Doing well but out of sorts
Early in my career, I held the position of Distribution Sales Director for a high-growth software company. My team was responsible for about 40% of the entire company’s revenue working with massive software distributors, large channel players, and value-added resellers. I had mastered the tiered distribution game since I had done it before for a larger company with great success. My dedicated team and I were in our element. We knew how to work with the channel players, we had good products, and excelled with our product managers. Work was good, but something was missing. One day I realized that I lacked context to our entire company. We were pretty good at slaying revenue dragons, but I had to know more about how our kingdom worked and how our team fit inside that kingdom.
I realized that I lacked context to our entire company
Luckily, I had a VP of Sales who encouraged me to go across the organization and meet people. People not just in marketing and sales, but those in finance, R&D, and support. For example, I took an accountant to lunch to learn what she did (gaining appreciation for being an accountant) and to explain what our team did. After that, when any of my customers had financial questions or challenges, things went very smoothly with our internal finance team and I no longer required our CFO. I did the relationship math. When good people across the organization understand and care about each other, the company is more efficient. Not to mention, it creates friends who look out for the health of the business. Cross-functional alliances assist employees in handling daily business tasks. Still, these meetings on their own were not enough to maximize the understanding of the company.
When good people across the organization understand and care about each other, the company is more efficient
Later on, when I moved into marketing and had my own P&L as a business unit director, I was able to understand our unit's growth engine. Then, as an executive and board member, an even greater view of the entire company. Finally, as someone who advises companies, venture capitalists, and private equity firms, I have disciplined myself to define a unified picture. Alas, inside of companies, there simply is just not enough dialogue around how the company operates and the unique supply chain cocktail that makes it valuable.
Growth engine (business model) context is what’s missing. This is not the same as goals. Goals tell us what we want, business models instruct us where to add operational value. Constant attention on our growth engine tells us where our ideas and general efforts are helping. Other than the CEO, few people fully understand the complete business model of their own company. What are the components and the combinatorial impact that creates unique value, growth, and earnings? The true value of your company is the efficacy of the value chain.
Few CEOs manage, communicate, or educate toward a holistic grasp of their own growth engine. That's called lost opportunity folks. Instead, they manage department heads (also in the business model dark) toward their respective annual goals. We can leverage our diverse talent so we grow faster. Going back to my accountant colleague, what if she knew the complete business model? Who knows what experiences, relationships, and ideas that were sitting beneath “her role” where she could progress our business? It is so easy (LinkedIn) for today’s employee to communicate with their business connections outside of their employer. Employees could explain their organization more effectively if they had the benefit of context.
Few CEOs manage, communicate, or educate toward a holistic grasp of their own business model
We need simple visual tools that communicate the growth engine and a common language. All employees and business owners can now see the big picture and the relationships between the adjacent components that create that picture. A well-known problem in managing departments is catching silo-itis which causes harm because of how they see the business and because of how they get recognition. Happening at this very moment is a joint meeting where a department head is confused about what they(the other department) are doing. With a unified business model understanding, our teams can prioritize and discuss how we are working to improve the model that generates earnings.
As an executive, I would rather be held accountable for addressing a growth engine component (not a department) and how I can help other parts of the business model. As an employee, I would rather be known for improving or fixing something in the business model as a part of my individual performance review. When the business design model is being improved, it’s not about me anymore. Business model improvements enable gains for our teams, divisions, and the company. Welcome to understanding a greater purpose than “me”.
Let’s do our jobs fully aware of how our efforts live in harmony with the rest of the growth engine. One of the great failings of hierarchical management is to keep employees down by withholding. To make sure our reports never get the exposure to fully understand what the business is. Once again, needless fear and ego jump into the game. We have to show courage. Employees that get exposure to our business models and C-level concerns become lynchpins to our business. Conversely, employees that aren’t interesting in learning more about your model, shine a light on their limitations.
One of the great failings of hierarchical management is to keep employees down by withholding
Growth engine excellence is a game-changer because you aren’t required to provide the best products or services. Look around. Are you painfully aware of imperfect products and services? This is the result of a superior business model that includes partners, strong branding, clear pricing, distribution channels, persona targeting, and responsive customer support. The guy with the best product might have a warehouse of the best product because his business model isn’t working.
Growth engine excellence is a game-changer because you aren’t required to provide the best products or services
Businesses that test constantly win faster
Your existing business model is dynamic (why we call it an engine) and it’s being tested everyday by your customers and partners. Does your company capture what it learns so you can make insightful adjustments to the model? What kind of frustrations do you suffer from not being able to share the knowledge?
At times, you’re creating a new model of iterative learning where you will embrace the philosophy of testing frequently, fail fast, and document what you learned. Be careful not to include the same people leading existing business models with those pursuing the new models. The former is sharpening the saw, for the latter, you’re inventing a new kind of saw, requiring a different mindset.
Growth Visions has created our own working one-page Growth Engine framework. True, there are other business models out there, but they seem to focus only on startups using a snapshot approach. Ours is more flexible and we thought other components needs to be included. In the next few weeks, I plan on writing quite a bit about the usefulness of business models. We use them with our clients and know they are necessary to create conversations that make the biggest difference.
Imagine if everyone in your company understood your growth engine design. How could have helped in recent situations or conversations?