Determine Your Company’s Strategic Purpose & Growth

At the 1997 Apple World Wide Developer Conference, Steve Jobs answered a question about one of the numerous engineering projects that the company had become infamous for spawning by saying, “focusing is about saying no.” Jobs went on to apologize for what he described as “lousy engineering management” that had fostered a way of doing business at Apple that caused the “total [to be] less than the sum of the parts.”   During that time, Apple leadership had succumbed to the siren of continual ideation that undermined the progress and profitability of the entire company. In short, Apple had lost its focus. Paradoxically, it is often the entrepreneur’s advanced juggling and multi-tasking abilities that were the greatest asset in surviving the start-up phase that become the greatest liability in successfully navigating the growth phase. 

Take Rick for example. Rick was the newly minted CEO of a specialty manufacturing company that had just been acquired by a private equity firm. Rick had been given a daunting task by the company’s new owners: turn what had been somewhat of a post-acquisition money pit into a Cinderella story. But Rick suffered from what I call “bright shiny object syndrome.” Over the next year, this company of fewer than 50 employees (most of whom were well-meaning rank and file workers who had spent the last 18 years on auto-pilot) dabbled in four different markets, considered a fundamental change in its business model, and tried to roll out three new products. At the same time, the new owners continued to pump in more money to keep the company afloat.

Am I saying that there is no place for innovation or breaking into new markets? Absolutely not! In fact, without innovation or breaking into new markets, your company won’t grow. But if you want to generate the kind of innovation and new market entrances that lead to profitable growth, a better lifestyle for you, and eventually a large financial payoff when you decide to sell your company, then you are going to have to focus all your time, talent and treasure on one path at a time. You are going to have to become relentless about taking one idea and developing it to its full revenue generating, cash flow contributing, bottom line boosting potential while saying no to all others. You’re going to have to pick a path. 

One of the most simplistic and yet thorough frameworks that I’ve seen for guiding business owners in picking a path was put forth by Anthony Tjan, CEO and founder of the venture capital firm Cue Ball, in a blog posting that he wrote for the Harvard Business Review. In the post, Tjan describes the process that he uses when “outlining a path for strategic purpose and growth” of a portfolio company. The process boils down to answering four very basic questions. I’ve included the questions in bold below along with some color commentary to help you get started. So grab a pencil and a paper (you only need one sheet) and let’s get started:

1.   Why does your company exist (this is your company's mission)? This is where you write down the purpose that your company is trying to achieve. You don’t need a paragraph, just one sentence.  This statement should be simple and designed to stand the test of time. In other words, your mission should be something that anyone can remember and should still be the same 10 years from now.

2.   What is your value proposition? This question is all about your customers. This is not about what you or your executive management team decides to sell in the marketplace. It's about developing a true understanding of important (from the customer's perspective) unmet or underserved needs and delivering a solution that gives you a competitive advantage. Answering this question may require some research, but it’s well worth the time and energy to get this one right.

3.   Who are you trying to serve? This is really an outgrowth of question 2. Once you've identified the marketplace gaps, you then move on to deciding what customer group(s) you should be pursuing. This is what is commonly known as "outside-in" thinking. Your company has a set of core competencies--things that you are really good at doing (or that you could become really good at doing without significant costs and effort). What is the intersection between the marketplace gaps from question 2 and your core competencies? This intersection is your ideal playing field.

4.   How do you know when you are winning? I like to think of this as your vision for successfully delighting (not just serving) the market that you identified in questions 2 & 3. Perhaps it's as simple as being the #1 choice in the marketplace. If your company has been losing customers for a number of years, perhaps winning equals a net growth in your customer base. The key is to keep your vision short and simple and state it in terms of winning with your customer.     

Once you’ve answered all four questions you’ll have the foundation for a growth plan for your company. 

If your company is anything but a startup, you may find that because of the way you’ve done things for the last 10 or 15 years, you have a gap between your ideal growth path and where you are today. Does this mean that you are doomed to stagnation until you get everything perfectly aligned or that your newly created path is totally irrelevant? No. It just means that you’ll need to chip, hammer and blast away at business-as-usual while using your growth path as your guide for what should stay the same and what needs to change.