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What Does Greatness Ultimately Look like for You?

by on September 10, 2014

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There’s a definition of GREAT for every business.

Even if you’re doing something that nobody has done before — especially if that’s the case — you should be able to draw a picture of what greatness looks like for you and your team, and be able to explain why.

The companies with the best shot at sustainable growth and valuation are the ones that do the best job of connecting present actions to future outcomes.

While it’s important to look at trailing indicators, you need to keep your eyes fixed on leading indicators as well. Looking at what changed for businesses like yours will give you a taste of what’s coming up while you still have time to adjust.

It also gives you the opportunity to think of doing something completely different, better, or faster. Being informed arms you for the future, but it doesn’t have to define it for you.

How are you going to get there?

Once you have your vision you need to lay out the roadmap to make it a reality.

So what do most companies do?  They engage in annual strategic planning.

The biggest issue with the annual planning strategy: It discourages you from making investments in people and resources that won’t pay off in the next year.

If you’re all about hitting a number, you won’t make choices that might distract from that goal, or that won’t immediately help you achieve it. Especially if your sales cycles can be very long, it’s tempting to make decisions that make sense within the span of one year but not in the broader context of your business.

You fail to anticipate disaster.

When you carry out most of your annual plan at the beginning of the year, all the risk is pushed to the end. You’re basically saying, ‘I’m not expecting things to change in the immediate future.

Your benchmarks are meaningless

When you work on an annual cycle, you need to finish the year first in order to understand how you’re doing versus any benchmarks that you have from the past.

That means you don’t really have a way to understand whether your first quarter looks the way it should compared to the competition, or whether your second or third or fourth quarter look how they should. All you can do is reflect on the entire year.

EOY becomes your one data point. You don’t hold things up to benchmarks as much as you should.

The Argument for a Three-Year Plan

At first blush, planning three years in advance sounds even more broad and detached than staking out just one year, but the system is more nuanced than that. It requires pulling in a great deal of data from other companies to set up strong benchmarks, to determine what are “best practices” and answers a very important question for any company: “What does greatness ultimately look like for us?

Gathering as much relevant data about Best Practices as you can should be step one of any planning process.

Planning what you are going to do the next year based on what you think is possible without looking at the experience of others may seem like a good policy, but it only yields reasonable goals.

You don’t account for step changes in your market or customer base or any opportunities that may take your business to the next level.

You actually aim lower.

Ask yourself and your team the following questions:

1) What was the best performance we saw for any company? What was the worst? What was the average?

2) How far apart were companies on any given metric within the same year (metrics included departmental spends, bookings, and more)?

3) Which years were “great” for companies and what moves or outcomes made that possible for them?

Once you have all this information and these basic answers, you have to figure out which metrics you care about the most — which are most relevant to your business right now?

There are going to be some that are key drivers for you.

p.s.

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation: a Proven 5 Step Process.  http://www.therevenuegroup.net/free-offer.html

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From → Strategy, Valuation

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