The CEO Challenge for December 2013

Lots has been written about Good to Great. Yet, shortly after the book, some of the celebrated companies weren’t so Great.

There is only one thing that will make a company Great, or even a Survivor, and that is to Continually Produce More Profitable Revenue.

Research and common sense tells us that a company that does not Continually Produce More Profitable Revenue will first become insignificant and then go out of business (Blockbuster, Sun MicroSystems, and TWA).

When people talk about being Great based on operations or execution alone, I cringe. Great operations do not have to result in making or growing profits in the short-term, or more importantly, in the long-term. Lots of Great operating companies like DEC (Digital Equipment Corporation) and Circuit City just stopped growing and died.

In the 20th Century, many companies – particularly in North America – spent most of the century fulfilling bubbles like the growing middle class and a world deprived of goods after the Second World War. By the end of the 20th Century, there were lots of goods and lots of competition. Just being a Great operator without being Great at Growing Profitable Revenue is not enough.

If you have your sights set on being a Great 21st Century company, you must keep in mind these 9 requirements.

 

  1. There are 3 rules to thinking GREAT. Michael E. Raynor & Mumtaz Ahmed from Deloitte Consulting LLP spell them out in The Three Rules: How Exceptional Companies Think. If you aren’t thinking about the right things and deploying operations aligned with that thinking, then you have to hope you are in a fulfillment
  2. II.Good enough sometimes is enough when it comes to products. Often customers don’t want and won’t wait or even pay for Great products. They want “good enough” and they want it now.
  3. III.Hedgehog – The Science of “Revenue Generation” would say that your Hedgehog is a very specific way to monetize in the market and that you know what that is when you have completed the Revenue Strategy. The Hedge is a combination of your passion and the market needing a problem solved in a compelling way.Fly Wheel – This is something every company aspires to and Revenue Science gives you a roadmap to make that real. The Revenue Roadmap starts with the Revenue Strategy, which defines your True North (or Hedgehog). 
  4. IV.Level 5 leaders have to lead somewhere. That somewhere is the result of your Revenue Strategy, which creates your aligned True North with metrics that assure leadership clarity and execution focused on that somewhere.
  5. What you do and how you do it is never enough. Many people mistake companies that are good at executing their process as Great companies. The companies that execute their process and tactics look Great as long as the company operates in a fulfilled bubble. Hungry or cold people are not fussy about their food, shelter, or provider if they started with nothing. As Maslow tells us, when people pass the fulfillment stage, they have higher level needs, higher expectations, and greater willingness to pay for the next level. Those companies that fulfill based on what they do and how they do it have a hard time after the bubble has burst and the buyer demands more than a mass produced commodity. The next level and long-term Greatness requires a high-level purpose, which manifests from the Revenue Strategy.
  6. VI.There is no Great without a Revenue Strategy. Good to Great seems to assume that profitable revenue will exist if you hire the right people and have level 5 leaders with a business strategy and execution. That is all true as long as the world is in a fulfillment bubble. In the bubble, the seller’s costs are too high, the margins are too low, and the customer is anything but loyal. A Revenue Strategy, based on the 5 Revenue Strategy Questions, creates more profits, with less investment, while producing loyal customers, partners, and staff.
  7. VII.Answering the 5 Revenue Strategy Questions creates a deployable Revenue Strategy (your True North) that is Great in the short-term, and when continually applied, is even GREATER in the long-term.
  8. VIII.Your True North creates your Fly Wheel. Once a True North is in place, every person in the company knows both where they are going and when to say, “No.” Everyone going the same direction propels the Fly Wheel, and saying “No” to the wrong customers, partners, staff, investments, processes, and distractions avoids pouring sand in the Fly Wheel that just has to be overcome. Living your True North and saying “No” moves you along the roadmap to Greatness.
  9. IX.Revenue Strategies require principles. Principles accelerate the Fly Wheel and keep it greased. Principles like “always acting with integrity” help you hire the right people, get them on board faster, and remove indecision – all of which accelerate the Fly Wheel.
  10. Strategy Question number 5 moves the Hedgehog from a concept to your written contract with your ideal customer. Without compelling offers, each interaction with a possible buyer requires you to start the Fly Wheel and then, after each transaction the Fly Wheel stops dead, and you start it again for the next buyer. Hedgehogs result from intentionally creating scalable offers that accelerate your strategic Fly Wheel.

Good to Great was first applied to companies who were Great because they were fulfilling a bubble (in the right place at the right time) and were excellent operators. What was missing was an aligned Revenue Generation Strategy with metrics that kept improving the Growth of Profitable Revenue supported by aligned operational excellence.

Now, re-read Good to Great, and then build a deployable Revenue Generation Strategy before the bubble bursts!

 

What do you think? 
Please share your thoughts and experiences with us here!

 

Comments

comments