X-Factor Introduction
Why is it that some businesses prosper while others struggle? Why do some companies grow and are successful for a few years only to stall and lose momentum in the market? Many times there isn't a simple explanation--but more than likely inefficient X-Factor management is a contributing factor to poor business performance or failure.
Please reference the Yin/Yang image above. Think of a business as having two distinct parts: Idea Generation and Idea Mobilization. Good ideas for technology, products and services need to be created and then delivered to the market through the machinery of an organization.
The holy grail of Idea Generation and the life-blood of a successful company are "Good Business Instinct", "Passion" and "Drive". Good Business Instinct is the ability to identify a market need for a product or service today or in the future; Passion is the ability to rally investors, talent and customers around your product or service; Drive is the capability to block out all distractions and set backs and keep focused on the end result to the exclusion of all else.
There is no substitute for these three ingredients. This is also why thriving businesses struggle when founders sell out and leave. With them goes the magic sauce of success.
On the other side of the equation is Idea Mobilization. This is the organizational machinery necessary to commercialize great innovative products and services. I've labeled this machinery X-Factors since these elements have a vital but hard to quantify impact on a company's profit and performance.
About 50% of business failure, early stage to mature companies, is attributed to one or more X-Factors. Businesses that demonstrate advanced skills in this area have a statistical advantage over the competition and in overall company performance.
It is also unlikely that entrepreneurs that are great at Idea Generation are equally skilled at Idea Mobilization. Why? The entrepreneurial traits needed for great Idea Generation create blind spots that prevent the necessary attention to effective X-Factor management. It is also one reason that X-Factors are addressed too late in early stage companies and inadequately in larger ones.
Please reference the Yin/Yang image above. Think of a business as having two distinct parts: Idea Generation and Idea Mobilization. Good ideas for technology, products and services need to be created and then delivered to the market through the machinery of an organization.
The holy grail of Idea Generation and the life-blood of a successful company are "Good Business Instinct", "Passion" and "Drive". Good Business Instinct is the ability to identify a market need for a product or service today or in the future; Passion is the ability to rally investors, talent and customers around your product or service; Drive is the capability to block out all distractions and set backs and keep focused on the end result to the exclusion of all else.
There is no substitute for these three ingredients. This is also why thriving businesses struggle when founders sell out and leave. With them goes the magic sauce of success.
On the other side of the equation is Idea Mobilization. This is the organizational machinery necessary to commercialize great innovative products and services. I've labeled this machinery X-Factors since these elements have a vital but hard to quantify impact on a company's profit and performance.
About 50% of business failure, early stage to mature companies, is attributed to one or more X-Factors. Businesses that demonstrate advanced skills in this area have a statistical advantage over the competition and in overall company performance.
It is also unlikely that entrepreneurs that are great at Idea Generation are equally skilled at Idea Mobilization. Why? The entrepreneurial traits needed for great Idea Generation create blind spots that prevent the necessary attention to effective X-Factor management. It is also one reason that X-Factors are addressed too late in early stage companies and inadequately in larger ones.
Let's Explore the X-Factors in Greater Detail
Strategy Formulation
Strategy is how you are going to approach and achieve the creation and delivery of your vision for a technology, product or service. Unfortunately, in many organizations, vision, mission, purpose, goals, objectives (and anything else you want to throw in) are blended together into a confusing soup. And, even the wrong players are involved in the wrong aspects of formulating strategy. Some companies go so far as to make this a democratic process--the kiss of death to creating a vital, actionable road map. Let's simplify and streamline this process--and make sure we have the right people, the right information and the right method to build out the needed strategic framework for success.
Planning & Resource Sequencing
Entrepreneurs and driven executives tend to be great planners. The problem is that the planning activity is done in their heads (over coffee, in the shower, while asleep at night) and not sufficiently translated into a plan or blueprint that the company and all its employees can follow. This phenomenon occurs in any size business. Leadership also has a tendency to develop an initial plan (vision, mission, strategy) and then delegate portions of that plan before it is fully translated. This serves to introduce misalignment between the intended direction of the company and workforce execution. It's an expensive proposition. Companies also tend to deploy resources (time, money and personnel) based on functional priorities. The efficient way to deploy resources is based on master plan sequence. Not priority.
Teaming
Is your company being lead by a group or a team? There is a big difference. Using titles such as C-level team, top team, executive team, and leadership team may sound great but it doesn't guarantee that, in fact, a high-performing team is functioning behind the name. It's common to find many "executive teams" in reality performing more as "executive groups." There is always an opportunity to tune in and tune up your top team and make sure that teaming is leveraged to the fullest.
Stakeholder Management
Like it or not, the world revolves around stakeholders. Stakeholders in a business include, for example, customers, directors, employees, partners, owners (shareholders), suppliers, unions, creditors, and the community from which the business draws it resources. Stakeholder mismanagement is likely the number one killer of CEO's and other top-level executives. Invest time and energy upfront to understand and manage the stakeholder landscape. If performed well key executives increase their impact and leverage on achieving objectives and overall company performance.
Scalable Organization Design
Organization redesign quite often is used as a fix-all for company ills. Yet, this solution usually has little to do with root causes and what actually needs to be addressed in the organization. It is also one of the most disruptive activities that can be self-inflicted on any business. Learn how to create organization structures that flex and grow with the needs of the business. A scalable organization design is a competitive advantage.
Employer of Choice Culture
People are the organization, so to speak, in the "Information Age." Every night the organization goes home. If the employees don't come back, the organization ceases to exist. Unless you're dealing in gold, platinum, or precious gems, the greatest investment will always be employees. As such, it is just common sense that if leadership creates a culture that protects and nurtures this investment, that return can be phenomenal. Architect the culture that you desire for today and in the long term and put in place a plan to manage to that end. That way, who you hire, how employees are developed, how decisions are made, etc... will gradually shape and build the company you desire. Culture provides the ultimate context for distributed decision making--the bane of any globally distributed or rapidly scaling enterprise. Talent is the ultimate key to company success and performance. A business can lose the war here if culture is left to chance or ignored.
Transition Management
Businesses, as they grow from small to large, undergo countless transitions or inflection points. Some are obvious. Many are not. Companies tend to stall (growth and profitability stops) during prolonged transitional periods--which also tends to create unwanted employee turnover. Executives and managers at any level in an organization need to be students of change and transition: 1) To anticipate business inflection points, 2) To understand the impact of change and transition, and 3) To have the right information, tools and processes to effectively navigate and manage these ongoing events.