I have heard innumerable times from CEO’s over the course of my career different variations on the same basic statement: “My business is different; most of what other companies do doesn’t apply to mine.” My response to this statement has always been respectful but curious. I tend to ask in return: “How is your business different? How are its underlying principles different from the fundamentals that drive all businesses?” This usually starts a conversation that follows a familiar pattern.
As we talk, we tend to work our way toward meeting each other halfway. Yes, there are some nuances to the business we are talking about that make it distinctive, even highly unusual compared to other firms. But—its underlying dynamics and challenges have a great deal in common with other firms. Finding the balance between what makes a company different from and similar to others is an important task for entrepreneurs—and their advisors.
Every company has unique characteristics. Its products or services may be highly specialized. What it offers its customers may be highly customized to a narrow market niche. It may serve a very few customers or never serve the same customer twice. It may serve a narrow geographical area, or the entire globe. That the owner appreciates and can articulate what makes their business distinctive is a fact that any prospective advisor to him or her should acknowledge--and take advantage of.
Yet all companies respond to the same imperatives. They must navigate their market and find the niche/s to sell their product or service where they will have most buying power with suppliers and pricing power with customers. They have to be able to satisfy customers’ needs and desires, while earning a profit doing so. They need to aggregate goods and services into as low cost and flexible a supply chain as possible. They must decide which capital spending is necessary to support their growth. They need to retain and motivate their employees.
Even a company that has always done things a certain way or whose management team has experience in the same sector of the same industry will ultimately face the same pitfalls that other companies face. Successful companies of whatever type must search continually for ways to innovate and improve their performance. They need to seek out strategic leverage points (for example, a key position in their industry’s supply chain) that can help them achieve competitive advantage. They must look for ways to benefit from changes that are disrupting their market and overturning customary ways of doing business. None of this happens by isolating yourself from considering what best practices in other industries might mean to you.
A good way to think about commonality across all kinds of companies is to consider a broad framework such as No Man’s Land. Our framework addresses the functional areas of Market, Management, Model, Money, which are central to all businesses. It suggests that all emerging growth companies face many of the same basic challenges:
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Expanding the scope of what they do for customers, while avoiding the trap of trying to be “all things to all customers.”
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Institutionalizing the talents of the entrepreneurial founder into a professional executive team.
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Building a profitable economic model at higher scale, to fund “step-fixed” costs of building infrastructure in advance of demand.
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Getting access to debt or equity capital to finance growth.
In the second part of this article, I will address how a framework like No Man’s Land applies to a wide variety of companies, whose strategies and operations are very disparate.
For information on how to navigate your company's way through No Man's Land, request our complimentary ebook below complete with insight from Newport's own best selling author, Doug Tatum.
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Mike Viguerie has broad executive experience, centered on the healthcare industry, in environments ranging from Fortune 100 companies to start-ups and turnarounds. Contact or learn more about Mike here.
