Blog: 7 success factors of a growth company21.11.2018
I have walked the entire path from setting up a business to expanding it to an international success and exiting successfully. There have been many amazing moments of triumph and bitter defeat along the way. At the same time, I have accumulated a solid understanding of what makes success and, by extension, growth. Learning is impossible without mistakes, which is why I’ve become very well acquainted with the hard way during my journey. It’s only in hindsight that I can put into words the things that I’ve found to rise above others when speaking of success factors. I’d like to share them with you so that you may be able to steer clear of the pitfalls more than I did in my time (although all smooth sailing all the time is a somewhat unattainable feat for an entrepreneur).
The success of a business involves many things that need to be accomplished and secured: financial management, agreements, legal matters, staff and culture, business development and account management. However, none of these things can really be regarded as elements of success and eventual growth. In fact, the things that need to be accomplished are essential requirements for a company’s very existence, not to mention success. Success requires the essentials, or the requisite attributes, to be in order. These ensure that the things that need to be accomplished can be handled better and the company’s performance can rise above that of its competitors.
That being said, the success factors I’ve identified are far from rocket science. Here is a brief summary:
- Shared direction and goal
- People-centred approach
- Positive dissatisfaction
- Facing the actual state of things realistically
- Courage to seize an opportunity
- Readiness for change
Listed briefly like this, these factors don’t seem that special, right? The secret and challenge lie in the fact that many of the people involved have attributes that can be difficult or even impossible to acquire through studies. This leads us to what is actually the most important meta element on the list: the right team, i.e. the right people with the right attributes performing the right tasks. In other words, the right team is the success factor for a company’s other success factors.
Let’s now examine the seven factors individually in a bit more detail.
In the absence of trust among the team, there’s absolutely no point in continuing down the list. Trust is by far the most important factor on the list and enables the other factors to be actualised.
Trust works on multiple levels. When you trust the members of your team, you know that they’re open about their own goals (no hidden agendas) and you can count on them to handle their own responsibilities to the best of their ability (in their own way). They don’t go behind your back and can trust you in return. Mutual trust between team members will enable them to be critical towards one another without being afraid of being stigmatised – and they will also be able to receive criticism more easily. See also the section on positive dissatisfaction.
An atmosphere of trust among the core team of the company will organically spread to employees, customers and partners. This positive air can often be sensed immediately.
Sometimes, there can be conflict within the team for one reason or another. In these situations, too, trust is a tremendous resource, which enables disputes to be resolved without straying from the matter at hand.
Trust is built slowly and can be lost in an instant. Time must afforded for building trust. Even if the team members know each other from before, the new business environment can be dissimilar enough that coexistence within it takes some practice. Planning the business operations over a couple of weeks of camping in rough conditions can be a good option.
Shared direction and goal
You sometimes hear people say that culture eats strategy for breakfast. I find that, in these cases, the speaker hasn’t quite grasped the meaning of strategy. After all, can it not be the strategic goal of a company to develop its culture?
Simply put, strategy means setting a goal, planning operations to achieve it, and communicating on it openly and repeatedly. A company can’t succeed if it doesn’t know what it wants to achieve.
In my opinion, setting a goal is one of the things that need to be accomplished. For this reason, the emphasis is on the word shared in the context of this success factor.
When the entire team participates in the definition of the goal, it’s easier for everyone to feel ownership of it. This way, the entire company staff can turn their attention to the same things. A company should be like a large ship on a steady and correct course instead of everyone sitting in their own little dinghies paddling around willy-nilly. A shared goal is a lighthouse that the ship uses for navigation.
Like trust, goal setting spans many levels. Especially in the context of a start-up, it’s extremely important to identify the personal goal of the core team members. If one person wants fast growth followed by an exit and another’s passion is to work on growing the business and being involved even after the statutory retirement age, you may run into trouble if everyone in the team isn’t aware of these wishes and goals.
When charting the team members’ goals, it’s also a good idea to discuss personal values. They often help to clarify the goals.
Your team is made up of people and, by the same token, so is your pool of customers and partners. You conduct business with people in almost every case imaginable. Ultimately, people’s needs and wants define what sells, no matter what you‘re offering. In fact, customer-orientation is one manifestation of a people-centred approach.
Taking this approach doesn’t preclude you from letting people go in a tough spot. Nor does it mean that you can forget the basic laws of business and the bottom line when planning whether to have the office Christmas party in the next town over or Dubai, for example.
A people-centred approach means that the principles of steering and developing the business operations are rooted in people, not technology. In other words, don’t start a new product development project blinded by new technology. Instead, make sure to first ensure that someone somewhere (preferably more than one person) actually wants or needs the product.
It can also mean opting to speak the customer’s language instead of your own technological jargon when speaking with the customer. Learn to understand your customers and their way of seeing the world to find the common language.
