The first business, of course, is the product or service you provide. It’s what you sell and what customers receive. This could be an object such as a necklace, or a service such as SEO consulting.
The second is the business of the business (BOTB)—all the things that help your business run. These include operations, HR, culture, finance, etc. You can think of the BOTB as the operating system that keeps everything else running smoothly.
Founders tend to devote most of their attention to the product, since that’s what got them into business in the first place; it’s their passion. In the early stages of any company, it’s natural to focus on selling and delivering product, because that’s the driver of rapid growth. I have seen many businesses get to as much as $5 million in revenue with little to no focus on internal operations. But before long, this narrow focus will begin to cause problems.
If shipments are late, turnover is high, or cash flow isn’t monitored, success will begin slipping through your fingers. Unfortunately, founders often value the people working on product so much that they will dismiss early warning signs about them—even when the red flags come from their own BOTB experts.
This is particularly true in design-oriented businesses led by creative founders. Creative people love product, not operations. I have seen the same story play out time and time again: These founders will favor their product-oriented team members above and beyond anyone else in the company. An HR person or other manager might point out signs of trouble, but no one at the top will admit that the emperor has no clothes. I worked with one creative company years ago where no one on the creative team was ever held accountable for anything. It set the tone for the entire business and led to a turnover rate of nearly 50 percent.
The risk you run when you ignore culture is that you may only be as good as your first product. In the long run, having a healthy, innovation-oriented culture is necessary to stay ahead of the competition. Only companies with good cash flow, proper systems, and engaged employees can make the changes necessary to evolve along with the market. High turnover will hamper any efforts to build a reliable, adaptable, and skilled team.
Sustainable businesses have both great products and world-class operations—including hiring, culture, finance, and more. They work to ensure excellence not only in what they do but in how they do it.
If you think you might be doing a poor job managing your BOTB, here are a few steps to take:
- Place value on the business of the business. None of the following ideas will gain traction if you don’t learn to appreciate how much your successful product depends on a successful organization. This is the critical first step and requires some self-awareness and reflection.
- Hire a No. 2 and empower him/her. Great visionaries know what they are good at and where they need help. Most great businesses have had both a strong visionary and an expert at operations. Walt Disney had his brother Roy. Steve Jobs had Tim Cook. At Acceleration Partners, our GM Matt Wool runs the day-to-day business, so I can focus on the future. Whether it’s a president, COO, GM, or similar title, bring in someone who can manage all the things you don’t want to do.
- Implement an “operating system.” Formal programs exist to help you build strategic plans for operational success. Use Gazelles/Rockefeller Habits, the Entrepreneurial Operating System, or something similar to help you manage and measure the key operational metrics of your business.
- Plan quarterly and annual off-site meetings with your leadership team. Off-sites are a great way to pull out of day-to-day tasks and work “on the business” rather than in it. Make sure to get the team out of your normal working space for maximum impact. This is also a great time to focus the majority of your time on some of the BOTB issues, rather than the product which gets more attention day to day.
- Hire a coach. Most CEOs these days turn to business coaches to help them grow, to point out weaknesses, and to create accountability. A coach will help you focus on your personal blind spots.
Remember that at the end of the day, a successful business is much more than a great product. It’s a team of people working together to create sustainable excellence—supplying great products and services while simultaneously running world-class operations.
Robert Glazer, Contributor