At least of long-term profitable revenue
Sales are up, more employees every month, profits are growing, my bank likes me – how can things get any better? This is the business equivalent of being 22 years old, feeling great, being able to eat or drink anything, looking trim, feeling healthy, having a great job and a full social life.
Fast forward and the story changes: being in the right place at the right time does not a future make or more accurately not a great future make.
We all know classmates who were on top of the world at 22, but at the 20 year reunion have physical challenges and are hoping to find that job to get them back on their feet.
The business version of that 22 year old is that company who was making money and growing during a great economy. Lots of companies have the good luck to grow because they are in the right place at the right time with the right product or service.
These companies make a lot of money and are the envy of their peers, loved by their investment advisors and living the good life.
What these people or companies are not doing is building a strong foundation that prospers without the good luck of “right place at the right time.” When everything is going great, it is hard to stop and apply strategy, best practices, and discipline.
Just like looking around at the reunion, the business world gets a daily rush of news about mortgage companies going out of business, banks closing, Pontiac and Saturn Motors have ceased production, 100 year old newspapers no longer publishing, and our favorite restaurant is gone just to name a few.
How is it that those companies, who were in the right place at the right time, can be so fragile that a good competitor or a bad economy can put out their flame?
Research is clear that more great companies come from depression and recession than from the good times (right place, the right time). Those companies that last decades, start with no luck, no money and storm clouds everywhere. What makes the long-term difference?
All that good luck, cash, success and revenue leads CEOs and founders to hold a wrong set of assumptions that they seldom test or validate. The voices of the world yell the good luck is the evidence that this is a great company doing the right things based on the right results. Even one of my two favorite authors Geoffrey Moore talks in “Crossing the Chasm” about how a company that crosses the chasm should abandon quality, traditional best practices and just go get all the market share possible. When Geoffrey published this book in 1991, I just could not accept that assumption as valid, because my other favorite author Eliyahu Goldratt who wrote “The Goal “in 1984 had convinced me that there was a science to the practice of business that will always dominate over the long term.
When “Crossing the Chasm” was written, the high tech world was in the right place at the right time, and the bubble was a long way from bursting. The first burst of the tech bubble was 10 years later, and it was followed by another period of growth based on the luck of right place and right time that will run for the rest of this decade.
To transition a right place, right time company to a long-term winner, the company should manage costs and apply these 3 “Revenue Generation” best practices:
First – Hold the company and every offer the company makes to the market to the standard of having a “Revenue Generation” strategy based on these 5 questions.
1. What is our brand promise?
2. What’s the customer “problem” that we solve for the customer NO ONE else Solves?
3. What niche/s do or will we dominate?
4. Who is our ideal customer?
5. Which Offers result in domination?
If you can’t answer the questions and / or the answers don’t prove to be compelling in the market, there is risk on the horizon. So create a compelling strategy or sell that part of the business while the luck is with you.
Second – Build a visual portfolio of the offers you have based on the BellCurve from the diffusion of innovation. If your offers have all moved to the right side of the curve, you can plot your end. If the offers can’t be placed on the curve, the business is without any revenue strategy and deep in chaos and at high risk to any competitor or slowdown.
Third – Develop an assumption testing culture where every person, in every planning session, no matter what their role or position must ask the question of team members if what they are talking about is based in fact or assumption. If it is based on assumption, the next question is “if the assumption is wrong, what is the level of risk?” If the answer is high, the assumption must be validated now, and if the risk level is low, the planning can proceed while the assumption is validated.
Good luck plays to the ego and false assumptions. Go beyond this enemy and apply the science of “Revenue Generation” and bring compelling value to the market for the long term.
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