It’s a well-known fact that most start-ups fail within the first three to five years. Budding entrepreneurs take time to come up with a goal, spend even more time and money on product development and marketing; and yet, it still doesn’t always work out. So, what sets successful businesses apart from the others?
This book summary will help define just that. Success needs to be carefully planned before you even start your venture. Short-term, intermediate and long-term goals are key to this. And to achieve these goals you need the right tools.
In this summary readers will discover:
- The four criteria of big goals
- The importance of a core purpose and core values
- PEST Analysis
- The three Value disciplines
- Key Performance Indicators
- Why Strategic Reviews are important
Key lesson one: The Four criteria of big goals
The term Big Hairy Audacious Goals or BHAGs was introduced by authors Jerry Porras and Jim Collins in their book Built to Last. To qualify as a BHAG, your goal needs to meet four criteria.
- The goal needs to be very big
- It should take years to accomplish
- The ways in which to attain this big goal should be a little elusive and
- It must be easy to identify if it has been achieved or not
To give you a working example of this, consider Sam Walton, the founder of Wal-Mart. After World War II, Walton decided he wanted to turn his small variety store into the most profitable store in Arkansas. This was an extremely large goal, especially since he was selling mostly T-shirts and fishing rods at the time. Walton could not achieve this goal quickly nor did he know how exactly he would go about it. What he did know, however, is that in order to verify his success all he needed to do was compare his business to other stores in Arkansas. It took him three years, but Walton achieved his great goal and Wal-Mart became the most profitable variety store in the state. This is how a BHAG works. And the best part is, it’s not limited to growing your business, it can also be linked to a specific product or project. This was demonstrated when Walt Disney set out to make the very first animated film. Previously animation was only used for short films, but Disney wanted more. It took them fours years to produce Snow White and The Seven Dwarfs and completely changed the way people thought about animation.
BHAGs are necessary. They push you to think big and not fear how you can achieve your goal. It’s okay if you don’t know how when you start – you just have to start.
Key lesson two: The importance of a core purpose and core values
To reach your goal you need commitment and for this, you need a core purpose. A core purpose should be thought of as central motivation and is key for building a successful business and achieving your goals. It also gives your work meaning which in turn motivates both you and your team to remain committed to your goal. This is the mindset you want if you want to accomplish extraordinary results. Even research done by employee research firm ISR showed that an engaged workforce is more productive and profitable overall.
You also need core values to act as your business’ moral compass. These values will determine how you make decisions and guide your recruitment practices. It ensures consistency and dictates how your company operates. Take for example a taxi company whose core values state that ‘the right route is the right route’. This core value dictates that your drivers don’t take detours that would alter fares in any way. If everyone knows this upfront, they will be committed to following through on it and if they don’t agree with the core values, then they shouldn’t be working for you. This is why the core purpose and the core values of the business are important to establish. It’s simple and straightforward and easy to follow through on.
Key lesson three: PEST analysis
There’s always a chance that you have a business that’s meticulously run but nobody’s buying what you are selling. So, what did you do wrong? Chances are you did not consider the factors that will impact your industry of choice. This is where PEST analysis comes in.
PEST stands for Political, Economic, Social and Technological and refers to the external factors which affect your industry.
You might wonder how politics plays into this but let’s look at Sam Walton again. He was smart enough to analyze the market Wal-Mart was entering and he saw that the US government was investing in infrastructure, particularly in the creation of more roads. He was able to therefore determine that it would be easier for customers to access his stores because of these new roads. This led to him opening stores in new locations. So you can clearly see why you should identify any political opportunities or threats early in order to determine the strategies you can adopt to ensure the success of your business.
The same strategy goes for economic factors. Identify what is happening in the economy and how you should react. A booming economy might present the most opportune time to launch a new business and conversely, you might want to hold back if the economy is struggling.
Next to consider are the social factors. You have to consider how your employees and your customers act and think. What is trending, who is your target audience, what emotion or lifestyle do you want to appeal to? All of these factors will affect your business.
Lastly, consider what technological changes or advances will occur and how that will affect your business. If something new came up on the market, how would that affect your product and sales?
This careful screening of your environment will prepare you for any factors that will affect your business. By considering them beforehand, you are setting yourself and your business up for success.
Key lesson four: The three value disciplines
To find out what makes you different from your competitors, you need to identify your value discipline. There are three value disciplines that you can choose.
The first is operational excellence and which means you have the lowest costs. The second is product leadership indicating that you create the newest and best products. And third is customer intimacy which means that you produce solutions for the unique problems your customer faces. Whichever value discipline you decide upon will keep you focused on the unique difference that you have that will set you apart from your competitors.
Using Sam Walton again as an example, he chose to focus on operational excellence as he wanted to offer goods to his customers at the lowest possible price. This led to him using his own savings in order to achieve this. His strategy paid off in the end because it was these rock bottom prices that made Wal-Mart a success.
Once you have chosen your value discipline, you can then identify the strategic actions that you have to take to achieve your goals. These actions are called your core activities. Your core activities will take precedence and you can allocate fewer resources to less important activities. This can lead to you syncing your core activities to your value discipline and will allow you to achieve your goals undistracted.
Key lesson five: Key performance indicators
Your business needs clear and definable metrics in order for you to track its progress. Numbers are easy to monitor and it is, therefore, crucial to set goals that can be tracked numerically. You also need to set up key performance indicators or KPIs.
KPIs are important markers of success. For example, if you work in construction you may want to have the number of proposals you submit as a KPI because you noticed that the more proposals you submit, the higher your income. Or if you are in pharmaceutical sales, you might set the number of visits your sales rep makes to physicians as a KPI because you know that more visits equal more sales.
These are numbers that your whole team can monitor easily and can predict the performance of the business and its financial success.
Key lesson six: Why strategic reviews are important
In order to stay focused and not lose time on distractions, you need to conduct meetings that work to maintain progress. As much as holding meetings can sometimes be time-wasting in itself, you have to have regular moments of reflection to reassess your direction and keep everyone focused on the goal.
Quarterly strategic reviews are recommended to give your team the opportunity to reflect on the work they have done in the last three months. You can look at what was achieved, what is still to be done and any new projects that will start. In reviewing these factors, you can reassess if you are still in line with your goals. You can also use this information to analyze your Strengths, Weaknesses, Opportunities and Threats. This is referred to as a SWOT analysis. Between the quarterly review and the SWOT analysis, you can now clearly plan what you wish to do in the next quarter.
An example of how this will work is if you identify weaknesses and threats in your SWOT analysis you might decide that it is best to work on these in the next quarter and hold off on any new projects. This will ensure that you will eliminate all the negative factors thus strengthening your team when they take on their next goal.
The key takeaway from Business Execution for RESULTS is:
Starting a business is never easy but in order to ensure success, you have to have a winning strategy to achieve your goals. There is also a need for you to determine your core purpose, values and activities that will keep everyone committed to this journey. You need to take the time to set big goals and determine the factors that will both help and hinder your progress. By carefully tracking these, you will be able to set your business up for success.
How can I implement the lessons learned in Business Execution for Results:
Implement quarterly strategic meetings with your team to ensure that everyone remains focused on the right goal. Carefully review the work completed and identify which areas need focus in the next quarter. Also, always be sure to reintroduce the core purpose, values and activities in these meetings so everyone remains committed to the business and its ultimate goals.