A few years ago I published my Top 10 New Year’s Resolutions for CEOs. The list is timeless and all CEOs would benefit by taking a look at the list and prioritizing what you should work on starting now. That said, the list is operational in nature and you may be ready for a more strategic set of New Year’s Resolutions, the topic of this post.
As your team develops and matures, you should be able to depend on individual team members to attack each of the operational areas, allowing you to spend more time identifying and developing longer-term strategies that will build your company faster and create more competitive advantages. This post is for CEOs who are ready to become more strategic in nature and want to think about resolutions that will help you execute some great strategies. Here they are:
1. Get Your Senior Team Solidified
Do thisby identifying and finding the next key missing people around your management table. Why? You need to offload work from your plate and the plates of your other senior team members so that you can take on work that is longer-term (a.k.a., strategic) in nature. You also want to get people who are more specialized in your key operational units (the units that are most important to your business model).
To do this, answer the question: What work is on your plate and/or the plate of your senior team members that can be better done by another senior team member that has expertise in a particular area? One way to determine this is to gather your senior team around a white board, post each of your activities that take meaningful time on post-it notes, and then build clusters of post-it notes on your whiteboard, with each cluster representing a senior manager’s responsibilities. This should help you to identify clusters that represent new positions.
Another question for you as the CEO is who is currently at your senior management table that should not be at your table? As a company develops, you need more senior people in the senior roles. Some CEOs over-hire at the early stages and then company then grows into the more senior people. Other times CEOs hire less experienced senior managers and hope that the people in the senior positions will develop as the company develops. Regardless of your situation, you really need to address this issue, as most companies have people in senior roles that can’t keep up with the demands of the role and you need to get the best person possible into each important seat.
Net, net, set a resolution to perfect your senior team in the next 12 months!
2. Identify and Exploit your Accelerators
If you are an expansion stage company, then you have a set of business growth strategies that have a solid economic model associated with them. You are also in the process of getting your senior team solidified so that you can better execute and expand your business growth strategies.
Your team should be expanding your business by improving your whole product while expanding your marketing, sales, delivery, and customer service resources. This will expand your business, and the key question for you is “can you find additional strategies that will accelerate your growth?”
Acceleration strategies are strategies that accelerate your growth in better ways than simply adding more resources to your current business model. Ideally, accelerators grow your top line at a much much greater rate than you grow your resources, such as expenses or number of people. (note: substitute “users and user engagement” for “top line” if you have a strategy that ignores your economic model at this point).
Some example accelerators
Below I list some of the accelerators that have worked really well for other expansion stage companies. Just to be clear, your business is unique, so the best accelerators for your business are also going to be unique. What works best for one business is not necessarily going to work best for another business.
The key for this resolution is to pick 1-3 potential accelerators that you and your team feel have a high potential of working well for you, experiment with them over the next few months, kill the ones that don’t work and operationalize and expand the ones that do work.
Product market accelerators
The best accelerators exist by better engaging with your product market participants. That is, the accelerators are are outside your company but you need to do something to stimulate them. For example,
– Focus on the customer segment(s) that contain your best customers and that you can dominate. For example, Intuit aims at individuals and small businesses that have very different needs than larger companies and Salesforce.com originally aimed at companies that had small to medium sized sales teams. Perhaps you can capture more best customers more easily via more specialized approaches aimed at specific customer segments?
– Focus on your users and create more competitive advantage over competing companies. For example, one of the companies that I work with, Mashery, recently launched a feature, PCI compliance, that allows retailers to sell products through their APIs without the need for the customer to complete their purchase over their website. It is unique and valuable to retailers and has created some great business opportunities for Mashery.
Perhaps you can focus more on your target users and get some insights into what you can deliver that will create more unique value to your users? Perhaps you can add some significant additional value to your users that will make your users more engaged and sing about you to others?
– Focus on your pricing. Most companies are afraid to price their products appropriately and they companies are leaving money on the table. You probably have great opportunities to improve your pricing structure and your prices while keeping everything as simple as possible. Perhaps there is an opportunity to improve your pricing?
– Focus on your users and create more network effects and/or allow your users to sing about your product more easily to others. Perhaps you can create a product that gets users to “market” your product for you like eBay, Groupon, Atlaissian, Facebook, Dropbox, and many others have done so successfully?
– Build a relationship with a key member of your users’ ecosystem of products/services. (these are other products and services from large companies that your users are generally using) For example, Zynga originally keyed off of Facebook to get their users, Microsoft got its big break by working with IBM, and Firefox got a big break from a partnership with Google. Perhaps their is a large player or two in your users’ ecosystem that could help you accelerate?
– Get others to sell for you and then service the customers themselves. There are many indirect sales channels to your customers, including franchise models, multi-tier marketing (e.g., Avon), Affiliate Programs, retailers, Value Added Resellers, Manufacturers Reps, Distributors, etc. Perhaps you can figure out who is currently already selling to your target buyers and get them to sell your products as well?
– Become the product market “brand” for your target market that helps your target market better understand your unique advantages vs. your competitors and get your target market to perceive you as the go-to vendor. This will naturally happen if you dominate your product market like Google, Drop Box, Zynga, LinkedIn, Facebook and Groupon have done.
