Ciao amici. It’s good to see you again. For those of you who have joined us for the first time, organizations in the know call me The Godfather of Growth. Each month, we get together to talk business – how to grow sales, manage your people and take your business from a small operation into one that the other capos will look at with envy. So grab a double espresso and listen up.
This month we are going to talk about focus. Focus is the fuel of rapid growth. I know this because I’ve seen its effects a number of times in a variety of markets. I was part of an organization that grew sales by a multiple of 90 in three and a half years growing from $250,000 to $22.5 million. I watched as Keith Nosbusch, at the time the incoming CEO at Rockwell Automation, used focus to take Rockwell from $3.5 billion to $7 billion and beyond in just a few years. Focus means taking dead aim at a market segment or, for larger companies a limited set of segments, so that you eliminate distractions. Distractions are expensive to new and emerging organizations. When you focus you minimize wasted time, wasted effort and most importantly wasted cash. Now if you’re thinking “big deal who didn’t know that” then maybe you should pay extra close attention to what I’m going to say because something that appears so obvious is not practiced by an alarming number of companies. So let’s find out if you’re truly focused or you just think you are.
In order to take dead aim on a market segment, you need to spend a lot of time thinking about who your ideal customer is and you have to be very specific – as if your life depended on it. This will take time and many paths may lead to dead ends. But if you successfully maneuver all of the obstacles, the results can transform your business. Let’s talk about the most common mistakes you need to avoid.
Mistake #1 Taking a Product Functionality Point of View
The first mistake I see companies make is that they take a product functionality view. “Our ideal customer is someone who needs to measure the oxygen saturation in their blood” or whatever their leading product feature might be. I’m sorry to say that I hear this a lot. When you are thinking about who your ideal customer is, you have to take their approach. Few people think “I need to measure the oxygen saturation in my blood”. They think more from a problem and solution point of view. For example: “I need to know when I might be on the verge of an asthma attack so I can avoid going to the hospital.” I’ve seen many great products fall by the wayside because their organizations were unable to do this successfully and technology companies are more likely than others to make this mistake.
Mistake # 2 Not Being Mission Critical
Some organizations are able to avoid the first trap to only get caught in the second. Just because you can solve a customer’s problem doesn’t increase the likelihood they’ll buy. But solving a significant problem that has a direct and quantifiable impact on their business can be magic – especially when you can show how you help them to increase revenue (or monetary upside benefit if you are B to C) versus reduce or avoid cost. A prime example of this is in the senior care market. I was involved with a company that sold to organizations that operate nursing homes and assisted living facilities. These organizations generate most of their revenue by billing federal and state governments for services provided and Medicare or Medicaid are their primary payers. By being able to show in a factual, measurable way that investing in technology would increase the reimbursement that they could receive, their products became mission critical and they were able to get direct access to the most senior executives in these organizations because they could show a direct and significant impact on their business.
Mistake #3 A Lack of Granularity
Some companies make it past the first two obstacles only to fall victim to the third – being mission critical. Let’s stay with our senior care example. They were able to make a solid case for being mission critical and producing quantifiable results for senior care providers. But to really have focus that drives growth and minimizes distraction, I need to get more specific. Which portion of the senior care market will find my products most attractive? Why? If I capture just a few percentage points of this portion is it sufficiently large enough to fuel the growth of my business? Is it sufficiently large enough to grow it significantly? The reason this organization was successful was that they were able to answer these questions accurately and with a high level of specificity. “Our ideal customer is a top executive of a multi-site, for-profit senior care organization who operates nursing homes in case mix states because we can provide demonstrable value by increasing reimbursement. By successfully capturing 5% of this total market of 5,000 facilities our company will grow to $22 million in sales.”
Mistake #4 Failing to Get to Alignment
Once you get to this level of granularity, the most attractive segment of the market segment comes sharply into focus. And once you have this level of focus you can now align your company’s resources behind it and make the most of your available cash. Granted, this takes courage but the companies who grow rapidly stay the course. But to achieve alignment you have to be sure to communicate clearly to your organization the rationale and outcomes they can expect by getting into alignment with your granular view of your ideal customer. This communication has to be repeated and reinforced until it becomes accepted fact by a large majority of your organization. Those who don’t believe should be encouraged to get on board or go elsewhere because you need all facets of your organization to have the same granular view of your ideal customer at the same degree of focus that your leadership team does.
Mistake #5 Not Staying Disciplined
Most companies do not make it past the fourth obstacle. It’s understandable. It takes a lot of time and can be very frustrating at times. Those who do this have one more obstacle in the way before they unlock rapid growth and that’s discipline. And the obstacle that most often gets in their way is falling victim to the head-turning opportunity that is not part of the granular picture and the alignment they’ve worked hard to establish. I see this happen more than I’d like. A company has run the gauntlet to get focused and a couple of months later they encounter a sizeable opportunity that does not match with their granular view of the ideal customer but they chase it any way. This is the business equivalent of the siren’s song and you have to resist it. Because being seduced by it will result in distractions and diverting the full attention of your company away from the prime targets that will drive repeatable and sustainable growth. This behavior also creates organizational confusion. The teams that thought you wanted them to go down one path are suddenly going down another. Even if this is for a short time, your organization is likely to second guess what you are doing so the next time you try to get to alignment they’ll question your commitment. This is a very difficult obstacle to navigate and many companies are unsuccessful in doing so.
We’re running out of time for this month’s meeting. If you are the leader of a new or emerging business you need to think long and hard about what I’ve said about focus. There is no doubt that is the fuel for rapid growth providing you avoid the obstacles that stand in your way.
Grazie mille for spending time with me today. Remember that you can always find me at firstname.lastname@example.org or if you need my help I’m only a phone call away at 412-973-8909 but be careful what you say because you never know who’s listening. Ciao for now my friends.
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