Over the years of running the Fast Growth Icons events series, I’ve seen hundreds of successfully scaling companies. I’ve seen even more fail. But there’s a third category: businesses that initially achieve a significant degree of success but then plateau. What causes the slowdown, and what differentiates the rapid-growth superstars from the also-rans?
I think there is a view (one perpetuated by the media) that the people that build amazing companies are almost god-like superhumans. In my opinion, outside a few possible exceptions, I don’t think that’s true. The reality is a bit more prosaic.
Businesses fail for all sorts of reasons. Maybe their idea didn’t have a large enough market, maybe they ran out of money before they reached sufficient scale, maybe they hired badly. Or one of a thousand other reasons. So it’s more interesting to look at businesses that have achieved significant scale (millions in revenue) and profitability, and wonder why these promising early successes didn’t fulfil their potential.
“Stratification in the sport is discrete, not continuous.
There are significant, qualitative breaks — discontinuities — between levels of the sport. These include differences in attitude, discipline, and technique which in turn lead to small but consistent quantitative differences in speed. Entire teams show such differences in attitude, discipline, and technique, and consequently certain teams are easily seen to be “stuck” at certain levels”.
“The Mundanity of Excellence”, Daniel F. Chambliss 1989.
The competitive edge
This is directly translatable to companies. There are lots of companies producing similar products, with similar teams engaged in similar activities. But some become market leaders with billion-dollar valuations, while some languish. At each revenue level (millions, tens of millions, hundreds of millions and billions) fewer companies make the grade.
The critical issue he puts forward in the paper is that it’s not about innate talent. It’s tempting when we see someone achieve something amazing, to think that they have a natural gift. But many studies have shown that other factors are better predictors of success. In swimming, living in a sunny climate, with wealthy parents (who have the time to shuttle you to and from practice and can afford lessons and coaching), and the luck of ending up with a good coach are all clearly correlated with success.
What ends up delivering success seems to be a combination of the right attitude and perseverance (or Grit). The people that are prepared to put the extra work in, the extra practice. And not just because they consider it a necessary evil that needs to be endured; the best people enjoy the things that others find a chore, and are therefore able to spend longer on them. We seem to be genetically programmed to like things we are good at, creating a virtuous circle where it is hard to tell which came first.
Motivation can’t be faked
As a side note, I hear lots of people ascribing value to non-work activities that demonstrate perseverance (such as marathon running). This is a useful sign in as much as they have shown they have grit in one area, but it’s not a sufficient condition unless their purpose is aligned with yours. If you want people to go above and beyond, they have to have a clear motivation for doing so.
The mundanity of excellence is, in practice, many smaller skills and activities, which on their own are not remarkable, combining to create something amazing. Which Sir David Brailsford (former performance director for British Cycling) calls “The aggregation of marginal gains”.
This task-based approach, which breaks success down into smaller chunks also helps people believe they can win.
“In the pursuit of excellence, maintaining mundanity is the key psychological challenge.
In common parlance, winners don’t choke. Faced with what seems to be a tremendous challenge or a strikingly unusual event, such as the Olympic Games, the better athletes take it as a normal, manageable situation (“It’s just another swim meet,” is a phrase sometimes used by top swimmers at a major event such as the Games) and do what is necessary to deal with it.”
“The Mundanity of Excellence”, Daniel F. Chambliss 1989.
Focus on the minutiae
I don’t want to imply that success is easy. It’s because you have to get lots of seemingly less important things right for a long time that it’s hard. Lots of people think there will be one major ‘silver bullet’ that will make them successful – this rarely happens.
So companies that continually succeed and grow are doing lots of things a little bit better than the competition, and that ability comes from their attitude and mindset.
Making sure you maintain focus and develop a proper strategy flows from that attitude. You need to have a clear, uncomplicated, and properly communicated vision of what you are trying to achieve and how that remains consistent over time. Many companies fall victim to ‘mission creep’ — a gradual shift of objectives that results in unplanned outcomes. Particularly as they hire new senior people who may come in with nuanced views of the overall mission (or how to achieve it).
Your strategy needs to clearly articulate how you have a differentiated proposition that sets you apart from your competitors. Why would they be better off working with you? If you can’t differentiate clearly, you risk becoming a commodity and have to compete on price which drives down profits.
So, success isn’t driven by super-human, super-talented individuals. It comes from a relentless focus on the overall objective, backed by a sense of purpose, and driven by constant small improvements.
“In the pursuit of excellence, maintaining mundanity is the key psychological challenge.” Daniel F. Chambliss