very
emerging business struggles in a highly complex and competitive environment.
Their position is almost always precarious. Only one out of 20 new ventures
launched will survive to celebrate its Fifth Anniversary. How can we enhance
our expectations of survival — and profitability?
VST Goals.
The successful emerging business will flourish under the tough discipline of
very short term (VST) goals. These are daily or — at most — weekly
targets, specific and carefully monitored. They are achievable
numerically-measured performance goals to be corrected promptly, if necessary.
The units of measure should be as simple as possible and — whether two or
2,000 employees — should be understood throughout the organization. Often, physical
units may be preferred to monetary units of measure. We are focused
on what we are specifically accomplishing today and this week;
if we meet our VST goals, our quarterly earnings will take care
of themselves.
Reality Checks.
Ubiquitous spreadsheet programs now give us the ability to construct the most
elegant scenarios of our future. The manipulation of different variables bracket
the ranges and composition of our anticipated success. Unfortunately, what
appears so graphically and colorfully on our computer monitor is quite commonly
failing to depict reality. There is a terrible danger of being seduced by the
wizardry of our spreadsheets and ignoring the blunt messages of the marketplace.
The real world particularly for the emerging venture — is not a continuum;
it is lumpy. Often, cash comes and goes not in an orderly and
smooth daily or weekly pattern, but with large outflows and inflows
notable for their erratic timing. Cash flow, especially, seldom
conforms with the workmanlike projections displayed on our computer
monitor.
Competent People.
Facing the immediacy of maintaining low direct expenses and overhead, emerging
businesses often succumb to the lure of bargain employees — frequently friends and family
members, eager to “help” the business and willing to work for
below-market compensation. In most instances, experience demonstrates this will
be a penny-wise-pound-foolish practice. Cheapness rarely equals competence. With
virtually no room for error, the emerging business can only afford the most
competent people — most likely, higher-paid people. Cheap and marginal
people will frustrate our most proficient employees, absorb unacceptable
amounts of management attention, undermine quality and delivery
performance, and alienate our customers, Don't look for people
bargains; look for superior competence!
Test the Strategy. The world is littered with outstanding
product and service concepts that failed because the strategic
execution was faulty. While strategy is not something to be fiddled
with every day, it is essential that our strategy be articulated,
understood, and continually re-evaluated to assure it is working
effectively. This requires valid feedback from our present and
potential customers as well as unvarnished competitive intelligence.
We must understand clearly where we are and where we are perceived
to be in the marketplace vis-a-vis our customers and our competitors.
Success is rarely attributed to the grand concept; it is found
in the meticulous execution and re-deployment of each component
of our strategy. "Sweat the details!"
“Board of Directors”. Even the tiny enterprise needs
the inputs of counselors detached from the day-to-day operations
who can and will objectively challenge the assumptions and actions
of the principals. This is not a “Board of Directors”
performing the legal functions of governance. It is a group of
two, three, or half a dozen men and women who know and respect
the principals, understand the business, are dedicated to its
success, and are willing to pose the tough questions. This group
should meet on a regular schedule with some formality; they should
be fully briefed before each meeting. The principals must be fully
open, candid, and genuinely seek the guidance of this advisory
group. “The Board” can be a solid reality anchor for
the emerging business — a resource of immense value.
Within the emerging business, using these five tools proficiently can
greatly improve our expectations of survival — and profitability!
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