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15 Steps to
Survive No Man’s Land
Steps to Survive No Man’s Land5 SM
Newport Board GroupBoar d Di rectors | Executive L eaders | Boar d & C EO Advisors
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25 Steps to
Survive No Man’s Land
Brent Sapp
Brent Sapp is CEO and Co-founder of Inc. Navigator. Inc. Navigator serves as Newport’s strategic technology provider. On occasion Brent also participates as a guest writer on Newport’s No Man’s Land and Beyond blog. Brent is a product innovator, author, Entrepreneur Activist, and founder of the Economy Heroes movement. His experience spans multiple industries including Health Care, Education and Software. He’s worked with startups, mid-market companies, and the Fortune 500 to help CEOs and their teams execute strategy, build brands, initiate sales teams, develop marketing strategies, and create new products. His company equips CEOs to make team alignment and accountability a routine so that they can execute on the right things. He helps CEOs and Founders transition through second stage growth where over 90% of companies fail. He’s worked with enough companies to verify that the right strategy made simple and measurable gets executed.
[email protected] 407.448.9477
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35 Steps to
Survive No Man’s Land
ContentsNo Man’s land ............................................................................................................ 6The 4 Categories of No Man’s Land................................................................. 12Market ........................................................................................................................... 13Management .............................................................................................................. 14Model ............................................................................................................................. 15Money ............................................................................................................................ 165 Steps to Survive No Man’s Land ................................................................... 17Inc. Navigator ............................................................................................................ 25
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45 Steps to
Survive No Man’s Land
Many companies enter the adolescent stage of business when they reach around 20 employees; it’s the stage where they’re too big to be small, and too small to be big. Does this sound familiar? If so you’re probably in No Man’s Land :
The business is stuck and you the entrepreneur are too involved in everything.
The company isn’t growing fast enough; you’re workingharder; but you’re making less money; the old way of running your business doesn’t seem to work anymore.
Your team is not on the same page; you don’t have the right people in the right roles; you don’t have enough time or money to do what you want to do.
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55 Steps to
Survive No Man’s LandWhy do only ONE in TEN companies get past No Man’s Land and reach the next
stage of growth?
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65 Steps to
Survive No Man’s Land
No Man’s Land
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75 Steps to
Survive No Man’s Land
Blind SpotsWhat are your top 3 to 5 company priorities? Do you assume your team agrees that these are the most important things to focus on now? Would they consider your priorities clear enough to guide action? Do they really believe that the team is doing the right things to achieve the right results?
Almost all teams are out of sync on critical issues to some degree. Although most CEOs are surprised at the degree of misalignment among their team, most will then acknowledge the problem. They just don’t know how to tackle it.
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85 Steps to
Survive No Man’s Land
Teams out of sync waste time, energy and resources as the individual members plow ahead without a united focus. Team alignment may be relatively rare but it is attainable for the top 3 to 5 priorities, which can generate at least a 20% increase in performance. At some point, a growing company must transition from a loyalty-based culture to a performance-based culture. Team accountability, where members know and communicate routinely about other members’ degree of execution, is rare. Is your team loyalty-based or performance-driven? Would your team members agree that you track results? What is your company’s unique competitive advantage? Team members’ responses most often vary when asked to describe their company’s value proposition. If the leadership team is confused on the reason to buy, how must their target market feel?
Teams out of sync waste time, energy and resources
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95 Steps to
Survive No Man’s Land
These and other blind spots are symptoms of an inevitable, unavoidable growth transition where only 10% of companies continue to grow. CEOs rarely see it coming, and usually don’t know how to survive it. Inc. Navigator Chairman, Doug Tatum, describes this inflection point as No Man’s Land*, the stage where companies become too big to be small and too small to be big.
No Man’s landAccording to David Thomson, author of Blueprint to a Billion, there are two inflection points where companies experience the greatest failure rate. Companies enter No Man’s Land as they grow past startup and enter adolescence. Figure 1 depicts the fact that over 90% fail to grow out of No Man’s Land and achieve scale. No Man’s Land and achieve scale. It’s a period of strategic confusion and inadequate resources.
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105 Steps to
Survive No Man’s Land
No Man’s Land Inflection Point
As Doug Tatum describes in No Man’s Land : "No matter how good their core business concepts, the companies I’ve seen have been pushed by growth into an uncomfortable situation where the resources and approaches that had allowed the firm to grow in the first place suddenly became insufficient and even an obstacle to further growth. Customers went away dissatisfied, and the entrepreneur in question felt disoriented, as if he or she were gradually and inexplicably losing control."
