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How a Few Companies Make It ... and Why the Rest Don't

Updated: Nov 10, 2023

Crucial questions to ask to scale and transform our organization

There was a small start-up called MiceTech. With a handful of enthusiastic and determined individuals, they embarked on a journey to make their mark in the business world. Their vision was to create innovative and transformative solutions that would revolutionize the tech industry.


As MiceTech flourished, they entered the next stage of their evolution, the Gazelle phase. They transformed into a scale-up, experiencing exponential growth and attracting substantial investments.


However, as Gazelle companies like MiceTech were absorbed by the Elephants of the business world, their vibrant culture and progressive spirit were often crushed under the weight of bureaucracy and established practices.


Many of these once-thriving Gazelles became extinct or irrelevant, losing their identity and succumbing to the dominant corporate culture.


But MiceTech was determined not to meet the same fate. They sought ways to scale to an Elephant company while still maintaining their core values.


The evolution of these companies showcased the immense possibilities and challenges within the business world, reminding entrepreneurs to strive for greatness while staying true to their roots.


***


There are three stages which could correspond to the evolution of a company:

  • Mice - start-ups which represent 96% of the businesses

  • Gazelles - scale-ups and fast growing companies with a turnover between 10-100M or even 1B$

  • Elephants giant companies which slowed down or bought companies

Gazelles are usually bought by bigger companies, Elephants, but their vibrant culture and progressive spirit were often crushed under the weight of bureaucracy and established practices.


Many of these once-thriving Gazelles became extinct or irrelevant, losing their identity and succumbing to the dominant corporate culture.


Why only a few companies make it to the top while others struggle or fail. There is still a way to scale your Gazelle company and reach the size of an Elephant yourself.


“We have the answers, all the answers;

it’s the question we do not know.”


To do this there are crucial questions which need to be asked on four fundamental decisions: People, Strategy, Execution, and Money, and the right tools that will allow us to scale the company:


PEOPLE:

"The bottleneck is always at the top of the bottle"


  • Do we have the right people doing the right things correctly in the right business (your company)?

    • This question encompasses all the relationships in the business, from employees and managers to customers, investors, partners, and accountants.

  • Are they happy and engaged on business objectives?

    • Fulfilled and motivated teams are more productive and invest in the company's growth.

  • Would we keep working with them?

    • The company's growth required a dedicated and talented workforce where each individual was valued and had the skills, dedication and cultural fit necessary for today's success. Are they appropriate for long-term goals?

TOOL: Function Accountability Chart

  • A valuable tool to clearly outline the roles and responsibilities of each team member, ensuring that everyone knew what was expected of them.

  • They should be responsible and require little supervision

  • They should always amaze the team with their ideas and results

  • Should be 1 or 2 KPI's for each person in the organization

  • Clearly define the objectives that each senior leader should focus on every day

STRATEGIES:

"If you want everyone on the same page,

then you need this page first"


  • Can we state it firmly and clearly?

  • Is the strategy promoting sustainable revenue growth in the business?

  • Strategic planning should be divided into two different activities:

    • Strategic thinking: senior leaders meet weekly to discuss strategic issues

    • Execution planning: middle managers and front line employees should be included to discuss the quarterly and annually priorities

  • Imagine a cycle of thinking, planning, acting and learning that is how our strategic planning should go

TOOL: The 7 Strata of Strategy

  • What words do we own in the minds of our target customers? What do they remember when they hear our company name? Example: Google = Search

  • Who are our target customers and what is our brand promise to them? Example: Southwest = Low-Cost Flights

  • How can we guarantee our brand promise? Example: Oracle= Performance

  • What is one phase strategy that might upset people but ensure the success and blocks competition? Example: Apple=Closed system

  • What are our 3 to 5 activities that differentiate us from our competition? Example: IKEA = assemble furniture

  • What is our "X factor", or our underlying advantage, that makes us 10 or 100 times better than our competition?

  • What is our BHAG – Big Hairy Audacious Goals, a daring and ambitious long-term goal that would drive the organization forward?

EXECUTION:

"If more than one person is accountable,

then no one is accountable"


Even if we have excellent strategy and hard-working people but if we have poor execution and many things going wrong, we will waste a lot of time, effort, and money solving problems that shouldn't exist in the first place

  • Are all our processes driving smoothly and driving profit?

  • There are 3 potential issues:

    • Unnecessary drama like late shipments or wrong invoices

    • People are spending too much time fixing mistakes

    • The company is earning three times less than the average profit in the industry

TOOL: Rockefeller Habits Checklist

  • We don't need to apply all these habits in our company all at once as it will drive everyone crazy

  • We need to focus on one or two habits per quarter it will take 2-3 years to establish all but results will be worth it

  • HABITS:

  • The executive team should have enough TRUST and RESPECT for each other so they can debate and give constructive criticism without being offended

    • Embrace diversity - accept different opinions - give honest feedback

  • Everyone in the company should work towards the number one goal in the quarter to keep moving forward

    • It's about setting a goal and having a clear deadline every 90 days

    • Setting quarterly goals allows everyone to celebrate or learn from their mistakes and have fun in the journey

  • Get input from our employees regularly

    • Frontline and sales staff will give us valuable information’s about the obstacles and opportunities in the business

    • Senior leader should take time to talk with one employee a week and ask what should we start, stop or keep doing

    • Most important pay attentions to the stops or problems

  • All employees must know the company’s strategy

    • They need to know BHAG – Big Hairy Audacious Goals – 3/5 years goal

    • The employees should know who the target customers are and what brand promise are that the company needs to keep (elevator pitch)

  • Each employee or team should be clear on their priorities or key performance indicators for a week – scoreboard on display to clearly see the progress

MONEY (CASH):

"Growth sucks cash -

the first low of entrepreneurial gravity"


  • Do we have a consistent source of CASH to fuel the growth of the company?

  • Ideally this cash needs to come from the business, is like the law of gravity in the business 😊

  • Nothing will stress faster than running out of cash, focus on profit and revenue is a normal mistake

  • CFO needs to provide an updated cash flow statement daily. A clear projection how the cash flow will look over the next 30/90 days. We should know the Cash Conversion Cycle (CCC)

TOOL: 7 FINANCE LEVELS to use to improve cash flow in our business:

  • Price – explored opportunities to increase prices strategically, ensuring that they captured the value they provided to customers

  • Volume – ways to increase the number of units sold without compromising on price

  • Direct Costs – negotiating better prices for labor or raw materials

  • Operating Expenses – find areas where operating costs could be reduced without sacrificing efficiency or quality

  • Account receivable – strategies to collect payments from customers more quickly, minimizing the time it took for cash to come in

  • Inventory – their inventory management to reduce excess stock and avoid tying up unnecessary cash in inventory

  • Accounts payable – managed their payments to creditors, extending payment terms when possible to slow down cash outflows

SUMMARY:


The MiceTech team was engaged and motivated to smooth EXECUTE their STRATEGIC plan managing it effectively MONEY (CASH) the lifeblood of their business, contributing to the company's success to steadily transformed into a formidable player in the industry from a small start-up into success story with Elephantine proportions.


The book is good source of inspiration of the power of strategic questioning and planning in driving growth and success.


Inspired by "ScalingUp" by Verne Harnish book


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