In the first part of this article, I discussed the reality that creating and building a business to scale is not an easy feat. As an entrepreneur you're not alone. Most will make the same types of mistakes.
To change the course of your business, the first step as a Founder or CEO is to admit you may be wrong. This will lead to reflecting on long standing beliefs that might be preventing your growth.
To aid the growth of your middle market company, I have detailed four steps that will help you face reality and get back on the right path to success.
4 Steps to Help Middle Market CEOs Change Their Business
Step 1: Question what has never before been questioned
Unquestioned views are what inhibit business innovation. The CEO fails to ask herself the most challenging questions - well before bankers, investors or customers start to ask them. Questions like: Why are inventories so high? Why are product lines so complex? Are distribution channels too rigid to meet customer demands? Asking these questions pro-actively is part of the process of letting no assumption go unquestioned.
Step 2: Get new data
The CEO’s direct reports (and even employees who haven’t previously been in the inner circle) need to be engaged to gather new data. It will be their ticket to take part in a discussion of the company’s identity and direction. The goal should be to build a new, robust fact base, organized around categories like customers and competitors. Get employees to contribute insights - such as why the company’s new products are not in as much demand by the market as the business plan projected.
Step 3: Innovate, innovate, innovate
While we may all be tired of hearing about “thinking outside the box,” it’s still indispensable to getting past those beliefs that are self-limiting and holding the company back. The CEO and executive team must look beyond the current business of the company to see what other industries are doing in market or product innovation. As an example, grocery stores have increasingly embraced the “home meal replacement market”, adding rotisserie chickens and pre-made salads. But are they thinking beyond their industry or are they still thinking like grocers? If they are really thinking like food service innovators, wouldn’t a grocery store put in a drive-thru window? Think of innovations that show up in products; processes, and business concepts: Black and Decker’s snake light product, Wal-Mart’s cross-docking process or Zip Car’s lot-free rental business.
Now check the company’s track record on innovation. What was the last major change in the fulfillment process? What was the last product, service or business the company brought to market? How soon is the next one coming?
Step 4: Lose your fear of looking inconsistent
It’s time to face painful truths. It can be discouraging, even humiliating for entrepreneurs to face the fact that what they have believed - and had led investors, employees, and customers to believe - is not in fact the case. The CEO must clearly and compellingly explain why the company needs to change direction. Because there is new evidence about customer needs that suggests that the company needs to revamp products? Because social media marketing is replacing traditional advertising as the way to reach certain demographic groups? Because a new competitor can serve a segment of the market more efficiently?
However jarring the recognition that the company has to change course, there is a good chance that stakeholders will be more impressed than dismayed, once they see that the entrepreneur who created the company is receptive to new facts.
Search your soul/save your company
Change is hard. Change that involves giving up long held convictions is really hard. But doing so can be what saves the business, putting it on course toward renewed growth and profitability, toward achieving its potential. Honest CEO soul searching - without pre-conditions - is the first step.
About the Author
As a CEO, Director and Advisor to CEOs on strategy and governance, Mike has compiled a track record of navigating complexity, refining business models and cultivating leadership. Learn more or contact Mike directly here.
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