Friday, August 22, 2014

The 10 Commandments of Hypergrowth

Hypergrowth is when a company has 5 or more years of 40% plus growth year after year. This is a very rare, and usually unsustainable situation, but believe it or not, any company can achieve this if they just plan and organize for it.

Yes, not all companies will experience hypergrowth, but it is not because they cannot, it is because they did not PREPARE for it. I could not imagine any championship team or athlete NOT preparing to be a champion; of not working everyday to win the cup, or series, or world title? Amazingly, most companies that do not experience hypergrowth never see themselves has champions.

So, how do you prepare you and your company for hypergrowth? I have listed 10 Commandments which at a minimum will set you on the path to hypergrowth, and yes, it goes for high tech and traditional companies as well.

I. Set a Big, No Humongous, Goal

As Marianne Williamson is quoted as saying, “Playing small doesn't serve the world in any way.” Companies need a real mission and make it simple, clear and above all audacious. Remember the moon mission President Kennedy prescribed? Whatever it is you do, make sure you goal involves being the top player in whatever category you go for. Whatever you do, do not make a mission statement that is just a bunch of words that sound nice, but do not really SAY anything. Once you have that mission statement, put it on every company document. Mention it every time you get the chance, and most importantly make sure you employees have bought into it as well. As I say, “If you cannot see it, you cannot be it.” No one or nothing great EVER happened without there first being some outlandish goal, and then seeing and believing you could get there.

II. Grow Your Talent…

And this starts with leadership. "Great leadership makes ordinary people into extraordinary people." Remember that! Ordinary companies can get by with ordinary people, the kind who do their jobs and go home. Hypergrowth companies need extraordinary people, the kind who work their tails off in pursuit of growth. The best way to find them is first be the leader that can take ordinary people and make them superstars.

Oh, and believe it or not it is not about skills or talent, it is about attitude. Make sure your employees have the right attitude to grow, change, and over time excel. In most cases, these people will tend to be a bit younger, but you do not want just “wet behind the ears” employees. The test of a great leader is if they can also make old dogs do new tricks.

III. You Can Never Have Enough Training

Have you ever wondered why we call what doctors and lawyers do practicing? They are ALWAYS in training! High-speed growth requires people who not only work hard but work effectively, and that means that they are going to learn and master new skills, and that means training. It does not matter if your sales people have twenty years of experience, or are fresh out of school. Things change, and they are always going to need training!

Usually the best way to train “newbies” is to team them up with a mentor, a person who is a bit more senior and does not feel threatened by hotshots. Have as MUCH formal training as possible done “off site” and leave the electronics back at the office. You are going to spend a lot of money on training, but in the end, the dividends will be tremendous in productivity, return on effort, and employee satisfaction

IV. Do Not Starve Opportunities

Make sure ALL your employees have the best tools to do their jobs, and these tools improve all the time. You will always need better systems as your business starts to grow AND change. As Wayne Gretzky said, ”You want to be where the puck is going to be,” so that means always planning and playing for the future. Hypergrowth companies are always shooting at a moving target. One LARGE potential problem will be that the more successful your fired up team gets, the more likely they will get bogged down in paperwork or needless procedural dogma. Make sure this does not happen!

Give everyone in the sales process, from the salesman to order fulfillment, tools to allow them to make decisions on the spot and NOT have to wait for management to OK something. Yes, sometimes they will make a mistake, but they will NEVER lose a customer for it. Having EVERYBODY connected makes it easier for people to make the right decision right when a customer needs it, not after the customer has left.

V. The CEO Focuses on Growth -- Everyone Else on Profits

The job of the CEO is to focus on growth and strategy, but in order to be successful; the CEO is going to have to instill the fact that profitability is the MOST important thing to the company. Better to sell $2 million and make $1 million, than to sell $100 million and make $10 million. If you do not understand why this is true, you need to go back to school. Make sure profitability, how you make money and where the profits come from, is ingrained into the bone and sinew of everyone in your company. With this knowledge you will be surprised on how many great ideas come from the rank and file on how to improve profitability. Make sure you implement them and reward the individual for speaking up! Also, measure and reward organizations for their profitability, and create contests and teams to make it so.

VI. Exchange Equity for Cash

If you are a fast-growing company, you will most likely look like a company that is losing money. Boy, does that make banks nervous.

Your banker will always be nervous, so just accept it. The downside is that you will always be in danger of losing his credit lines. "They'd say, you got to slow down.' You’ll say, 'I can't.' But I will try to build up enough equity so you’ll be comfortable.

