Is Your Company Fit for Growth?

Illustration by Paul Wearing

Is your company fit for growth? Many companies today are not. The way they manage costs and deploy their most strategic resources is preventing the expansion they need. But they don’t realize it — at least not yet.

To be sure, many of those companies are in better financial shape today than they’ve been in for a long time. Having implemented cost-cutting and austerity programs during the recession, they have relatively healthy balance sheets and sizable reserves of working capital. They have strengthened their ability to weather downturns and improved their productivity in ways that could potentially last for years. All these restructuring actions were required for survival between 2008 and 2011.

But as they shift their focus from the cost side of the ledger to the revenue side, searching for ways to move beyond cost cutting — entering new markets, commercializing innovative products and services, offering more compelling customer value propositions — these companies are strategically and financially out of shape. They have not made the hard choices involved in channeling investments to the capabilities that are needed most, and deemphasizing or eliminating their other expenses.

How can you tell if your company is fit for growth? Here is a simple, three-question diagnostic:

• Do you have clear priorities, focused on strategic growth, that drive your investments?
• Do your costs line up with those priorities? In other words, do you deploy your resources toward them efficiently and effectively?
• Is your organization set up to enable you to achieve those priorities?

The easiest way to answer these questions is to imagine the opposite.

If you do not have clear growth priorities, there are several warning signs. You have so many initiatives that you can’t remember them all. Your executives go to multiple meetings on unrelated topics every day. Asked to name the most important capabilities your company has (the things it does well) or how they relate to your strategic objectives, different leaders give different answers. Your best people are working on so many programs and projects, they are burning out. Meanwhile, you are underinvesting in some areas — which might include parts of R&D, market development, and customer experience — where you could potentially build a distinctive edge against your competitors.

If your costs are not deployed appropriately, that’s also painfully apparent — especially in the amount you spend on nonessentials. Staffing levels in different parts of the organization are out of sync; for instance, you might have twice as many finance people counting the money as salespeople bringing it in. Your highest-priority initiatives falter because their investments do not get sufficient attention, while legacy programs with very little impact continue to be funded. Every function pursues an agenda of professional excellence, striving to be “best in class,” no matter what the cost. Each department’s annual budget is calculated as “last year’s, plus 3 percent.” Every once in a while, in moments of high pressure, you institute across-the-board cost-cutting programs that force the businesses to temporarily reduce overhead, but everyone knows that it won’t make any long-term difference.

If you don’t have a well-designed organization, that is evident as well. You are not nimble enough to move quickly, or aligned enough to work in harmony. It takes a week to get a sales quote approved, while your competition wins the business. Information is not readily available to the people who need it. Managers oversee fewer than four employees, on average, and get far too involved in their subordinates’ work. Incentives (such as bonuses and rankings) motivate people in ways that actually undermine the behaviors needed to achieve the company’s stated growth priorities — for instance, people put internal reports ahead of customer responsiveness. You have “shadow” HR, finance, and IT staffs popping up in places outside your shared-services organization. Since most suggestions are rejected, people become afraid to take calculated risks — and that derails the most innovative growth- or savings-oriented ideas. via strategy-business.com

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America's Healthy Infatuation With Entrepreneurs - David A. Shaywitz

REUTERS

America has fallen hard for entrepreneurs.

The aesthetic appeal is easy to understand. Compare the Fortune 500 CEOs interviewed on the HBR IdeaCast talking about Campbell's Soup or Coca-Cola (podcast here) with the entrepreneurs at the Stanford Entrepreneurial Thought Leader Seminar Series discussing Pandora and Instagram (podcast here). The big company CEOs sound just like you'd expect. They are competent, factual,  and in control. But while most of them presumably have strong interpersonal skills and a high EQ, they come across as dry, unemotional, and focused on the "core business."

In contrast, the entrepreneurs presenting at Stanford wear their hearts on their sleeves. They are vividly passionate. They exude emotion. They are selling themselves, with a kind of animated desperation. They tell student to "do what you love." It's an appealing message, and you can see why it catches on.

These two personalities generally reside at opposite ends of the business spectrum, presumably reflecting two very different business needs. It's essential to be brash and irrationally exuberant to start a business. But to sustain a large multinational corporation, you've got to be calculating and rational.  It's also a well-described phenomenon that as start-ups evolve into progressively larger companies, their character changes, and their needs evolve, or "mature."  Mature organizations are supposed to act predictably, responsibly, unemotionally. The qualities embraced (or at least tolerated) at the start-up level can become liabilities. Many start-up CEOs hand over the reins at this stage, or at least share them (as Google did for years when Brin and Page hired Eric Schmidt), explicitly acknowledging the need for an "adult in the room." Talk to us about leveraging your capabilities.

