Every entrepreneur's business plan looks perfect . . .
"We've got an incredible product" "There's enormous customer demand" "Best of all, there's no competition!" "We've got great financials with just 1% market share ... ... just think where we'll be with more market share!"
. . . until the 'real world' takes over.
"If you must play,
decide on three things
at the start: the rules of
the game, the stakes,
and the quitting time."
"The reasonable man
adapts himself to the
world; the unreason-
able one persists in
trying to adapt the
world to himself.
all progress depends
on the unreasonable
George Bernard Shaw
In our experience, most enterprises fail in their beginnings: ill-conceived strategy … poorly developed business model … confusing synthetic ‘solutions’ with authentic market needs … misjudging the competition … emphasizing sales over marketing … going with preferences and hunches instead of research and testing … wrongly allocating internal resources … wrongly directed execution (doing the wrong things) or simply insufficient execution (not doing enough of the right things). Plans are not enough. Execution is not enough. Great plans badly executed and poor plans executed aggressively both bring the same bad results. Success requires more than good plans and more than excellent execution. Much more.
Moving Down the Funnel
Today's world operates in four dimensions. It moves at blinding speed. Any given job may cut across every function in the company - engineering, manufacturing, HR, finance, marketing, sales, business development, R&D... an employee might communicate with Europe in the morning and Asia in the evening. That person must take into account different personalities, technical backgrounds, cultures, languages, attitudes. No one has taught your people how to do any of this.
Blow up your organization chart. Face it. Organization charts are useless. They show show a false picture of reality, grouping people with similar backgrounds, personalities and job responsibilities, regardless of the mission at hand. Org charts are nice and neat and hierarchical and antiquated remnants of 19th century military organizations. They made sense when the world was two dimensional. When everyone lined up and marched in unison.
Today's World is Flat
In the real world, companies operate in highly connected networks, not in isolated silos. Processes cut across organizations following the development or delivery cycles of product and service. Vertical organizations fail. Heirarchy fails. This is what supply chain management is all about. This is what the IT organization knows when they implement an ERP system. This was the early breakthrough of Silicon Valley business: heirarchy and organization charts are meaningless. You are as important as the value you proivide to the mission of the Company. The rest of the world is not yet caught up.
Here's how your company really works. Your company has an informal network that cuts across all the boudaries. It ignors the hierarchical silos of vertical functions. They organize around processes that look like funnels. Your company has a product development funnel, a supply chain funnel and a revenue generation funnel. Each is supported by financial and human resource processes. Never seen these funnels? Ask your people how their work really gets done every day. You might be surprised. Every one of your company processes works its way down a funnel which filters many possibilities down to a few outcomes. And at every step along the way, trade-offs are made between many variables - trade-offs that untimately show up in your products and services ... and financial performance. Is your organization making the right trade-offs?
What's the secret sauce? To execute well, you must understand all of your processes, both internal and external. This is the only way to see what is missing, what is not getting done, how your company might veer off course. Complex? Yes. Difficult? Yes. Impossible? No. Develop and maintain a focus on process. Not hierarchy. Forget the 'chain of command' and pay attention to your horizonal business instead.
Let's get to work ...
In the real world, there are no easy anwers. In fact, there are so many targets (variables) that it is hard to even figure out which ones to shoot at. MBA programs teach business like it is a Newtonian world with linear cause and effect relationships. Build a great product and go sell it to a big market. The real world operates more like bounded chaos where uncertainty and opportunity intersect with endless possibilities. The trick to finding the right answers comes from asking the right questions. That is a matter of defining the problem correctly. Easy to say, hard to do.
The Soft Stuff is the Hard Stuff
Managing the most critical resource. In real estate, the saying is 'location, location, location'. With companies, it's 'people, people, people'. All business leaders know that the right people in the right places doing the right things make all the difference in the world. But most entrepreneurs don't manage the people side of the business effectively. The bias is toward action, toward engineering the product, toward driving sales. After all, isn't this what entrepreneurship is all about? Go, go, go, fast, fast, fast.
Where most entrepreneurs fail. Seems obvious, but most businesses fail at this all the time. Great business plans are not developed in a vacuum and cannot be executed by one person. It takes a coordinated group, a skilled team. It takes hiring the right people, not hiring the best resume. It takes defining the job right and aligning the skills to the job. It takes coordination and collaboration across a global landscape now defined at Internet speed. It takes development of individuals and teams that work together to produce plans and execute in an immediate, dynamic environment. This is how work really gets done.
The key principle. This is how businesses succeed. This is how fortunes are created. Business plans with static scenarios, quaint organizational charts, and fictional financials mean nothing here.
Welcome to the real world.
Silicon Valley Strategies | www.siliconvalleystrategies.com | 415.559.0446