What Everyone Is Thinking

I'm so busy. I don't even have time to think about something new, let alone do something new. I'm focused on revenue. We have customer crises. I don't have time for planning or process or infrastructure. I'm busy on revenue-generating stuff!

The companies that scale are the ones who choose to do less stuff.

It might sound a little counterintuitive, but the companies who scale are the ones who do fewer things. It works because they can do those few things really well. By comparison, the companies who get stuck often get stuck because they keep trying to do too many things. You can't do too many things well. This is another area that requires extreme Valor, because it's really hard to say no to opportunities and give up potential or actual revenue streams in order to focus on becoming great at the few things you choose to win at.

As a leader it's vitally important to develop your confidence in this area. Study successful companies. Every chance you get, talk to CEOs of companies who scaled and ask them, “Did you ever have a scary decision where you had to abandon some revenue streams or opportunities in order to focus on winning in fewer markets?” They will always say, “Yes,” because chaos doesn't scale.

There are three problems related to doing too many things that will keep you in chaos and stall your forward progress.

Problem #1: Addicted to Busy

It's so tempting to stay busy, because, first of all, it's scary to say no, and secondly, being really busy can make people feel heroic and important. Much of the busy stuff can be related directly to bringing in revenue. What could be more important than that? How can that be wrong?

It's wrong because now it's stalling you. You are overwhelmed with work. You are too busy, and it's too chaotic to get the things done that will enable you to scale. Yes, you might have brought in that $3M deal, but you pulled the whole team off the new initiative to do it, so you failed on the effort to open up that new $100M channel. Or you might have needed to do custom work to get that deal, which pulled your key developers off your next $100M product line.

It feels right to keep pursuing every piece of revenue because that has made you successful in the past. It's what successfully got you to $200M. You had to be nimble. You had to be aggressive. You had to make deals happen. You had to drop everything to get that next, big reference customer. You had to stop work on your roadmap to get your biggest deal ever. None of that was the wrong choice at the time. But now that way of working is what's holding you back.

You can't even think about scaling to be a $1B company because you are too busy being a $200M company.

When short-term pressures chronically prevent you from doing more strategic stuff, you end up burning all your time and resources reacting to issues and opportunities in an ad hoc manner, instead of making progress on strategic work that will let you scale. New initiatives require new work. If people are just too busy and distracted to get traction on the new thing, it doesn't get done simply because there is no time to do it.

Another question I ask CEOs is this: “You are a $200M company today. When you are a $1B company do you think that you will operate [a chaotic area in the business] the same way?” They almost always say, “No, of course not.” So then I ask, “Okay, at what point between now and when you are a $1B company do you think you need to start operating in the new way?”

By definition you will need to be doing things differently at $1B than you are doing at $200M. So when do you make the switch?

Hint: you don't get there until after you make the switch.

Think of one of the chaotic areas in your business, and imagine it operating in the same way but with five times more revenue. Could you manage five times more revenue production at the same level and in the same way as you do it now? If one person is handling it now, can you just hire another four people to do it? Maybe…but remember, chaos doesn't scale. If you only know how to scale your expenses linear to your revenue growth, you lose. You'll find that if you just grow the chaotic workload as is, you will have other breakdowns in systems and communications. It's just not possible to do it the same way when you get bigger.

In this case Valor is required to break the cycle. You need to change the systems and the approach to create a more streamlined, repeatable infrastructure that can accomplish ten times as much without costing ten times as much.

Here is what I recommend. List all the places in your business where you are too busy. Is it customer support? Is it delivery? Is it a backend process? Pick the one that is causing you the most pain and creating the most wasted energy. Then ask, “How must this work when we grow by ten times?” Start making the change now—in this one area. Fund it. Focus on it. Do it. You don't need to scale everything all at once, but you also can't just wait until you get bigger, because you won't ever get bigger if you don't start scaling.

Problem #2: Doing Too Many Things

Valor is very much about having the guts to make the choice of doing fewer things. It's much easier in the moment to keep doing too many things than to have the nerve to make the strategic choice of what to stop. This is one of the hardest challenges of being a business leader—and if you are avoiding it, you are in good company. This issue is rampant. I see it everywhere—because it is so hard. You need to make choices and trade-offs. You need to decide where you are going to place your bets and then you need to stop doing some other stuff.

