Five Stages and Myths of Business

By Larrywomack.com

 

STARTUP STAGE:  The owners are the business

  • Problems:  Customers/service/cash
  • Process:  Owners do the work
  • Organization: Simple
  • Planning:  Minimal/tactical
  • Objective:  Experience/stay alive
  • Customers: Owners know them

 

SURVIVAL STAGE:  The owners pull the business

  • Problems:  Income vs. outgo
  • Process:  Owners make decisions
  • Organization:  Managers carry out orders
  • Planning:  Financial projections/sales/improvement
  • Objective:  Survival
  • Customers:  Owners see them

 

 

SUCCESS STAGE:  The owners lead the business

  • Problems:  Cashflow/profits/delegation
  • Process:  Managers make decisions
  • Organization:  Chain of command
  • Planning:  Financial /marketing/strategic
  • Objective:  Exploit accomplishments
  • Customers:  Owners hear them

 

TAKEOFF STAGE:  The owners plan the business

  • Problems:  Growth/capitalization
  • Process:  Workers make decisions
  • Organization: Flexible/changing
  • Planning: Long-range/comprehensive
  • Objective: Manage growth
  • Customers: Owners hear about them

 

 

MATURITY STAGE:  The business is the business

  • Problems: Control/flexibility
  • Process: Multifaceted/integrated
  • Organization: Complex
  • Planning: Futuristic
  • Objective: Continuity
  • Customers: Owners read about them

 

FIVE COMMONLY HELD BUSINESS MYTHS - An opinion from Larry Womack

 

Myth #1:  Most people who run businesses want phenomenal success and are willing to pay the price.

 

He who makes the best decisions wins!  

A business becomes outrageously successful because its leader makes better decisions than does the competitions’ leaders.  But most leaders don’t want to invest the time, money, and energy required to make the best decisions.  They’re content to achieve sufficient gains in revenues and profits merely to feed their own personal needs and interests, keep the company going, and to pay employees the minimum required to prevent them from going elsewhere.

 

Making better decisions 

Good decisions result from acquiring and using the most relevant information available.  The best decisions are those that anticipate customer needs.  The future is the most important source of information.  If a leader determines that finding and using good information is a weakness, he or she should get help.  The leader must either learn how to explore the future for knowledge or find someone or company to do it for him or her.

 

Myth #2:  Businesses achieve phenomenal success through programs of continuous improvement.

 

Where there are no risks, there are no rewards.

Constantly getting better allows the company to simply stay in the race.  To win requires becoming different from the competition.  Most leaders don’t want to become different.  It’s too risky.  Becoming different is extremely risky if the effort is driven by ignorance.   An uneducated opinion is a dangerous resource, especially if it’s one’s own.  Becoming different requires that the leader eliminate ignorances through personal education or securing knowledgeable assistance; determining what the real possibilities are in the marketplace; selecting the maximum opportunities that the resources can address; telling the management team what he or she wants, and then giving the team what they need to help the leader get it.

 

Focusing on becoming different

There are three opportunities to create a sustainable difference between a company and its competition:

  1. Innovation:  Providing products and services competitors have yet to think of.
  2. Value:  Providing products and services of such value to customers that it eliminates competition.
  3. Price:  Providing products and services at a price far below that of competition.

Remember, getting better (continuous improvement) only secures the present.  Becoming different will ensure the future.

 

Myth #3:  Most leaders already know what they need to know to be successful.

 

An uneducated opinion is a dangerous resource.

Everyone is ignorant in some field of endeavor that is required to succeed in business¾in finance, predicting the future, customer research, people skills, management, planning, organization, marketing, communication, or production.  Instead of sharpening one’s own skills or getting quality assistance, most leaders will denigrate the areas where they are weak and be overconfident that their strengths alone will compensate for their ignorances and those of others.  Continuing education is the road to success for both the leaders and all others who must contribute to the success of the enterprise.

 

Investing in success

Invest in knowledge, information, tools, talent, innovation, and the future.  Instant gratification is nice, but the constant gratification that comes from phenomenal success is bigger and better.  Effective leaders do not waste money on gadgets or gimmicks, problem solving, inspection, management fads, or business potions; they use the money for futuring, tooling, training, educating, and for rewarding success.

 

Myth #4:  Success comes from solving problems.

 

Who wants problems?  

A company does not become successful by solving problems.  To solve a problem, a company must have one.  Why have problems in the first place?  Problems result from leaders’ poor decisions, like hiring incompetent people or not giving staff the tools needed to do the job right the first time.

Learning from one’s mistakes is costly, dangerous, and a tremendous waste of time.  Problem prevention makes more sense.  The most successful companies these days seem to be those that help companies get out of fixes.  Business systems and environments that reward those who prevent fires have fewer fires than companies that reward those who put them out.  There is also less need to hire expensive problem-solvers from outside the organization to fix mistakes and solve problems.

 

Preventing Problems

Systems, processes, policies, and procedures prevent problems.  Having a roadmap, like a plan, will go far in reducing the time and money consumed in correcting mistakes and solving problems.

 

Myth #5:  Time and motion equal accomplishment.

 

Looks like work, walks like work but is it work?

A leader always gets the type of behavior that he or she rewards.  In the workplace, individuals should be rewarded for the value they add to the successes of the company, not for kissing-up.  Many leaders use a system to reward those who come to work early and stay late, instead of identifying and rewarding those who measurably contribute to the company’s success.  Contributors resent carrying the burden of non-value-added colleagues.

Companies should hire only those persons who will add value, and then give them all the knowledge, information, and tools required for top performance.  What sense does it make to do otherwise? And the mere fact that someone has been with the company since the beginning is no reason to retain him or her, especially if that person is under-performing.  Either get such people appropriately prepared to do the work or get them out of the way.

 

Rewarding outstanding performance  

High performers resent working with poor performers and eventually go where they will be appreciated.  If a leader wants to retain quality people, he or she must reward them well, and ensure that poor performers are trained or replaced.  Reward accomplishments.  Recognize achievements.  Correct misunderstandings.  Punish misbehaviors.   Remove the uncooperative.