While many large organizations might similarly benefit from having a kid in the room -- someone who is energetic, passionate, emotional, excitable - it's hard to envision a corporate phenotype that would be more doomed: the environment just doesn't support it.  Sure, companies trot out bromides about "cultivating entrepreneurship," while HR departments sponsor group training sessions on innovative thinking. But the reality is that the culture of most big companies is geared to performing established activities in increasingly efficient ways. Simply stated: doing the old things better takes precedence over doing new things well enough. Most employees (and certainly the ones who last) figure out extremely quickly how you're supposed to act at work (Sir Joseph wasn't far off). You could say most large organizations have elected to trade the passion of young love for the predictability of adult relationships.

And perhaps this is why we look so wistfully at entrepreneurs. They seem to exude the raw passion that experience has taught us to modulate, the vivid emotion that we've learned to suppress, the intense energy that we learn must be channeled, the unreasonable audacity that has been replaced by sensible objectives.  We cheer for them because they represent our youthful hopes, our idealism, our ambitions and our dreams. And when these entrepreneurs defy the extraordinary odds, and succeed, we rejoice, for at the moment we can sense, if only fleetingly, the exceptional untapped potential within each of us. We rejoice, and wonder: what if?

It would be easy to dismiss our infatuation with entrepreneurs as misty-eyed revisionism, the way we might selectively recall and invoke treasured childhood memories while forgetting the many painful challenges of youth and adolescence. The day-to-day reality of getting a new company off the ground is generally far less glorious than the inspirational experiences trotted out by the small minority of ultra-successful entrepreneurs who are routinely invited to share their stories. There's a significant selection bias here, to say nothing of the urge to write oneself into a heroic cultural narrative.

But I'd argue that if we had to find a group of people to admire and admittedly idealize -- and you know we're going to -- we could do a lot worse than taking our inspiration from impassioned, dedicated individuals seeking against all odds "to make a dent in the world." via theatlantic.com

Consulting, Speaking & Coaching. Driving Growth through Innovation  

Innothink Group is a strategic management and innovation consultancy. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting over a third of our fees at risk subject o hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships. 

For speaking, coaching or consulting inquiries contact: 

CEO Jim Woods

+1 719- 649-4118

 

Learn How to Build a Stellar Team at a High-Potential Startup

Imagine trying to convince a Yankees star pitcher to join a new, unproven Major League Baseball franchise. An impossible task? Not necessarily. Corey Reese, co-founder and CEO of Ness Computing, took on the tech-world equivalent of the challenge--and succeeded.

Reese wanted Apple engineer Scott Goodson, a member of the team that developed the iOS platform for the iPhone and the iPad, to decamp from Apple and join Ness as director of engineering. It was 11 months before Reese got a yes out of Goodson. What did it take?

"It was a mutual respect and recognition of each other's situations," Reese says. Over many (many) conversations with Goodson, Reese made it clear that the engineer could really shine at Ness, and that he could help solve a problem that had never been tackled by a startup. "It was more like, ‘Whenever you're ready to move, let's talk,'" Reese says, "and it was definitely worth the time to develop that relationship, because it really does start with hiring great people."

The Los Altos, Calif.-based startup, founded in October 2009, came out of stealth mode late this summer with the release of Ness, an iPhone app that makes personalized, on-the-go recommendations for restaurants (and soon, shopping, travel and night life) based on people's preferences and their friends' activity on social networks. They've raised money from Khosla Ventures, Alsop Louie Partners and the founders of Palantir Technologies, and they count the creators of FarmVille and Mint.com among their advisors. Reese, however, still spends between 30 and 50 percent of his time recruiting talent for his team, which numbers around 15.

"If a CEO looks at his function as [finding the employees] to achieve business goals, spending a significant amount of time hiring the very best people for key positions is a great way to run a business," says Reese, who spends as much time searching for--and getting to know--potential interns and recent grads as he does looking for industry leaders. "Great things come out of a culture that combines experience with youth and enthusiasm," he says, citing Bill Gates, who hired a similar mix of "kids" and "veterans" in the early days of Microsoft, as an example.

As a former associate at a venture capital firm, Reese leveraged his existing networks at the University of California, Berkeley, and Stanford University--and now also MIT and the University of Texas at Austin--to pinpoint the brightest talent in the freshman and sophomore classes, before Silicon Valley's big guns start competing for their attention. "Find where your target employees are, and evangelize," Reese says. He also established Ness's on-campus reputation by sponsoring engineering "hackathon" competitions and by focusing recruitment efforts at a small number of prestigious computer science programs, looking for students interested in "building stuff," rather than just maintaining sky-high GPAs.

