We mostly hear about what great businesses do well. But there are lessons to be learned from the traits that keep many businesses from reaching their potential.
Plenty has been written about the characteristics of highly successful businesses. We think it is worthwhile to understand the traits of unsuccessful companies. If you identify the factors that are limiting your business's success, you may generate new ideas about how to earn a better return.
There are three key inhibitors to any management team's ability to build a successful business.
They believe that their circumstances are unchangeable and therefore don't act.
They do not set milestones for their journey.
They do not reevaluate along the way.
There are always options and choices. For our business, we can change the way we address our customers, our employees, or our goals. We won't always be able to change all three--but there will never be a time when we can't change any one of them.
In our experience, when successful management teams objectively view the facts, they are able to see options and flexibility. For example, not all business assets are on the balance sheet: Customer engagement and loyalty, relationships, and location (to name a few) can always be leveraged for growth beyond the four corners that your business now occupies. Opportunities always exist, even in difficult circumstances.
Lack of Milestones
Milestones let us know we are heading down the right track. Unsuccessful businesses will not identify what success "looks like" and will not create the metrics that measure their successes. Growth and profitability alone are not sustainable without milestones.
When we plan for what we want, we get there a lot faster. To set milestones, first identify where you want the company to be in five years, based on metrics tied to the drivers of value creation. Then work backward to the present day, outlining the important steps and achievements that need to happen along the way. Finally, prominently display and really celebrate the milestones as you reach each one.
Lack of Follow-up
After leadership teams do the hard work to objectively view facts, engage key personnel, and plan milestones, they need to follow up by reevaluating their plans on a regular basis. Unsuccessful companies often push reevaluation low on the to-do list.
Perhaps your strenuously developed strategy isn't working. Or maybe everything is going exactly to plan, but everyone is miserable. In either case, you need to rethink your plan and make whatever changes are required to get back on track. One of my favorite Steve Jobs quotes about career satisfaction can also be extended to business strategy: "If today were the last day of my life, would I want to do what I am about to do today? And whenever the answer has been 'no' for too many days in a row, I know I need to change something."
Unsuccessful businesses don't always have to be on the brink of decline or failure. An unsuccessful business could be doing nominally well but be missing huge market potential. By continuously addressing circumstances as changeable, creating milestones, and performing comprehensive evaluation, your team will reach more of its potential.
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark