With a seemingly constant stream of startup wins in the press these days, many would be forgiven for thinking that business success is as simple as buying a laptop and registering a domain name.
The reality, of course, is that getting a business running effectively is one of the hardest things anyone can do in this world, and stories of business failure far outweigh those of business success.
I’m sure we’re all somewhat aware of the statistics: half of businesses don't make it past the first year, while about nine out of 10 do not make it past their fifth.
And how about those larger, established companies? Well there’s a massive divide between those that make it versus those that make it big. For example, roughly 96% of businesses in the United States never post revenues of over US$10 million.
So why exactly is it so hard to build a great business? Certainly we can come up with no easy answer for this. Whether your company is turning over $500k or $500 million, there are simply too many factors and scenarios to consider, with each stage of business growth (or decline) presenting challenges that often leave us in reactive rather than proactive mode.
But let's pose the question: why do some companies just do it better while the majority plateau and eventually stagnate? What are the winners doing differently? At the risk of oversimplifying, in this article, I take a look at five key things that great companies have a reputation for excelling at. As you read them, ask yourself if your company can safely say it not only considers all of the below, but lives by them.
1. They don’t just have goals- they have purpose
It goes without saying that goal setting is an absolute must for any business that wants to be a success. However, simply setting clear goals is not enough: those goals must all serve the overall purpose of your company, or have a purpose behind them. And more importantly, the majority of staff at your organization should know exactly what that purpose is.
While quantifying the link between a shared purpose and business performance is not easy, several notable studies have touched on the phenomenon. One particularly comprehensive one from 2002, for example, published by Richard Ellsworth of the Drucker School of Management, found that companies whose organizational purpose is to “deliver value to customers” were significantly more profitable over a 10-year period than those whose overall aim was to provide returns for their shareholders.
Studies like this one actually show quite clearly the difference between "purpose" and a "purpose that matters to your employees". They remind us that goals such as increasing sales, reducing staff turnover, or cutting costs should always be underpinned by the driving purpose of your business– which management should take the time to properly define.
2. They are process-driven
In the early days of any organization where resources are often stretched thin, the number one priority is to keep the doors open. And so while getting things done may not always mean getting them done to the highest standard, you want to at least get them done.
While we can live with the "scrambling about" in the early days of a business, it's worth noting the words of former Indian President A. P. J. Abdul Kalam in considering the long-term growth of a business: “Excellence is a continuous process and not an accident.”
And a big part of that "continuous process" towards the pursuit of excellence (read growth) is to in fact set up the necessary processes, protocols, and structures across your company and constantly refine them.
In a blog for The New York Times, serial entrepreneur and business speaker Jay Goltz ranked "lack of controls" as number three in his top 10 reasons why businesses fail to grow. Goltz notes that while it is one thing to have high standards, it is quite another to put processes and controls in place to ensure they are met– something which many companies still fail to do: “Without the controls, you will have good intentions accompanied by bad results,” he says.
3. They are constantly improving their offering
As with the constant refinement of processes, your offering too needs to be constantly worked on. As the old saying goes, “complacency is the enemy of progress,” and nowhere is this more true than with your products or services. “Good enough” will never do. Instead, you have to always be asking yourself how to make it better.
Businesses who go on to be great (and stay great for long periods) usually are the ones who put innovation near the top of the to do list at all times. And it's not just the improvement of the existing, but the regular introduction of accompanying products and services.
The importance of this can be seen in the astronomical amounts of money spent every year on research and development by companies – who despite their size – continue to prioritize growth and improvement. Case in point: the top four R&D spenders in 2015, according to PwC, were Volkswagen, Samsung, Intel and Microsoft, spending over $52 billion in total.
When companies of that size and market dominance are still pushing to improve their offering, then what hope for those in the chasing pack who do not?
4. They go above and beyond for their employees
To quote Richard Branson, “Take care of your employees and they’ll take care of your business.” And let’s face it, there’s a guy who knows a thing or two about building a successful enterprise.
But what exactly do we mean when we say “above and beyond?” To be clear, while it’s important to get the basics right –salaries, holiday and other standard benefits– those are indeed very much the basics.
Truly successful companies such as Branson’s Virgin Group take another step– they get to know their employees to tailor a flexible benefits package that helps them to feel engaged, empowered, and individual. In Virgin's words, we do this by “supporting our people across all aspects of life to help them be their best selves.” This support can take the form of any manner of things, from actively encouraging a healthier work-life balance, to providing access to health and fitness programs, to generous maternity and paternity leave, to flexible hours, etc.
As if Virgin’s successes were not proof enough, plenty of studies have shown this approach to breed success. One of the most comprehensive studies of its type, undertaken by Gallup in 2012, found that of 50,000 business units, those in the top half for employee engagement reported nearly double the performance outcome of those in the bottom half.
5. They foster a culture of accountability with lots of communication
They may sound like two separate things, but in a company setting you need a heavy dose of both working together to be successful. Accountability, after all, requires clear and unambiguous communication about who is responsible for what, and a process for clearly communicating the results of those accountable.
Naturally, the assigning comes from above, with management needing to set the framework for conveying clearly what is to be done (rather, what is to be achieved) and who is responsible.
Measures then need to be put in place to pass on information in the other direction, which, again, is essentially all about monitoring the results. And the monitoring needs to be meaningful. Far too often companies have a sort of "false accountability" structure in place simply because performance results are not properly analyzed and discussed– which is, in fact, unfair to both employee and employer.
Such a framework of accountability and communication is at the core for addressing shortcomings, finding out what works, identifying high performers who are indeed the future of your company, motivating your teams– and so much more.
In truth, companies with truly great accountability-communication combos are quite rare– which is perhaps why great companies are rare. According to the Workplace Accountability Study, a multi-year study involving 40,000 participants, 91% of those involved said accountability is one of the top development needs they would like to see at their organization, while 82% said they had no ability to hold others accountable at their company.
Become great; stay great
When we talk about qualities of great companies, generalizing is a bit too easy to do, and so we must be somewhat cautious here. At the same time, we cannot ignore the fact that some companies are just better at implementing on the core business practices that common sense will tell us bring results– which is why those companies are getting results.
And we should ask ourselves through all of this why the majority of companies somehow eventually lose their discipline for implementing best practices (if they ever had it in the first place). Why is it so hard to maintain? Are we so caught up in the tasks that we forget to work on the infrastructure?
Whatever the reason, we do seem to be making things harder on ourselves. Yes, business is brutally challenging and always will be. There are so many factors out of our control. But if we don't work to make a difference on the above five points –should any be missing at our companies– then we are literally settling. And that's not such a great idea when it comes to the competitive environments in which we all work.