How later-stage startups can strategize and grow beyond $10 million
he moment when your company reaches the $10 million plateau is when strategy really kicks in. You will need to develop a business execution plan that meets your growing company where it is, and brings it to where you want to go.
This article was written by the original owner of startupguide.com, Ryan Allis, and published on his website in 2012. Read more about why Ryan was happy to hand over his website domain to us here.
"Good strategy requires you to choose just one thing that your business will become the best in the world at. It also requires you to design a system of unique activities which both enable your firm to become by far the best at that niche and are difficult for other firms to fully understand and replicate." -Ryan Allis
Getting from zero to $10 million in annual sales requires three to six years of focused, dedicated hard work and finding a clear value proposition to solve a real problem that your customers have. Getting beyond the $10 million mark requires something more – a defined and coordinated company strategy to become the best in the world in a certain field.
This section talks about creating strategy and building an execution plan for the later stages of your startup, after you’ve reached product-market fit and reached about fifty employees and $10 million per year in sales.
What will you become the best in the world at?
The most important thing to know about strategy is that your business must be able to fill in this blank: The one thing we will do better than any other company in the world is _____________.
If you can fill in this blank, and then build a reinforcing system of activities that enable you to sustainably become the best in the world at that thing, your business will thrive.
Too many companies are mediocre because they aren’t clear about the one thing they will be the best in the world at, and thus end up not being able to be the best at anything. Because of this, they often don’t attract team members who are passionate about the problem the firm is working on solving.
If you focus on being the best in the world at one thing, you can often achieve that goal.
What is strategy?
Strategy is a collection of unique processes that work in unison within your company that enables your firm to be the best in the world at one thing. A good strategy brings together lots of information from many different sources and enables you to do things differently and better than your competitors.
Too many firms lose their track by tryingto be the best in the world at five things or trying to be number two or three at something. If you focus on being the best in the world at one thing, you can often achieve that goal. And when you achieve that goal, then you can see if you can expand to being the best in the world at something else.
Ultimately, strategy is about tradeoffs. It’s about making decisions. It’s about choosing not only what to do, but just as importantly, what not to do.
In the beginning stages of a startup, strategy is important, but it’s almost done without a lot of thinking, because it’s simply the vision of the initial founders executing toward a product idea that they have. While there’s a lot of product strategy and product design, much of it just happens inside the heads of a few people in a small group at the beginning.
What I’m talking about is building strategy when you have hundreds of employees. At iContact, we got up to 300 employees and I learned a lot in my nine years there about how to set strategy and how not to set strategy as a leader of the team that was leading the organization.
Good strategy is about finding ways to take advantage of the assets you have and the assets that you can bring to bear to create value for humanity.
Seek input widely, but create in a small group
It’s important when you’re thinking through strategy to do it in a small group with people who know each other well and can be brutally honest when necessary about their opinions, thoughts, and perspectives on the information that is being brought to the table.
A key principle I’ve learned is to never initially create strategy in a group of more than four people. Any more and you might go in endless circles of discussion and get caught in analysis paralysis. Typically, you will want to work with your heads of operations, sales, marketing, and technology to begin. At least, that’s been my experience.
Some of the people who might be in this room include the CEO, head of product, head of technology, head of sales, head of service, head of marketing, and head of operations.
You should choose four of these individuals. Align with this smaller group, and later align with your full executive team, your directors, your managers and your full employee base. Align with the core first, then align with the rest of the team.
It’s important to bring feedback all the way up through the organization from the front lines – the people who are directly interacting with the customers on a daily basis. Gather your information and have the processes in place to collect the information and bring that up and enable your executive team and core team to make informed decisions.
Creating your execution plan
Once your team has a strategy and a plan, make sure you take time to communicate it in a memorable way with quantitative metrics and visual designs that can be reinforced to the full company, and then focus on executing your quarterly, monthly or annual operating plan with fanatic discipline. Make sure you communicate and reinforce it to your employees at least monthly.
As you grow beyond 25 employees, you’ll find consistent employee communicating is one of the most important roles of the CEO. It’s no longer about the work you do, it’s about the work of your dozens of employees being coordinated toward the same overarching clear goals. It’s your job to make sure the direction the company is going in is clear and that all employees understand what it is your company is working on becoming the best in the world at.
At iContact we would hold an annual three-day retreat (usually in the NC Mountains) with our eight person Senior Leadership Team to set our objectives and plan for the year and then a quarterly one day off-site to set our targets for the upcoming quarter.
As you grow beyond 25 employees... it's no longer about the work you do, it's about the work of your dozens of employees being coordinated toward the same overarching goals.
We used a model called the One Page Strategic Plan that enabled our Senior Leadership Team to express our plans in a document that could be printed out on one sheet of paper. At each annual retreat we would update the left side of the plan and at each quarterly retreat we’d update the right side of the plan.
You can download the blank template from a company called Gazelles which we used for the one page strategy plan. When we were finished, we’d have a meeting with the next-level down in the organization (which we called the Leadership Team) to gather feedback and then distribute the document to all employees at the beginning of each quarter and hold a kickoff all-hands meetings to talk about the quarter or year’s goals.
Too often, companies will spend months, and sometimes years, building their strategy, and then they’ll roll out their strategy via one email memo. Most people won’t even notice it. It’s important not just to have a meeting to kick off a plan, not just to have a poster or memo, but to have a meeting, a poster, and a memo — and perhaps even a celebration of moving from one stage to the next.
You want to pre-define what success is for your operating plan, both financially as well as quantitatively in terms of what it means to a customer. You want to have predefined, measurable results that tie into your team’s incentive compensation plan.
Once your company gets beyond fifty employees, or even twenty-five, you need to have a Chief Operating Officer who focuses on keeping the trains running on time and facilitates cross-departmental effectiveness, efficiency, and company metrics and company projects.
Next, you want to operationalize your plan. Once you’re clear on strategy, don’t skimp on what it takes to make the plan real. This is where you can take some time to do an offsite and to really figure out, as a full executive team and maybe even including your director and managerial level, what resources are needed to achieve the goals that you have defined and what the right metrics are to be tracking on a weekly (or even real-time) basis to enable your team to have the focus necessary.
Once you figure out what those KPIs (Key Performance Indicators) are, track them visually on monitors that you display throughout the company.
The next thing that I learned is to hold four quarterly calibration sessions each year. These four one-day planning sessions are to help you talk about not just the annual plan, but what the next three months are going to be. During the last week of each quarter, if you hold these sessions, they will enable you to kick off the next quarter right.
You should aim to have no more than five company objectives per six-month period, and you need to communicate these before the start of the period. Don’t finish your annual planning in February; finish your annual planning in December, so that by early January, you can have had a kickoff event and explained the key metrics and how you’re going to determine success for your company for that annual period.
Once you’ve made your quantitative predefined results visible, you need to continually test. Use just a small amount of money to test, get data, and improve constantly and continuously. Once you know what works and you have data to back up your hypothesis, put all your resources behind that product and elevate above your competitors.
Key business execution lessons
Finally, here are some of the key execution lessons I’ve learned in the last decade:
Main photo: Unsplash
*This article was originally published on October 17th, 2018 and updated on December 11th, 2018.