1 to 20 employees
High failure rate
Many businesses remain smallfor up to 15 years before they start the No Man’s Land journeySome companies remain
Growing businesses typically begin to experience early stages of No Man’s Land as they exceed 20 employees
It has been estimated there are 350,000 gazellesat any given time-approximately 80% of these have less than 20 employees
Less than 5% of gazelles transition the inflection point and become business breakouts and merger candidates
Companies that survive No Man’s Land and continue to grow pass the inflection point and become business breakouts
Breakouts occur on average at 100 employees, or, for public companies, $50 million in revenue
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115 Steps to
Survive No Man’s Land
No Mans Land was recognized in the 2011 book, 100 best Business Books
of All Time by Jack Covert and Todd Sattersten
Get a Copy Now!
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125 Steps to
Survive No Man’s Land
The 4 Categories of No Man’s LandIn No Man’s Land, growing companies experience difficulties in four
distinct managerial categories:
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135 Steps to
Survive No Man’s Land
No Man’s Land market issues center around the relationship between company and client. Companies often find it difficult to identify their most profitable clients or the cost of acquiring a profitable customer. They also have a tendency to make promises to customers that they are only 70% able to keep.
It is so important to decide carefully which promises to extend to which customers. The correct decisions will keep you growing through No Man’s Land, while the wrong ones will kill you. An entrepreneur makes some promises that lead to stadiums full of new customers, while other promises lead to dead ends, tangling up the company with promises meaningful to only a few clients or customers. The key is for you as the leader to make the right decisions that lead to a growing and profitable customer base.
Market
Customer Satisfaction—Gross MarginProduct CommoditizationProfitable Clients—Profitable ProductsCustomer PromisesCost of Customer Acquisition
Market Issues
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145 Steps to
Survive No Man’s Land
It’s tough to make changes that involve replacing loyal staff; but CEOs must make strategic hires and fires when necessary to put the right people in the right positions. These high capability individuals will lead the company through No Man’s Land.
If someone tells entrepreneurs that they need to let a close friend go, they typically react defensively, acting as if it were somehow their own fault that things have gotten as bad as they have. They lose confidence in their own decision-making process. Entrepreneurs must realize that the transition to professional management is a normal progression. As a business changes, it requires people with different skill sets. The entrepreneur needs to match the people in charge with the skills the business needs. The founder must hire at the top first, not the middle, to navigate through No Man’s Land.
Management IssuesCEO RoleExecution Reports—Priorities—Experience—AgilityAlignment—Accountability—Talent
Managment
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155 Steps to
Survive No Man’s Land
One memorable Super Bowl commercial a few years ago showed a young group of entrepreneurs throwing the virtual switch to open their online store. The first orders produced high fives but when the order counter started spinning like a pinwheel in a hurricane, their smiles turned up side down. Many companies in No Man’s Land can’t make money at higher volume.
Model
To make it through No Man’s Land, firms must develop a new economic model that allows them to provide their value proposition at scale while earning a profit. The firm must constantly analyze its performance in light of this model to assure that the company can achieve sustained profitability.
Model IssuesKey Metrics—New ProductsInfrastructure for Growth—Profitability at Scale SystemsCompetition—Strategy—Forecasting Growth Initiatives
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165 Steps to
Survive No Man’s Land
Many rapid-growth companies roll in profits but have no cash on hand; worse, they have more cash going out than coming in. Banks and private equity firms are less interested in a company’s proformas than they are in the company’s ability to reduce the risk on their lines of credit and investment.
Most companies enter No Man’s Land without enough capital to leave it. If and when they fail, “undercapitalization” is seen as the cause. Yet undercapitalization is not the cause but rather a fatal symptom. The true cause of the company’s inability to raise capital is that it is perceived as too risky. To raise money, firms must focus on reducing their real and perceived risk by addressing the Market, Money and Management issues described in the previous chapters. Yet even with the appropriate measures in place, transition through No Man’s Land is difficult because of institutional barriers that exist in the capital markets. Hang on! It’s going to be a wild ride.
Money
Money IssuesCapital—Compensation—Reducing Risk—Forecasting Speed LimitExit Strategy—ValueCapital AllocationROI on Assets and People
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175 Steps to
Survive No Man’s Land
The 5 Steps to Survive No Man’s Land
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185 Steps to
Survive No Man’s Land
Get radically objective about the business. Embrace the brutal facts, as author, Jim Collins states. Great companies ask tough questions about the No Mans Land categories to get an accurate picture of the extent of team misalignment and each issue’s degree of urgency. Tough questions usually reveal tough decisions that must be made; decisions that stir the pudding but if not made can throttle the company, keeping it in No Man’s Land.