You can also put a lot of resource against marketing to own your product market brand like Box.net and HubSpot have done over the last few years (they have managed to be perceived as their market brands while remaining small companies relative to their brand awareness and perception).
Also, you could at least partially do this without being large or spending a lot of money by figuring out the brand messaging that resonates the best with your target market and then using that messaging going forward (with whatever marketing budget you have). You could also key off that messaging by creating great content for your target customers and becoming one of their key sources of information (this relates to my content factory point below).
Perhaps you can optimize your resources and/or increase your marketing resources to become the dominant product market brand to your target customers?
You currently have a number of methodologies in place to design and create your product, market your product, sell your product, service your customers, and to help focus your management team. There are a number of ways that you can make your methodologies more efficient and effective. For example:
– Set up your management systems that will allow your management team to stay aligned and focused on the right issues with as little work as possible. The basic idea is to help your team get more done in less time. Steve Denning describes the idea well in his Forbes article here. Perhaps you can get more of the right work done right?
– Separate your product design (product management) function from your product development function. If you have your product design function co-mingled with your product development function, separate them. This should accelerate both your design and your development as it is gets less and less efficient to have these functions co-mingled as you grow. Perhaps you can improve both your software design and your development with a simple organizational change?
– Use Scrum in your product development function. Scrum is the fastest growing development methodology because it works by making software better, faster to develop, and also makes software developers happier. Most companies have a huge opportunity to improve this critical methodology, even companies that have been performing scrum for several years. Perhaps you can build better software faster while making your team happier?
– Build a content factory in your marketing department. One of the critical needs of all marketing departments is to build more better content for your target market. You can learn more about this accelerator by checking out the Content Marketing Institute or by reading this book. Perhaps you can become the go-to publisher for your target customers by publishing the best content in the industry in an efficient manner?
– Build a Sales Factory. Sales is a huge expense in B2B sales and certain B2C sales. The better your methodology, the more sales per salesperson (or per unit cost). There are a lot of good sources to learn more, but here is a good outline for a solid sales factory. Perhaps you can sell more per unit resource?
– Follow the “the best service is no service” Customer Service Philosophy. Certain companies have large and growing customer service functions. The book The Best Service is No Service offers the best approach that I know to improve your Customer Service. I also wrote a blog post on the metrics for customer service that aligns well with the book. Perhaps you can make your customers happier while reducing your customer service costs?
– (if you have professional services) improve your professional services management system to produce a higher gross margin, happier professional services team members and customers, and easier scaling. Professional Services is generally poorly run in product-based companies and there are a lot of opportunities to manage the function more professionally and/or develop a professional services partner program so that your partners perform the professional services work. If this is an issue in your company, perhaps addressing it will help you accelerate?
Ultimately, your people are your business and manage/execute your methodologies, so you want to get the absolute best people to perform the most important work in your business. You can also leverage your people by procuring capabilities from outside companies. Here are some people accelerator examples:
– Build a people factory that finds, recruits, trains, motivates and retains the best people to execute your core methodologies. You can rely on your network, outside recruiters, and your VC in the early stages of your expansion, but at some point you are going to need to build your internal people factory to truly scale your company with exceptional people. Perhaps you can find more great people to fill your open seats as you grow?
– Create a labor market “brand” for your target people that helps them better understand the unique advantages of working for your company vs. other companies that they could work for. Having a competitive advantage in the labor markets will help you attract the best people who are in great demand. Perhaps thinking through and creating your unique advantage will help you attract and retain more of the best people?
– Gain capabilities and coaching by improving your Board of Directors. Every company has opportunities to improve and/or increase its board and gain the capabilities and coaching from experienced and networked people. Perhaps you have the opportunity to leverage your board to better help you develop and execute some of your strategies?
– Get one or more capability partners by outsourcing whatever you can effectively outsource. You probably already outsource some of your marketing activities, development activities, financial activities, and legal activities. What are the other capabilities that you can outsource and/or partners that can provide you with unique capabilities that will provide competitive advantage and allow you to accelerate? Perhaps more great capability partners will help you do more and do better at lower expense levels than you can do them internally? Perhaps they will also allow you to scale more easily?
– Get capabilities from your “Parent” companies. If you have a corporate parent, perhaps they have capabilities that you can leverage? If you don’t have a corporate parent, perhaps considering selling your company to a corporate parent that gives you unique capabilities would give you more of a competitive advantage and/or help to accelerate your business (if so, it might be a win-win transaction)? Related to this, perhaps there is a possible partnership with a corporate venture group or a Venture Capital firm like our firm, OpenView Venture Partners, that provides acceleration capabilities along with capital?
There are many other possible accelerators for your business. Two of the others include geographic expansion and acquiring companies/technologies/products, but in my view these strategies generally are better for companies after they have tried other acceleration strategies on the list. That said, if you are already at this stage of development, give them some consideration.
Net net, if you want to be a more strategic CEO, you should have a resolution to identify and exploit at least one great accelerator for your business in the next 12 months!
The role of the CEO in an expansion stage company is ever-changing and it is up to you as the CEO to manage the change. Over time, you need to get your operating management set up and then step up to the next level and work on your accelerators. Set these two New Years Resolutions and follow through on them…you will be well on your way toward becoming a more strategic CEO!
If you are at a stage of development that you can’t yet take on these strategic resolutions, then take on the 10 operational resolutions for a CEO.