Hackathons make it easy to spot the best candidates for internships: "They're the ones everyone goes to when they run into programming problems," Reese says. His strategies have paid off. He met two of his three co-founders at a 2009 hackathon--one was the winner, the other an employee of another sponsor--and one of his intern hires built the first version of the Ness app. After the app's basic framework was developed, former Apple staffer Goodson stepped in to turn Ness into a market-ready app and, along the way, mentor the young employees.

Reese takes a long-term view of the hiring process. "Even if you're not looking to fill a specific position, you want to get to know people and build a reputation for when you do need to hire," he says, and that includes socializing at events that aren't directly related to recruiting. Ness holds barbecues regularly, inviting potential hires to meet the staff and advisors in an informal setting. People who already have jobs might not respond to an interview request--"but when you say, ‘Come hang out, bring your friends, have some food,' it's a good way to get people comfortable and talking--and interested in working for you," Reese says.

Jared Hecht, co-founder of New York City-based GroupMe, says a company's core idea is one of its most valuable assets for recruiting--and retaining--talent. It doesn't matter how many great people you hire if you can't keep their attention, he says. Launched in July 2010, Hecht's mobile group-texting and conference-calling service has raised more than $11 million from investors, has partnerships with Bon Jovi and MTV and sends more than 100 million messages a month.

"The biggest key to engaging employees is a great idea," Hecht says. "It's also an excellent litmus test, to see if your idea is good enough to keep brilliant people interested."

GroupMe, which has 20 employees, offers potential hires an "engineering-centric culture" that allows them to have creative input, and, more important, to work with smart people who push each other to do better. The idea and the company culture both contributed to two of Hecht's hires, each of whom passed on offers to work for Square, a prestigious startup in the mobile payments space, after consulting with GroupMe for a few weeks: "They fell in love with the service and ended up joining the team full time," Hecht says.

The Matchmakers
While companies have long turned to sites like Monster and CareerBuilder to fill open jobs, they're not always the best options for startups--especially those in specialized fields or that require specific skill sets.

"After money, the hardest thing to find is the talent," says Chris McCann, co-founder of NextDigest, which publishes the StartupDigest newsletters. But, when it comes to recruiting top talent, the employees you want rarely bother with job boards. Most are bombarded by recruiters every day.

That's led to a boomlet of niche services for the tech industry, including networking sites like VentureLoop, StartUpers and Startuply, as well as services like Interviewstreet, which tests candidates' programming skills.

McCann recently joined the fray with his StartupDigest VIP, which aims to help startups find engineers and designers. The service focuses on bringing together a small pool of startups with prescreened job candidates who specifically want to join a startup. In just the first month, two of 11 users received job offers, and two more were flown out for final interviews. The service is growing fast, and McCann says he'll probably partner with VC firms as he expands.

Non-tech businesses have shiny new options, too. Bangalore, India-based Recruiterbox is streamlining the hiring management system for startups and companies with fewer than 30 employees. "There's a big demand for this," says Raj Sheth, who co-founded the company late last year. "Hiring at startups is often unstructured, and recruitment software is only available to big enterprises." For a monthly fee of up to $200, depending on the number of job postings, customers get a one-stop spot to post, advertise and manage job listings and applications.

The company's stable of paying clients includes Groupon China and Levi's India, and in the U.S., consulting firm 2ndWave. Sheth has also signed on tech startups like Blue Mountain Labs and Cloudscaling, but at least 70 percent of his clients are non-tech companies.

Sheth advises founders to pay special attention when posting job ads, because often it's the first impression candidates get of a company. He recommends posting in relevant places, like a niche startup board or through an incubator like TechStars or Y Combinator, which will yield more responses from candidates who understand what to expect when signing on with a startup--more equity than salary, a big job footprint and a ton of risk.

Next, spend as much time writing the job description as a motivated candidate would responding to it. "You're not hiring for a normal job," Sheth says. Be articulate and communicate the expectations, but also make sure to introduce the company properly, so you can filter for candidates who are aligned with your culture.

As historian and explorer Sir Walter Raleigh once noted, "The employer generally gets the employees he deserves." All the more reason to do it right at a startup, where every hire makes an exponential difference. Read more of this article via entrepreneur.com

Consulting, Speaking & Coaching. Driving Growth through Innovation  

Innothink Group is a strategic management and innovation consultancy. Where many consulting firms are reluctant to bear risks or tie their rewards to project outcomes, we decided to build a better model. We align our success with yours. We’re outcome obsessed, outcome paid, putting over a third of our fees at risk subject o hitting predetermined milestones. More than a guarantee we wanted from the outset to create true partnerships. 

For speaking, coaching or consulting inquiries contact: 

CEO Jim Woods

+1 719- 649-4118