This course focuses on the common growth challenges faced by existing private businesses when they attempt to grow substantially.
The Infrastructure of Growing a Business: Planning, Prioritization, Pace and Processes
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Grow to Greatness: Smart Growth for Private Businesses, Part I
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The 4 P's
This module presents the four P's of growing a business: planning,
prioritization, pace and processes. The four ways to grow your business are improvements, innovations, scaling, and strategic acquisitions. The required reading is Edward D. Hess, "Defender Direct, Inc.: A Business of Growing Leaders," Case Study.
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Edward D. HessProfessor of Business Administration
Darden School of Business
Good day. Welcome back. Week three.
Week three. Grow to Greatness: Smart Growth for
Private Businesses. We're going to focus on, today, all
right, the infrastructure of building a business.
okay? sort of like, the bones of the business.
Planning, prioritization, pace and processes.
Before going there though, I want to focus on the title.
I want to focus on the title. Grow to Greatness.
Notice, I didn't say, grow to bigness. I didn't say, grow to wealth.
I didn't say, grow or die. I said, grow to greatness. Why did I say,
grow to greatness? Now's your time to, remember,
you're answering, in your own mind, the questions I ask,
because that's how we're talking to each other.
That's one way for us to talk. Also, the class forum discussion boards,
which you've been using. Why did I say, greatness instead of
bigness, or wealth? Because, in week one, we focused on the myths of growth,
and you learned that growth and bigness is not necessarily good.
You learned that to basically be very good in business, you've gotta take care
of customers and have operational excellence, and have high employee
engagement. It's not just about money.
Money is the result of lots of other things.
But you've gotta, basically, put those things in place, and that's what we're
going to talk about today. Now let's look at the second, the tag
line. I said, smart growth for private businesses.
Why did I use the word smart? Now I'm pausin', so you can answer that question.
And I know there's somebody out there that said,
well if it said, Dumb Growth for Private Businesses, I wouldn't have taken the
course. You're right.
Okay? Dumb growth would have not been a good title.
But smart growth emphasizes what, ladies and gentleman? That you need to respect
the power of growth, and you need to grow smartly.
You need to grow, just like, in Susan Feller, the story we had in week two, is,
she has to get ready to grow. She has to put in certain processes.
She has to know certain numbers. You have to, basically, approach growth
with planning and thinking about, what do I need to do? How do I control it? How do
I make sure my customers are not going to experience disruption? Because what
happens, in growing an entreprenurial business, is, every day is different.
What, what sort of characterizes growth of a, of a small business? A lot of
chaos. Because, in order to grow, you need more
people. And guess what? People are human beings.
And what do human beings do? You're right.
They make mistakes. And so, what you do when you're growing a
business, you, as the entrepreneur, have to got to figure out, what mistakes do I
focus on, and how do I teach, not punish? Because in order for people not to make
the same mistakes again and again and again, they have to do what? They have to
learn. And when you're being yelled at, you
don't learn. Teach.
Manage the chaos. Every day is different.
Stuff happens. Okay? And what we're going to talk about today,
okay, stuff happens.
And what we're going to talk about today, is, how do I prevent the same stuff from
happening over and over again? Because, then, new stuff will happen.
because if I eliminate, if I eliminate the stuff that happened today, so it
doesn't happen tomorrow, and deal with new stuff,
you know what happens after 30 days, 60 days, 90 days? I'm better.
I'm a better business. I serve my customers better.
And I create the right environment, and that's so critical.
That's so critical. because, I go back to Julie's statement
about farming, and my statement to you. Running a business is a lot like farming.
The research show entrepreneurs, and you know this if you're an entrepreneur, you
work longer hours in your own business then you worked when you were working for
someone else, because, you can't leave it.
It's always with you, you're always thinking about it, just like farmers.
Sun up to sun down, and maybe even longer.
You're out there every day, working in the field of business.
Some days, you're planting. Some days, you're watering. Some days, you're
fertilizing. Some days, you're plowing under. Some days, you're harvesting.
Some days, your doing some of all of it. And today, we're going to focus on, how
do you know what to do when? And how do you put in place processes? And what are
processes? How do I plan for growth? And we have already talked about, in both
classes, the pace of growth.
The gas pedal, my famous gas pedal. So we're not going to, basically, go in
too much detail for it. Managing an entreprenuerial business is
constantly choosing which fires to fight, and after you put the fire out, leaving a
fire extinguisher behind. And we'll come back to that. Okay.
All right. And the truth, and the truth here is
remember the bear, remember the bear. I've only got to outrun Kyle. This is
Kyle, and this is Ed, and I've only got to outrun him.
