Consistently Grow Revenue at Record Levels – Article 2 of 2
The first step in consistently growing revenue is strategy. You know you have a good strategy when your revenue growth is over 20% and/or at the top of your industry group. However, growth is not easy to sustain. There are roughly 23 million firms in the US, of which only 4 percent get above $1 million in revenue. Of those firms, only about 1 out of 10, or 0.4 percent of all companies, ever make it to $10 million in revenue and only 17,000 companies surpass $50 million. Finishing out, the top of the list, the top 2,500 firms in the US are larger than $500 million, and there are 500 firms in the world larger than $11 billion.*
Article 1 focused on the importance of strategy and having the right personnel on your team to help forecast the future. While this is essential to building a high-growth organization, I have seen many an organization develop great strategy and forecast well and still not get it done.
Last weekend, my client and friend, Raul Segredo, CEO of Avionica, became the star of this article. Raul runs a very successful and fast-growing aviation company. He took me flying in a six-seat airplane. In our mission for the day – going to lunch – he took me through his routine, one that I believe exemplifies the way to consistently grow a business at record levels: having everything you need to see on one page, looking at leading indicators, and great communications systems.
Pilots regularly do exactly what the CEO needs to do. When we got to the plane, Raul had a routine that I will call leading indicators for a safe flight. He inspected the entire plane to make sure that everything was the way it should be (equipment check, fuel check, etc). He did not take off until he knew that he was not putting himself, his plane, and his passenger in danger. He knew where we were going and had the flight charted on how to get there. He had the proper training and knowledge to adapt to conditions if unexpected events occurred. . While we were in flight, he had everything he needed to see on one panel to stay on course and fly a successful mission. Lastly, had anything gone wrong, there was a communication system in place to address issues.
Goal alignment is a key to consistent growth. The best way to do this is to reduce your strategic and business plan goals to a “one-page” format. Not only is this achievable, it is imperative. The concern of many leaders is that there are a lot of moving pieces in their business and their tendency is to want to control all of those pieces. This causes a lack of focus and too many unfinished things. Rather than trying to feed the entrepreneurs’ desire, the one-page format forces them to focus only on what is most important to them “now.” Using this methodology, everyone has the same control panel but with differing measurements, depending on their roles and responsibilities. Some of the columns are the same for all, such as core values, vision, company targets, and brand promise. However, there are columns on the control panel that are specific to the individual/department such as: accountability, actions, and measurements. On this control panel there should be no more than 3 key priorities and core measurements of focus. In the end, all align with the CEO’s control panel. By utilizing this method, you provide for complete alignment throughout the entire organization
As an affiliated coach with Gazelles, Inc. we are called upon to help the organization implement the growth tools talked about in “Mastering the Rockefeller Habits” by Verne Harnish. As part of its strategic planning processes, an organization must identify core stakeholders and processes that drive growth. Once identified, it is imperative to have the 2 or 3 leading indicators that will let you know in advance (e.g. revenue and profit) that you are well on track to do well. By focusing on these leading indicators you will better execute on your strategy and thus better sustain your growth.
A great example was a technology development firm that was growing over 100% per year. After 4 years of consistent growth at incredible levels and being on the top of most highly recognized magazines’ (e.g. Fortune and INC) lists, they were seeing a decline in performance and turnover in employees who were considered stars. Originally the CEO thought that the company was outgrowing his people. Ultimately, he realized that he was burning everyone out. As a result, the company developed a new leading indicator of “Employee Hours.” They looked at all of the projects and made it a company requirement that all projects were staffed and planned to fit within a “60-Hour Work Week.” This became a critical leading indicator to their success and sustained growth. This goal actually revolutionized the way the company thought, improved quality, reduced cycle time, employee retention, customer satisfaction, and actually increased growth.
Another great leading indicator that is highly recommended for every business is Net Promoter Score (“NPS”). In “The Ultimate Question,” author Fred Reichheld introduces the NPS as the way in which leading firms transform their customers into promoters. The survey focused around one simple question, “Would you recommend us to a friend?” The analysis shows that on average, if a company increases NPS by a dozen points versus competitors, it can expect revenue growth to double. This is a radical change from the customer satisfaction score, which is totally ineffective in predicting success for a company. .
You would think by the title of Patrick Lecioni’s book, “Death by Meeting,” it would be about companies having too many meetings. Actually, the point of the book is that companies have too many bad meetings. Your organization must have a system of daily, weekly, monthly, and quarterly meetings that focus communications around what is critical to driving your businesses, preventing bottlenecks before they happen, and promoting teamwork. Design meeting agendas to discuss those topics that will drive your business, using the information you already prescribed in your “one-page” plans.
Growing consistently at record levels starts with strategy. Once you have developed a good strategy, you may not grow as much as you should because of poor execution of strategy. The key is to learn from my friend Raul to be a good pilot. Have a good flight plan that you can fit on one page, use leading indicators to identify issues early, and have a great communications system so you are able address problems rapidly and maximize growth and profits.
Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at (305) 722-7213 or [email protected]. We bring proven tools that lead to new ways of thinking that lead to better results.
* Excerpt from Mastering the Rockerfeller Habits by Verne Harnish.