Listen to your team members, customers and partners and show that you’re hearing them. It’s really as simple as that.
Have you ever built a house yourself? If you have, you know the staggering amount of work involved. On the other hand, once the foundation was cast and the concrete was drying, you may have eyed your handiwork exhilarated about the accomplishment.
In this respect, building a company is not that different from constructing a house. You start the process with the foundation and, every now and then, it’s a good idea to admire the steps that have already been completed, from the first deal to the hiring of the 100th employee. At the same time, you should keep in mind the things that could still be improved.
Positive dissatisfaction entails openness and trust. Development is fastest when no one is afraid to voice their improvement suggestions. With the positive aspects in mind, even criticism is easier to receive.
Positive dissatisfaction is also connected to the ability to think ahead (proactivity vs. reactivity). When you make a habit of examining everything you do in a critical way, you may notice things that will require corrective measures in the near future.
In other words, let dissatisfaction (“What could we do even better?”) guide your actions towards the development of a constantly improving company. In addition to this, you should let positivity (“Look at the amazing things we have already accomplished!”) be the guiding light in everything you do.
Facing the actual state of things realistically
Sounds easy, right? Don’t close your eyes from unpleasant things and, instead, tackle them head on with determination. In reality, this guideline is often very difficult to follow. Entrepreneurs never have only one or two things waiting for a decision or measure – the total can easily amount to dozens, each more important and urgent than the one before it. It’s very easy to fill your to-do list with things that don’t cause excessive heart palpitations and cold sweats. You can get to the more unpleasant issues later, or maybe they will even go away on their own.
Unfortunately, brutal facts do not tend to resolve themselves. On the contrary, they often worsen and escalate to heighten the problems. This is why closing one’s eyes to the facts may easily lead to a situation where everyone’s time is mostly spent putting out fires to keep the operations running instead of developing them. More often than not, tackling and resolving brutal facts sufficiently early will ultimately pay dividends in terms of time spent.
Courage to seize an opportunity
In Finland, “Swedish decision-making” is a common concept: People sit around a table trying to reach a consensus no matter how long it takes. The most important thing is to ensure that everyone agrees and is happy. If this state isn’t reached, no measures are taken.
However, democracy isn’t always the right way to develop a company. Good leadership involves recognising new opportunities and, most of all, having the courage to make relevant decisions. The worst decision of all is one that isn’t made (which is actually a decision in itself – a decision not to make the required decision).
The courage to seize an opportunity doesn’t mean blindly throwing yourself at every opportunity that crosses your path. Quite to the contrary, it means that you evaluate any opportunities you come across as well as related risk in terms of the company’s goals, risk management capability and resources. Only then, if you have the green light in all areas, can you ease your foot off the brakes.
If you get an opportunity that will take you towards your goal but you aren’t yet sure if you can handle it, seize it. You learn by doing, and experience is the most effective teacher. If you’re too slow, you get left behind.
Readiness for change
It’s very easy to fall in love with your own plans. The problem with growth companies is that they are in a constant state of change. Therefore, when you create a new smooth operating method, you may notice that, once you have managed to double the size of your company, the entire process is hopelessly obsolete or, in the worst-case scenario, completely meaningless. In other words, readiness for change refers to the capacity to change one’s own thinking and reject decisions that only a couple of months ago were excellent.
Readiness for change can be proactive or reactive, and is closely linked to both positive dissatisfaction and facing the actual state of things realistically. Instead of letting yourself be caught off guard when the sales process one day stops bending and breaks, you monitor the situation and observe the need for some fine-tuning beforehand.
In a growth company, the entire organisation should get used to change. People you recruited a year ago entered an entirely different company to those you are hiring today. It may be that some of the older workers find the constant change alien and even burdensome. Then again, others may be energised by it. Either way, everyone will benefit from the open recognition of the necessity for change.
Changes, too, must be implemented in a people-centred manner. Changing too many things at once will exceed any individual’s capacity to adapt and cause nothing but trouble. Changes are necessary, but there is no need to rush headlong into them.
These kinds of success factor lists are what could be called “nice-to-know” reading, and that is all they will ever be without the willingness to actually apply them in your own company. One thing that’s sure is that even if you decide to take the necessary steps, the application and implementation will take time – and involve some unavoidable mistakes. That being said, it’s an amazing journey that everyone aiming for success should begin today. Contact me and I will be happy to help you along your path to business success!
Juha Lehikoinen is a growth entrepreneur, angel investor and professional board member. His history includes a successful exit from the service design company Leadin Oy slightly over a year ago. He and his brother Jaakko established the company in 2009 and expanded it into an international firm with almost 100 employees before selling it to Gofore Oyj in 2017. Now Juha offers training and funding to success-oriented companies in the Pirkanmaa region through his new company Via Nova Partners.
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