The same thing with your competition. And that's a surprise slide and I love
it. Isn't it cool? What a great team.
Alright. Now, I'm beginning this week with an
overview, like I did week one, and I'm going to start with some CEO quotes.
And as I read the quote, I'm going to stop.
And you know, now, this is our third week. You should have paper and pencil,
because Ed's going to ask you to write stuff down, because having you write
stuff down is the way you make sense of what we're talking about.
You're interpreting it in your own words. Well, get out that pencil and paper, and
I'm going to read through some, and I'm going to ask you, what does it mean to
you? What does it mean to you? Think about it.
Put it in your own words. And these come from actual entrepreneur
CEOs that were in my research study. These are their quotes.
This is not mine. This is them.
You're learning from entrepreneurs. Planning.
Begin with the end in mind. What's that mean? What, this was a
gentleman. What was he saying? Write something down.
We set up as if we were a large company from the start.
What does that mean? Hm. If you're planning, ultimately, to get
big, maybe you have to do some things in the beginning.
And you're going to see a quote, that building a business is a lot like
building a house. And sometimes, if you've ever built a
house or you know anything about building houses and everything, Â people, basically
have the ability to add rooms in the future.
What's the cheapest way, when you're building a house, to have that
flexibility? Well, you put in the water pipes and the electricity in the, what
could be the room, and you don't finish it until either you can afford it or need
it. You stub in the infrastructure, the
electrical, the water, the heating in the beginning, because it's much cheaper than
going back in and ripping everything out and starting over in that room.
Plan from the beginning. Know what it is you're setting out to do,
with the end in mind. Another end in mind, because as you plan,
it's a little bit like going out and saying, I want to climb that mountain.
Well, how far do I have to go? What are the, what are the obstacles I've got to
clear? What's the danger zones? How long could it take me? What do I need in the
beginning? Kay'? What do I have to do today, that prepares me to get to the
next level? Same thing with a business. And see this here? Planning. And I've
asked you, a couple of times, get out that paper and write it down. Write down
your ideas and your plan. I'll tell you, I'm a lot older than
everybody out there, all, there's over 40,000 of you, and I'm sure I'm older
than all of you, and you know what I do everyday when I
get up, that I learned in my first job? Everyday I take out my piece of paper and
I write my to do list, top priority, everyday.
And I check them off when I do them. And you know what I do first?
The first thing I do everyday, is the thing on the list that I dread the most
or don't enjoy the most, or that's the hardest for me to do.
because once I get it done, everything is, basically, easy.
Planning. Here's my comment from that CEO.
Building a company is like building a house.
Be sure you go ahead and pre-wire the electrical and stub in the plumbing for
the rooms you may need in the future. Another key point.
Give yourself an afternoon weekly, sometime, to think about the five
critical things going on in your business,
and make sure you're focused on the big opportunities or the big problems.
I call that firehouse time. Let's stop there, and think.
I said earlier that, basically, as an entrepreneur, it's chaotic.
Growth is chaotic. Stuff happens.
You're fighting fires. Remember?
I said, that basically you put out a fire, you want to leave a fire
extinguisher behind? In staying with that theme, I'm now asking you to think about,
what does he mean about firehouse time? What is the firehouse? The firehouse is
where the firemen and women come back to after the fire to rest, think,
go over what they just went through, what did they learn and how they do it
better. It's time away from fighting the fires.
Entrepreneurs need firehouse time. Most entrepreneurs get overwhelmed, if
you will, by the chaos. The chaos, the madness, the craziness. Everything's sort
of happening, what do I do first? The place is going crazy. How do I know? How
do I prioritize? And once you go through that process, you need time to jump away.
Go back to the firehouse. And it doesn't have to be an afternoon.
It can be even, just 15, 20 minutes, to think, compose, learn, and think about
how am I going to teach teach, teach my employees, so we can be better, better,
better. because the goal of this entire course,
okay, let's just cut to the quick. All right? What we know from research,
first, is, most entrepreneurial start-ups fail within two years to three years, the
vast majority. So if you're looking to grow your
business, that means you have survived that first big hurdle. Okay? You are over
that first big hump, but we know, when you try to grow a business, it is another
big hump, and most people who survive start-up don't make it. And what I'm
trying to do in this course, the entire course, is, is share with you the best
research we have on how to increase your chances of making it here, and not
falling off. Prioritization.
