In October of 2001, 1,435 good companies were examined over a period of 40 years. It was discovered by the team conducting the research that only 11 of these companies made the leap from being a "good" company to reaching their full potential and achieving greatness.
Jim Collins and his research team released Good to Great: Why Some Companies Make the Leap...and Others Don't on October 16, 2001.
The book has become a classic read in the business world. One that many entrepreneurs have found solace and encouragement in while building their businesses and overcoming their struggles in their personal pursuit of greatness.
Take Kimberly-Clark for example. Praised as one of the top companies in the world for building the iconic Kleenex brand, the majority of Kimberly-Clark's revenue over the past 100 years of the company's history had actually come from traditional coated-paper mills - the kind that would generate paper for magazines to be printed upon. Collins' Good to Great details the incredibly gutsy decision of Kimberly-Clark's CEO at the time to sell all of the paper mills; to completely eliminate the number one source of revenue as a company in the pursuit of creating new consumer-based products instead.
This radical change, one that caused a centuries-old organization to shift and pivot into new and adapting markets, marked Kimberly-Clark's transition from a "good" company to a Great one.
There is no shortage of stories recounting the tales of massive organizations making what sound like huge leaps to radically improve their businesses. Chances are, your business doesn't have paper mills that it's been using for hundreds of years. More likely, even, your business probably hasn't been around for a decade. Still, your business can improve; you can get better in terms of growth, revenue, or operations. Most of the time, it's not about making one large decision that radically changes your trajectory.
So, how do you make a business better?
Improve Your Understanding of the Business
It's so easy to simply work on your business for weeks at a time without taking a step back. As entrepreneurs, we easily get sucked into our businesses and forget the outside world. We forget that our small businesses are traditionally blips on the radar of the rest of the world, despite how important and valuable they feel to us.
Myopia is a fancy word for nearsightedness, which is what most entrepreneurs mentally suffer from; the inability to see your business from a distance. Entrepreneurial myopia is a completely made-up condition, but it accurately describes the way most business owners look at their companies. A myopic view only allows us to see the details of our business, which are the things that we most commonly experience or deal with on a day-to-day basis.
Take a step back.
Working with a third-party advisor allows you to step back from your business nearsightedness and analyze what's happening at a higher level. Instead of getting bogged down by the details, you're able to be brought back to a 30,000-foot view of your own business. By getting a birdseye view, you're able to more keenly observes holes and gaps that are causing harm and stagnating your growth.
One of the key aspects of understanding your business is analyzing things through a financial lens. A business coach or advisor is incredibly useful, but if they're not helping you understand what's happening in the business from a financial perspective as well, they're not giving you the full picture.
Financial information allows you to see more gaps in your business than most new entrepreneurs realize. From understanding how your revenue changes throughout the year to identifying the ways in which your business is spending money on employee benefits, you can draw some incredible conclusions from accurate and detailed financial information.
What Gets Measured Gets Managed
It's easier to pick out the holes in something than it is to patch them up.
If you've cured your entrepreneurial blindness and have found help in someone that can help you understand your business from an elevated perspective, you can begin to formulate a plan of action. A solid plan does three things:
- Identify the problem
- Explain the solution
- Provide a method for tracking results
Most of the time, it's easy enough to identify your problem once you know where to look! Even creating a solution that will help to solve that core problem is doable, but can take some time. Luckily, having a third-party advisor who is removed from the day-to-day operations of your business is an incredible resource.
Still, how do you know when your problem is solved?
A problem is solved when it's no longer a problem. Sounds obvious, right? Still, it's not always as clear as we might think. While we can identify problems, solutions have to be implemented and measured in order to identify their effectiveness. This means creating some kind of metric that allows us to measure the status of the problem.
For example, if the core problem within our business is one related to sales, we might say that what needs to be measured is the amount of revenue that we're bringing in each month. If revenue increases, it's probably safe to say that our solution is working. If it stays the same or decreases, we may need to find another solution.
Measuring is important, but it's equally important to remember that results (and change, for that matter) take time. Improving your business can feel hopeless at first, especially if you're in dire straits. Still, pushing forward and allowing for a predetermined amount of time to pass between measurements allows you to temper your expectations and reinforce that you're seeing positive changes over time.
Improvement is a slow science. Not every small business is going to benefit from radical changes like Kimberly-Clark selling their paper mills.
Instead, incremental improvements compound given enough time and real change begins to take place.