Why do some businesses thrive (about 3%),
....some survive, (about 95%) and...
A successful business is a complex system, where small changes can make or break the company. Successful organizations are made up of of seven business subsystems. Each business subsystem is made up of a set of business processes.
The solution for taking a "surviving" business to the next level is to discover what business process(es) are failing - then replacing that failing process with a successful process. This ability to make simple subsystem business process changes is the secret leadership of thriving businesses learn.
Only 3% of businesses have leaders who continue to take their organization to the next level year after year.
95% of business do not focus on business change or business transition and see no difference in profitability. Leaders who consistently take companies to the next level, slowly (or dramatically) change the organization. We call this type of "next Level" a Vision 1.0 to Vision 2.0 transition. In this article, we learn about the Vision 2.0 business model that supports next level changes.
Vision 1.0 – "One Team" business model
Initially, all Vision 1.0 organizations start as a single team. As the business grows, new members are added to the team. Each team member's role is to support the business owner run the daily operations. All team members look to the owner for leadership and direction.
This owner-centric model works well, in a Vision 1.0 business.
The problem with this initial model is that
Growth potential is limited to an owner's ability to juggle everything.
Some owners are better than others at "juggling" (About 5% that break $1 million annual revenue). In the end, every owner runs into the same problem. There are only so many hours in the day. Owners often give up weekends, vacations and even sleep to keep the business growing.
Symptoms that indicate this business model is failing include:
- As the business grows, business margins decrease.
- Profit levels flatten.
- As the organization grows, overhead costs increase.
- Owners & key leaders begin to burn out.
Vision 2.0 – Multi-team model
The Vision 2.0 multi-team model is designed to create a certain level of "tension." This may seems counter-intuitive. After all, isn't tension between teams a bad thing? The answer is, it depends on where the tension is coming from.
In any organization there are two types of employee roles. If we think about accounting roles and sales roles, we see an obvious difference. Accounting creates an environment business stability and predictability. While sales focus on developing growth and change. In Vision 2.0, roles are divided into two sets of Stability and Growth teams. Healthy tension between these types of teams is a positive competitive advantage.
Instead of enabling the owner, these teams are divided to replace the owner in the day-to-day management and execution.
The CEO can then step back from the two teams and into a strategic planing role. In this way, the CEO's time and attention is not fought over by employees. Instead, teams provide advice and recommendations that contribute to better organizational decisions.
The CEO's role is to develop the best strategy and plan from the advice of both the stability team and from growth team.
By delegating the day-to-day management activities to the stability team and daily sales activities to the growth team, a CEO can begin the work of taking the organization to the next level.
Change for the better
There are many benefits to this Vision 2.0 change. Business growth is not dependent on how many hours the CEO puts into the "day-to-day" activities to run the business. For many owners, it might mean a vacation is possible. Additional benefits include:
- Increased margins as the business grows.
- Profit increases with growth.
- Overhead costs remain constant and often decrease.
- Technology begins to amplify organizational productivity.
Transition from a Vision 1.0 to a Vision 2.0 model can start right away. The first thing our clients see is an increase in employee productivity. This change often means capturing income through cost reduction. This new income can then be re-invested into the organization.
Now the owner can begin analyzing the business for failing business processes. Working with the efficiency team and growth team together, they can re-design processes to improve both efficiency and growth for the organization.
Transition First Steps
Would you like to learn more?
Take our Vision 2.0 test. The test questions will help you evaluate whether your business is at a level of Vision 1.0 or Vision 2.0.
If you need help, contact us here. We would be happy to share how others have achieved success.