Focus first on these 4 areas for business growth

Growth is a natural phase for all businesses. We hear and read about it more often when referring to startups or scale-ups, but large enterprises equally emphasize on the importance of setting ambitious growth objectives.

But just because growth is a natural milestone in the life of organizations, this does not mean that managing it is easy. On the contrary, this can turn out to be a very complex exercise, regardless of the size and maturity of the organization. To make it actionable it needs to be simplified and focused on few strategic directions. Verne Harnish, the author of "Scaling-up", breaks it down to these 4 pillars, which I fully embrace and recognize in my daily work: people, strategy, execution and cash.

People will always be a company's most valuable asset. This is my strong belief. And in our times, attracting and retaining the right people is a true challenge, not only for myself, but for many other organizations that I talk to. Because of business complexity, you can't afford people to just come and "do the work required in their job description", move the needle from A to B, but you want them to be involved, committed and have ownership over their work. You want most of your colleagues to drive, not act as contractors or simple executors, and this means that you, as a leader, need to inspire with the vision (or the "dream"), set clear objectives, measure correctly & transparently and reward fairly.

And if necessary, ask yourself the hard questions:

• Did I hire the right people for the job?
• Would I rehire the ones that I hired previously?
• Are people underperforming, not having ownership or being disengaged because of poor leadership or because of job mismatching?
• Has the organization outgrown the people it started with?
• Has the organization outgrown all of them or are there people in my team that have the potential to grow with the organization and become leaders themselves?

Simplifying the above, leadership has the role to (1) attract, keep and motivate the right people and (2) grow the next generation of leaders.

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Strategy needs to be simple. If it is complicated to explain, it is complicated to execute.

The definition of strategy is to solve a customer problem significantly better than your competition does, a problem that is relevant to a sufficient number of customers in order to generate 3X the average profitability of your industry peers. Simple, right?

If you are the founder of a startup or scale-up, have no doubt, strategy is 100% your responsibility. You are not allowed to delegate it; you need to have extreme ownership over it no matter if you fail or you succeed.

When it comes to strategy, there are 2 risks founders are frequently exposed to: (1) they tend to get too heavy involved in execution and don't allocate a sufficient amount of time for strategy or (2) they focus on what they know best (sales, marketing, IT) which makes it hard to delegate the role and again this leads to allocating insufficient time to strategy.

In big, established companies, the strategy lies with the CEO and the board members. But the final say, usually goes with the CEO. The problem with most big companies is that they tend to draw the strategy in the safe circle, where incremental growth happens, but nothing disruptive. Why? Well, because disruptive can also mean big failure, so, unless the shit hits the fan, no CEO is going to risk its mandate for it.

Consider these questions if you want to evaluate your strategy:

• Is it simple to explain?
• Is it anchored in a vision (10 years from now), plan (3-5 years), execution roadmap (1-2 years) and mandates (quarter by quarter)?
• Does it really matter to my stakeholders what I plan to do?
• Am I solving a real customer job? One that is relevant for my 10 years vision?
• Can I make money with it? Can I make more money than my competition?
• Is it scalable?

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Execution is everything, most would argue. And if you have the right people and a good strategy, what can go wrong? Simple: execution.

There is a saying of Peter Druker: "culture eats strategy for breakfast". True, but execution also easts strategy for breakfast. Why is that? Well, for several reasons. First, execution means clarity on roles, responsibilities and objectives, and this is something that most startups and scale-ups miss. Big companies also do. Second, it needs good processes with information easily flowing within the organization. You will be surprised how teams of 5 people do not communicate clearly, timely and correctly. Now, multiply the effect to a company of 50 or 200 or 1000 people. Third, you need to have discipline, not chaos. Discipline equals routine, and as boring as it may sound, your daily standup needs to be daily.

When you think about your execution, challenge it with these questions in mind:

• How much emotional chaos is in the organization? Or how many times did I or someone else from leadership team had to "make peace" between two colleagues who were fighting over responsibilities or accountabilities?
• Is there a better, faster way to do things without cutting on quality?
• Does it take more than 1 meeting to make a decision? Does it involve more than 5 people to make a decision?
• Is execution costing me more than it does my competition?
• Is there something I can outsource?
• Are people skilled enough for flawless execution? What skills do I need to develop in them?

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Cash. Do you have plenty of it? If not, get it, because growth eats a lot of cash for breakfast. Depending on the size and maturity of each organization, there are several ways in which a company can bring in cash. Of course, the best one remains insourcing, but if that is not possible there are plenty of options in our days, from investment funds, grants, angel investors to investment banks or credit lines.

But before going to any external source of cash, all organizations need to frequently and consistently do internal exercises to see how to improve the cash flow. Here are your 9 tools:

• sell more
• sell more expensive
• reduce costs with raw materials
• reduce waste
• reduce operational cost
• reduce your inventory
• pay later
• collect faster
• reduce employee turnover (hire better; pay better; retain more)

2 more advices, especially for scale-ups: (1) have a finance person look over your books, help you pay less taxes and help you keep a clean, correct evidence of your cash and (2) be obsessed with your cash flow and monitor it daily.

I know it is always easier to write it down than to get it done. So, if you liked my article, share it with your thoughts about growth best practices.

2 books have inspired my work and this article, which I fully recommend for reading: "Scaling-up" by Verne Harnish and "Exploring strategy" by Richard Whittington et al.