As a leader if you are not waking up every morning thinking about what trade-offs you need to make, you are not doing the job.

The reasons why it requires Valor to make trade-offs and choose to do fewer things are at least twofold. One, you will be disappointing people internally who have been invested in one of the programs that will not move forward. And two, you may need to face your executive management, board, or even Wall Street and say that you are giving up an existing revenue stream to put more focus on a growing revenue stream. You need to have the guts to sell it.

I see a lot of leaders choose the path that requires less Valor in the moment but actually is more risky in the long run. They are so afraid to give up any bit of potential revenue for even a short time that they continue to try to keep doing everything, so nothing ever scales in a material way. But they have avoided the difficult conversations.

I loved Google's founders' IPO letter to shareholders: “As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. The Google founders had the Valor to stand up to Wall Street and typical shareholder expectations of quarterly performance. They said we have a long-term view and it's better for everyone.

I have led several successful turnarounds in my career, and I can tell you that the secret to success was to pick one thing to focus on and do it well. It was always remarkable to see how much more functional the organization became after we stopped trying to be bigger than we deserved to be by trying to do too many things. And once we had our focus, it also became much more clear how to scale, because we had eliminated so much complexity.

Problem #3: Being Too Reactive

Okay. You've made some key decisions. You've made some big trade-offs, and you have focused plans. You're excited about implementing the strategic initiatives that will scale your business. But then, oops, there is a customer emergency. Everyone drops everything, and it's all hands on deck until the customer is satisfied. Strategic work stalls.

Or you might have a team of top people working on market-changing product developments, strategic partnerships, or long-term, integrated, go-to-market initiatives, but then a big deal comes across the table, and they get pulled off this work to do whatever it takes to make sure the deal closes.

It takes tremendous Valor to keep your people working on strategic things. First you have to break free of the thinking that you are always doing the right thing by chasing revenue. Then you have to ask yourself, Why do we have to do so many, reactive, nonstandard things to win in the first place?

I worked with one company where one of the founders was responsible for creating the new platform that would allow the company to create repeatable engagements with enterprise clients, vs. having to do custom, time consuming work with every single customer. This was an improvement absolutely fundamental to scaling. But he also happened to be the only expert who could come to the rescue when a vital sales situation or big issue with a customer came up.

So every time a customer emergency came up, he got on an airplane. Two years went by, and he (and the company) had made no progress at all on the most important strategic endeavor.

Can you spot the problem? Without an intentional change to choose strategic over reactive, this situation will never resolve itself. They were locked in a loop that resulted in never solving the core problem. They were allowing the sales force and the founder to remain reactive. Some things they could have done differently:

1. Train more people to do the critical customer work, so the founder wouldn't need to be the one to go every time. To do this, the founder should never go alone; he should always bring someone along to train and get the sales force used to relying on other people.
2. Understand why these customer emergencies were coming up in the first place and resolve the root cause issue.
3. Equip the sales force to sell differently in the first place to avoid getting into these situations, which require heroic effort from the founder to resolve.
4. Get the company aligned on keeping the founder focused on making strategic progress.

Leaders need to start thinking differently about how they should be working. They need to spend more time thinking so they can spend less time reacting.

How to De-Risk the Most Important Actions

Conflicting Ruthless Priorities

People can get confused when they find that their ruthless priorities conflict with the ruthless priorities of another group. They need to get cooperation from the other group to support their own ruthless priorities, but the other group says, “I don't have time, your thing is not on my list of ruthless priorities.” This is a “game over” moment.

If we fast forward through all the good leadership behaviors that these two individuals could demonstrate to work this out between themselves, and they can't work it out, then, in the spirit of keeping things moving forward, both groups should escalate it to their managers and say, “We have a ruthless priority conflict. One of these will be at risk, can you help?” The use of ruthless priorities provides an excellent mechanism to escalate the right stuff.

It's also a beautiful thing to see this work in action. One time I was sitting in the office of a director, and a manager came in and said, “I just got this urgent request from sales. If I do this it will put at risk the ruthless priority that we agreed I was working on, so I wanted to give you a heads up.” In this moment the director said, “You keep working on the ruthless priority. I've got your back. I'll take this request and get it handled another way. You need to stay focused.” It was a beautiful thing!