If you’re reading this, you’re probably a entrepreneur, founder, CEO or someone with a leadership role in an organisation – even an organisation of one with you as the only employee.
The challenge you have is growing your business – how are you going to go from 0 to 1, from no sales to the first few, from the first few tens of thousands to your first million.
How are you going to change and compete and be efficient in every part of your business?
There are some very important decisions you need to make – about who you work with, what stuff you need and how you do things.
How should you go about things if you want to get it right?
Let’s start with how to do it wrong.
Imagine you’re the CEO of a company that makes bottled vinegar and you think it might be a good idea to go into the ketchup business.
You call in your team and ask them to do a study – work out whether this is a flyer or not.
What is that team going to do?
Warren Buffett wrote in 1989 about the institutional imperative – that force in business that makes smart people do stupid things.
For example, he write that “Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops”.
It happens because organisations and groups of people interacting together have dynamics – and the factors that make us human also cause problems when it comes to making decisions.
You would think that most managers and people that work in businesses are rational and take decisions on a reasoned basis.
It often doesn’t – reminding us of the story of the accountant who, when asked during an interview what he thought the profit from an example set of accounts would be, got up, close the door and, in a hushed voice, asked the interviewer “What do you want it to be?”.
Instead, start by imagining you can have anything you want
Give yourself and your people free rein. Imagine you could do anything – get whatever resources you wanted, go wherever – you could have anything you asked for that you needed to achieve your goals.
Note the point about what you need. Let’s say you want to meet 10 companies. What do you need? Is it lists? Is it telesales people? Is it a website?
What do you need to have in order to hit that goal of meeting 10 companies?
Then – insist that whatever you have pays for itself in a reasonable time
You want to hire 10 people? Fine – as long as they pay for themselves in 12 months.
You want a website? Fine – as long as it brings in enough money to pay for itself in 24 months.
You want to go out and exhibit at conferences? Sure – as long as the sales from the people you meet there pays for the costs.
Make people take responsibility for results
When you do this – the ideas you come up with and those that your team come up with are likely to be more reasonable.
You’ll get a plan from operations that says by investing in new machinery, you’ll cut costs.
Sales will add people, but this time it will be the right ones.
Marketing will create material and content – but this time it will be aimed at informing and educating customer and not stroking the egos of the managers who work here.
People respond to incentives
If you want amazing ideas – put the right incentives in place.
When there are no rewards for success or penalties for failure, people come up with weak and lazy ideas.
When challenged, however, they come up with good ones that they know will work.
Your job as a leader is to create the right conditions for your team to get on and deliver results – and then get out of the way.