Have you ever wondered why starting and growing a company seems to get harder with success? Have you ever asked yourself, “Why, when I should be celebrating and enjoying the fruits of my labor, do I feel so stretched and frazzled?” or “Why am I not having fun and feeling the excitement that drove me when we started?” There are probably countless entrepreneurs who have asked these questions over the years.
Some would attribute these feelings to the consequences of entrepreneurship and “paying the dues” of success. While it takes a lot of hard work to build anything meaningful, why should it temper the passion and enthusiasm that you felt when you first started out? Can you avoid feeling weighed down by your own success? Good news! The answer is – “Yes.” A predictable cycle can be broken as the following stories demonstrate.
Why do companies that start with buzz so often end in fizzle? Their decline is typically marked by, “I used to go there,” “I used to drive one,” or, perhaps, “I didn’t know they were still around!” Consumers pay little attention to the passing of these once promising companies because the next hot concept is just around the corner. Since it is hard to imagine a company’s leaders being hell-bent on building a mediocre company, the explanation has to lie with how well they understand the process of navigating the challenges inherent in healthy growth. Many leaders mistake fast growth for enterprise building; defining it in terms of speed, size, and revenue – seasoned with hubris. Enterprise building on the other hand is marked by excellence, value, and, humility. The former is about achieving scale, while the latter is about remaining worthy of growth. The challenge for a company that generates “buzz” is not to grow, but rather to build. As growth sets in, it is easy for leaders to confuse the novelty of initial success with the savvy required to continue on a growth trajectory. A friend recently shared an example of this kind of confusion. In his role as a member of a company’s Board of Directors, he challenged the wisdom of acquiring a smaller company. The company’s CEO and CFO told the board that they were excited about the acquisition because the company was very well led. In the course of their presentation, they mentioned that the object of their affections had never made a dime. After listening to the two enthusiasts, my friend asked them what they would bring to the table that would make a well-led, yet unprofitable, company profitable. Had they acquired the company, they might have grown in the short-term. However, without understanding whether or how they could capitalize on strengths and leverage the synergy of the combined companies, they would have done nothing to build an enduring enterprise. Hubris is a strange disease with well-known symptoms: business models based on myth, not paying attention to the basics of success, delusions of customers coming out of the walls, and the dismissal of naysayers as not being onboard. While hubris can be a source of immense self-confidence, it never works as a strategy.
Making money is not the objective of enterprise building, but its result. The objective is: Building a company that earns a reputation for goodness, flawless execution, and being best-in-class. The three elements — goodness, execution, and achievement — are core to a company’s growth worthiness and foundational to the attainment of excellence.
If achieving excellence was easy, the authors of the business classics Built to Last and Good to Great would have found far more than 29 out of the 5,000 companies studied that met their standards for being visionary (11) or having made the move from good to great (18). Many entrepreneurs start a company and work hard to grow it, only to see it slip into mediocrity or failure. What happened to the potential that made growth possible? There is something that happens between the dreams of an entrepreneur and the hangover of mediocrity that must be understood in order to answer this question. Rarely does an entrepreneur recognize that the hallmark of entrepreneurship contains the seeds of failure. A “fire, ready, aim” approach is part of the DNA of many entrepreneurs. If they are fortunate enough to recognize that there is much more to the process of enterprise building than growth, then they may seek the answer to a rarely answered question:
What can we do that is compelling and differentiating to our most valued customers?
This question addresses the essence of competitiveness. Compelling taps into what is “addictive” about the customer’s experience, while differentiating addresses whether the company will have an exclusive hold on the experience. Very often, founders are pleased with their answer to this question, but just as often, the second question gives them pause:
How do we turn a good idea into a company that stays worthy of growth?
How leaders answer this question spells the difference between those who start companies from those who build them into competitive powerhouses. One of the few company founders who successfully answered this question in the restaurant industry is George Biel, founder of Houston’s (later, Hillstone Restaurant Group) in 1976.
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