I think this is mission-critical. We, we, we got there a little bit
yesterday, with Three Fellers' Bakery. How did Susan prioritize her growth
alternatives? And you learned, that with Susan Feller, the first thing she had to
do was to prioritize her goals. Her goals, her values. And then that
allows her to prioritize her growth alternatives.
The same thing happens every day you go into your entrepreneurial business.
And if you're running a business, you've gotta be shaking your head just
like this, yes, yes, yes.
Ed's right. Ed's right, because lots of stuff are happening at
the same time. We call that, there's lots of stuff in
your inbox. What do you focus on first? CEO quotes.
Don't get involved in all the brush fires.
Focused on the thing with the biggest impact, the biggest fire that could do
the most harm. You read this quote in the Dave Lindsey
case. I do not pay you to get everything done everyday.
I pay you to get the most important things done.
And I'm going to make a correction there. That's in a different case. This one came
out of the Secure Works case. We are a product company.
I focus on quality, innovation and sales. This is a, a sort of rule this
entrepreneur made, okay? So if you're thinking about it, I got eight things
going wrong. Which one do I focus on first, okay? You
know. well, clearly, if it's life, health,
safety. That goes first, okay? What comes next?
What's the most important thing in your business? People? Quality of your
product? Customers? How do you prioritize? How do you prioritize? For me
the most difficult part is figuring out what not to do.
Here's the focus statement that we've had before, be two inches wide and two miles
deep. Two inches wide, two miles deep. That's my cameraman, Kyle's, favorite
statement of the course, so far. That's what he told me yesterday.
In a high growth Kyle likes that. I just gotta keep outrunning him with the
bear, okay? In a high-growth business, it's easy to get spread too thin, trying
to be too many things to too many people. It's all back to this thing of focus.
Here's a Dave Lindsey, Defender Direct, the one you read for today.
The more we focused and said no, the more we grew. It's counter-intuitive, isn't
it? Counter-intuitive. Why do you think that happened? Because,
maybe, by focusing, they became very, very, very good at doing the things that
the customers wanted, and they allowed them to be efficient.
But also, they had high quality and word of mouth.
They got more customers. Focus on the one thing you can do better
than anyone else, and focus on a way to make it appealing to a big market.
Lots of customers. Lots of customers. The big market.
Yeah. Big market.
Ka-ching, ka-ching. Okay? Process. Processes are, basically, the recipies or
checklists that people use on how to do the key things in your business.
Process is the glue that, basically, holds your business together.
Process is, you can call it the nuts and bolts. You can call it the blocking and
tackling. You can call it the circulatory system.
All right? But process is, is the how.
So, I get 99% defect-free, on time, quality delivery.
as the goal, and I reach it many days. Processes are what you put in place to
prevent errors, mistakes, variance. Okay? Variance.
You talk to people that go to business school, and they'll tell you, they are,
they are educated to manage variance, stuff that goes wrong.
Processes is how you reduce mistakes. Variance.
And the key thing is, the process is the fire extinguisher. The fire extinguisher.
We always want to put out the fire. [NOISE].
And leave the fire extinguisher behind for the next employee and the employees
after that. I do not want a single point of failure.
What's that mean? That means, and this entreprenuer who said it, he said, every
person, okay, must train someone else to do their job.
So if that person is sick, or not there, or has a family emergency, someone could
step in and the work doesn't stop. There's always backup.
There's, everyone knows someone else's processes.
I have a philosophy that, which is not audited, would always get worse.
And that means, trust, but verify. A lot of pretty good rules here, ladies
and gentlemen. The fire extinguisher. No single point of
failure. Trust but verify. The more we focused and said no, the more we grew.
Focus on doing one thing very, very well that's got a big market.
We've talked about that. What not to do.
The 2 inches wide, 2 miles deep. Focus on the things that have the biggest
impact. Okay? Stub out the basement or the room.
Building a company's like building a house.
Firehouse time. Begin with the end in mind.
Where we going? See, that's what Susan Feller had to ask.
What am I trying to do here? What am I trying to build? And then we've had our
gas pedal again. Okay?
All right. Now, before we go into to the Defender
Direct discussion, let's take two minute, because we just, I just put a lot out at
you. Let's take two minutes, three minutes.
Get your paper and pencil. Write down, what's the three things that
we talked about, that you want to think deeply about? That you want to come back
and play in your mind, that you want to go on the discussion
forum and see, all right? And read what other people say.
All right? Take three minutes. I'm here. I'm not
going anywhere. Don't want you to go anywhere.
Take three minutes and write it down, and then we're going to come back and go into
the, to the very interesting Defender Direct case. Three minutes.
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