Habit 1
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195 Steps to
Survive No Man’s Land
Set a clear direction by focusing on a handful of priorities. More than
5 priorities result in no priorities. Strategy can be simple. Teams can
focus when they are responsible for a handful of actionable priorities
and deadlines.
Habit 2
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205 Steps to
Survive No Man’s Land
Align the team through routine communication. We have observed that over 98% of teams are out of sync on No Man’s Land issues. On the other hand, companies experience at least a 20% increase in performance when teams are aligned and focused on the right priorities. Aligned teams can stay in sync with a routine review of priorities and key performance indicators.
Habit 3
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215 Steps to
Survive No Man’s Land
Keep score to hold each other accountable. While team accountability is rare, it is attainable. A simple dashboard that includes priorities, assigned action points with deadlines, and metrics will provide the catalyst for team interaction. Offering the team an opportunity to vote on the priorities and action points can also fuel accountability.
35Habit 4
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225 Steps to
Survive No Man’s Land
Adapt and learn quickly. Our nation’s Special Forces utilize the same strategic decision process on every battlefield around the world. The foundation of their strategy is based on the team’s ability to make a decision and then quickly learn from their unfolding circumstances, outside information, and the evolving interaction with their environment. By using this process the team adapts and learns in order to choose their next move. In other words, they remain agile at all times. As The Wall Street Journal has described the need for a company to remain flexible: "Now, even though the economy is slowly picking up, those fresh habits aren’t fading. This down turn has changed the way we will think about our business for many years to come", says Steve Odland, Office Depot’s Chairman and Chief Executive. Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt:
Strengths Weaknesses
Opportunities Threats
Habit 5
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235 Steps to
Survive No Man’s Land
"Strategy, as we knew it, is dead", he contends. "Corporate clients decided that increased flexibility and accelerated decision making
are much more important than simply predicting the future."
From: Strategic Plans Lose Favor, Wall Street Journal, 1.25.10
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245 Steps to
Survive No Man’s Land
One Page Strategy Dashboard to simply communicate strategy and track its
performance regularly
Quarterly Strategic Diagnostic to ask strategic questions about the business
and to get radically objective
Great companies have leadership teams that adapt and learn from their decisions. They are able to keep their strategy simple and remain focused on the top handful of priorities. They’ve developed the habits to execute.
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255 Steps to
Survive No Man’s LandInc. Navigator By Newport Board GroupTools to get your team radically objective, aligned, and accountable so that your company can survive No Man’s Land
Inc Navigator provided unique information to help us identify critical issues we need to address in our company. We also received specific insight into our industry that enhanced our ability to focus on the best objectives going forward. I would recommend it to any CEO of a growing company.”
Joe Scollo, CEO American Safety Corporation
What Entrepreneurs Say about Inc. Navigator
It quickly surfaced critical issues. We now know the ‘hidden truth’ and can make vital decisions.”
Gilbert Chandler, MD, Specialty Clinics of Georgia
1nc. Navigator is as valuable a tool for business that I have come across in my 25+ years of executive management. My present company is in the second stage which in the best of times has its challenges. Being able to take an in depth analysis of our company with the help of the Inc. Navigator team, we were able to understand our issues good and bad. The ability to bring the issues to the surface in a manner that effectively creates an actionable profile for the team is a tremendous asset. Establishing the right priorities and aligning the team on the correct action items has increased our productivity and established a positive can do attitude. I am looking forward to continued company growth via utilization of Inc Navigator.”
John Camp, CEO Schreder Lighting
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265 Steps to
Survive No Man’s LandAbout Newport Board GroupNewport Board Group (www.newportboardgroup.com) is made up of experienced CEOs, Board Members, and Senior Executives who are the experts to help your company break through No Man’s Land. No Man’s Land is the growth stage where businesses become too big to be small and too small to be big.
Our CEO Advisors and Board members have the experience and emotional intelligence to help you make the right decisions and guide you through No Man’s Land. We access the Newport Expert Network to find the best solutions to your problems. We use proprietary software based on Inc. Navigator to help you and your team get radically objective so that you can:
Execute on the right priorities Identify blind spots Make team alignment and accountability a routine Maximize the value of your business
Our process helps CEOs make better decisions and execute effectively to meet their goals. We provide the catalyst to help you and your team get the right things done.
Newport Board Group partners are the experts to help your company break
through No Man’s Land.
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275 Steps to
Survive No Man’s Land
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