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 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(es) with a successful process. Not every business leaders can be objective enough to look at a failing process. Involvement in "Day to Day" operations leaves little time to step back and look at all the system. Then Identify the small changes that make the company, "...just a little bit better." Stepping back and looking at business processes more objectively is the secret to turning a "Surviving" business into a "Thriving" business.
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. In this Vision 1.0 model, each team member's role makes the owner's job easier. Additionally, the owner has only one job. That job is driving the daily operations of the business. The Key competitive advantage for the Vision 1.0 business is the owner.
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 there are lots of ways to create a team. There are two rules though that all successful multi-million-dollar organizations follow.
Organizational Rules for Successful Vision 2.0 Teams
- Balance Conflicts of Interest
- Allow Team members to run the "Day to Day" Operations
In multi-million-dollar organizations, there are is always a balance in roles. This balance is between Stability (risk avoidance) and Growth. This next image Diagrams a classic conflict between the CFO (risk avoidance) and the CMO (Business Growth).
Vision 2.0 Conflict of Interest diagram (Accounting vs. Marketing)
In this we can see the owner in the center, considering the concerns of the Chief Financial officer and the Chief Marketing Officer. Both CFO and CMO make important points in their comment. We can see from their thinking they balance Risk and Growth in different ways. Ultimately the owner must provide a vision and a compromise that both the CFO and CMO can work on together.
The owner will have more time for strategic leadership when building Stability and Growth teams.
With these teams in place and as they mature, the CEO can then step into a new strategic planning role. Now, the teams manage the daily questions. Providing input, ideas, and recommendations that contribute to the owner's final strategic decisions.
Once these teams are in place and functioning, now the CEO is ready to take 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 vacation is possible. Additional benefits include:
- Increased margins as the business experiences business growth.
- Profit increases with growth.
- Overhead costs remain constant and often decrease.
- Technology begins to amplify organizational productivity.
The 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. We see employees increase productivity by 20% just by deploying the first iteration of the new Vision 2.0 teams. What this means for the organization are initial wins that cost very little to implement, but provide major returns in profitability.
By re-investing in more team stability and growth, new profits allow an analysis of the business in ways that weren't possible when the owner was involved in the day-to-day operation. Working with the efficiency team and growth teams together will 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.