They best way to do this is to set up a formal employee stock ownership plan, which enables your employees to buy stock with before-tax dollars. They can participate through payroll deductions of up to 10% of their salaries, matched in varying (and discretionary) degrees by the company. This way you can exchange REAL cash for employee ownership and in the early years make your dollars stretch a lot further. In a sense, your employees are now your investors as well.

VII. Have Fun!

Hypergrowth is hard and is serious work, full of stress and unforeseen problems. People work long hours and get run down all the time. Many will quit either because they do not fit your corporate culture, or do not buy into your vision, or cannot handle the pressure. That is OK, but make sure you treat them all with dignity and respect. Remember, they can still say either nice or hurtful things about your company.

Anyway, just because you are doing daunting work, does not mean you cannot have a lot of fun doing it too. That is why you have to make recreation a central element of your corporate culture.

Have annual picnics, organized by region, if you have them, which takes everyone to a distant resort for two or three days of fun, including a popular branch-against-branch tournament that boasts T-shirts and trophies. Have a four-day national sales meeting that sports golf or skiing and other games as well as the national playoffs. Take the corporate staff on half-day excursions once a quarter -- to Key West for a lobster dinner, or to the beach for surfing instruction, or to a rink for in-line skating.

What makes your company different from other have-a-good-time companies though, is that you also want people to enjoy themselves while they are working. And the easiest way to do that is just change the surroundings.

Have staff and Profit / Loss meetings at some recreational site – like at a bowling alley, another at the local ballpark, or at an amusement park. You can have fun with playing corporate Family Feud or Jeopardy!

Each month's contest can focus on a different business subject. One month’s topic can be the bonus program; other can be purchasing and inventory, customer service, and the balance sheet. Teams prepare for the game by studying "hint sheets" posted at the branch. Winners get points toward such prizes as jackets and watches.

In a way the these activities are just and an extension of an approach that expects people not just to work hard but also to understand the business, and reward them for their knowledge. You can randomly just ask employees questions from the book of 100 Corporate Facts, and if an employee gets it right, give the $100! Remember, be generous and have fun!

VIII. Avoid Bureaucracy and Politics

"A committee is a cul-de-sac down which ideas are lured and then quietly strangled."
--Sir Barnett Cocks
Policy manuals, endless meetings, countless memos, and volumes of rules and regulations could stall hypergrowth. Still, you cannot run a hypergrowth company like a small business. Yes, there has to be uniformity and discipline within and among different departments and divisions in your company, but that is not to say that it need be so rigid as to be stifling.

Remember, you are trying to create a seamless team, and teamwork does not come from a manual, but from leaders..and those leaders start from the top and go all the way down to the rank and file.

Also, be on constant guard of people “guarding their turf” and playing politics. Yes, we are all human, and sometimes feel threaten. It is the job of the CEO to let everyone know we are a team, and sometimes, you will be asked to do something for the team to help EVERYBODY win. Make sure you reward and recognize that player for going outside their comfort level

There are other ways to get people marching to the same music, such as the President’s Tour. Periodically, you can visit each department or branch unannounced, to do an inspection. Are there pictures of employees on the walls? Check. Are the facilities clean? Check. Are service levels up to standard? Check. There are 100 things that are the right way to do business. Either you do it or you do not. If it is done, they get a check mark. Make it a game and give recognition for great scores, and have a ribbon or banner made that states so.

IX. Share the Wealth

From day one, you need a mindset that you are all about sharing the wealth. In order to achieve hypergrowth, you are going to need everyone pulling their oars hard, and the payoff of hypergrowth is substantial wealth.

Not only do you need a widespread stock ownership plan where all of your employees will understand that they will get a chance to share in the wealth if they stick around, you will also need a bonus program to reward superior performance or achieving profit levels. That knowledge, in turn, lets you run a high-performance operation without too much turnover. High turnover results in lower profits and sales.

X. Foster Leadership

Leadership is a talent that amplifies any other skill set a person might have. Leadership is not always about being a leader, but about fostering teamwork, cooperation, and service. Yes, when a person is then called to be a leader, having leadership skills with help them excel in whatever they are doing.

With hypergrowth there is going to be plenty of opportunities for leaders to be developed and needed. If you are growing revenues 40% a year, you have to grow people 80% a year, and the only way to do that is to develop their leadership abilities..

As a word of caution: Not all top talent is cut out to be a leader. Just because someone might be a superstar on the court of football field, does not make them an outstanding coach.

There are many characteristics in leadership, and in a previous blog I list John Maxwell’s The 21 Irrefutable Laws of Leadership. I find in picking a good leader, the 3 most important ones in maintaining hypergrowth are the desire to serve, the desire to empower others, and the desire for victory. You will know when a person becomes a leader, and the ONLY way your company will ever achieve hypergrowth is by growing the leaders within.

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