or people? Once you make the choice of what general type of category you are in, you can begin to do some meaningful research on which brand and model you like best. But that comes later.
Your work now is similar to picking a car category. It is narrowing the options to those that are right for your company in these times given your specific strengths. The reason is to set the table for the next stage – developing your strategic direction. A strategy is a choice, and you are narrowing your choices for the next level of scrutiny and definition. Move forward with decisions that will provide focus for your business.
First, Examine Your Options
In the last issue, we talked about how to identify your options for growth. Put simply, we suggested an “outside-in” approach where you examine market changes and trends, assess where the opportunities of the future will be and consider them in context with what you do well.
Be Willing To Make a Decision
This may seem obvious, but choosing is hard. Often, it’s hard because some economic benefit is associated with every option and many companies (particularly in growth mode) want to do as many of them as they can. Those companies try to take on too many new initiatives simultaneously and take nothing off the table. A small effort is made in many areas, and companies fail to establish traction in any area due to lack of time and resources.
As a result, those companies don’t become known for any particular area of expertise, product or service. Decisions aren’t easy to make, but they help you create the focus you need to accomplish your growth goals.
Involve Different Perspectives
Sometimes, especially if your team has been together awhile, you may tend to think similarly about the world. You see things the same way. It might be a good idea at this stage to conduct discussion sessions with people who might have a different world view. Their perspective on what might work best or be of most future value to the company could be different from yours and get you to expand your thinking or reorder the possibilities.
Establish Decision-Making Criteria
When business owners do make decisions, all too often they tend to make decisions on experience and emotion. The person who talks loudest, fastest or last decides. As you already know, that rarely works. In order to benefit from the diagnostics you have already completed and keep the decisions focused on real market data and company facts, develop a list of criteria against which every decision will be evaluated.
You will likely establish criteria in at least three areas: financial, strategic and cultural.
Financial
What is the minimum contribution in revenue an initiative must generate to be worthy of a company-wide focus? The answer depends on how much growth you want.
Let’s say you want to grow at a rate of 10 percent annually for the next five years and you are currently generating $50 million in revenue. Think about how many major initiatives you can reasonably take on, relative to the size of the desired increase. In year one, you are targeting growth of approximately $5 million. Do you want 10 smaller initiatives or five larger ones? Fewer, bigger initiatives are probably to your advantage as they often require fewer total resources, make a bigger market splash and, if you are committed, give you the greater focus, increasing odds of success. So in this case, the decision rule becomes “every initiative sponsored must be able to generate a minimum of $1 million in revenue.” You also might consider profitability criteria, debt or cash flow guidelines.
Strategic
The next category, “strategic,” has to do with leveraging the overall direction you want to move in. Consider things such as channel of trade, customer mix, product excellence and other aspects of competitive advantage when defining your criteria. Does it help you leverage what you do well, or correct a shortcoming?
Cultural
Finally, cultural criteria have to do with aligning decisions to values. What are the must-haves in every initiative to make it right for your company? Are you a green company? Are you a God-centered company? Working against your culture and value system rarely works, so acknowledge it in your criteria.
Create an Evaluation Tool
Once you have established your decision criteria, list all of your options and then evaluate each option against each criterion, assigning an H=high, M=medium and L=low. Be willing to re-rank when you hear new or persuasive points of view based on good market analysis. Once the list is narrowed to the top ideas, your team can begin to see the type of opportunities that form the shape of your strategic direction.
Margaret Reynolds is managing principal of Reynolds Consulting, LLC. (816) 350-7680// This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
