Over the past year here in Portland I’ve been talking to a lot of startup leaders trying to make their fledgling businesses fly, and the image that always comes to my mind when I have these conversations is that of a race car traveling at 200 mph, and getting a tune up at the same time.
It’s quite a problem these leaders face, because once the green flag is raised and the business is launched – they can’t pull their business “cars” into the pits, have some work done, and then restart – that’s precious time in the marketplace that could mean the difference between success or failure.
So, changes must be made “on the fly” – and for a start up, there’s seemingly a zillion things that should be changed or modified at any given point, which is a huge prioritization challenge. They all need to be done, but when, and in what order? AND, they can’t be done in a way that stops the car.
This can keep startup CEOs up very late at night, pondering their next moves – unless they develop a critical “filtering” process that can make these decisions easier, and more effective.
The filter is a series of 4 questions that should be asked about every contemplated change or modification. Each question begins with “How directly does this change or modification effect”:
- Net Cash Flow generation
- Customer retention (and/or repeat business)
- Employee retention
- Timely and accurate financial and/or operational reporting
These are four elements that represent the moving car – and thus, they are a mechanism to insure that the startup’s limited time and resources will be devoted to the right things, and at the right time. The more a potential change effects one, several, or all of these filters, the higher it should be on the priority list.
Let’s look at a fictional example to see how this would work (albeit in an truncated way):
Imagine the CEO of startup service company “Acme Service Co.” had these 4 changes to consider:
- Formalizing the organizational structure and team responsibilities
- Rollout of a revised sales & customer service protocol & process
- New advertising campaign
- Revamp of the customer management (CRM) system
At first glance, which one of these four do you think effects all of the filters the most? If you answered (2), you’d match my assessment. The customer sales & fulfillment process in the service business touches everything – it certainly effects cash flow and customer retention, and if it’s presented and “sold in” correctly, it has a huge effect on employee retention. Finally, there can’t be a good protocol without steps along the way where proper reporting should occur.
Based on my filters, I’d do (2) first. What would be next? I’d lean towards (4), because if you can’t bill it, you can’t collect it, and if you don’t have data, you can’t manage it. You can “get by” with a substandard CRM, but a great one can positively effect ALL of the filters significantly (e.g. ever watch an employee get completely frustrated with a CRM – talk about demoralizing!). On the other hand, there may be an argument for (3), depending on the cash flow needs at the time.
Lastly, while understanding everyone’s roles and responsibilities through a formal org chart & structure (change number 1) is certainly important, especially to employee retention, in my 200 mph car it would finish fourth on this list, because of its lesser effect on the other 3 filters.
That’s how the process would work. And the answers in this example could very well be different for a different company in another industry at another point in time. But it’s very important in any case to establish a rational and considered “filtering” process like the one presented here, so startup CEOs can keep their “cars” on the road at top speed, AND be able to make the necessary changes at the same time.