In the past few quarters, our companies have seen tremendous improvements in the operational execution – focus and intensity have increased drastically, which has improved the output per hour. Add to that that we have recruited some very promising talents! It should be a recipe for success.
Similarly, we seem to be alright on the strategic level. We set goals – some more ambitious than others – and we do have plans in the form of budgets. While no one can foresee the future, the budget is our North Star – it guides us and helps us make the right decisions today so that we can achieve our goals in the future.
Despite improved operations and clear goals, we are still not moving as fast as I would like. It’s not for lack of trying. I have rarely seen people work as hard as we do these days.
Great input, lack of output
Here’s an example of how we fail on this from a portfolio company: We have a goal of recruiting for a specific role – we know how many people we need and that we need them asap. So far, so good. One month goes by – no one is recruited. Another month goes by – still no one recruited. Every month ends with the conclusion that we must do better, but the results are all the same.
Another example: We want to grow our top-line 25% a month for one of our companies. We push everything we’ve got in marketing and grow 5% one month. The next month, same effort, but grow only 3%. The month after, we don’t grow at all and topline is flat.
In both examples, the challenge is that we didn’t manage to effectively bridge our strategic goals with our daily operational tasks. Once the goal is set, we just ran at full speed ahead. We approached it the way kids play football: All focus on the ball – no plan!
It turns out that this is not the most efficient way to get there. This may sound like a trivial point, but it isn’t.
In classic business/military jargon, we are missing the tactical level of execution – the bridge between the strategy and the operations. It’s a common problem and needs to be addressed.
In many larger organizations, the division of responsibilities between layers of management makes it clear that the person on the factory floor should not think about the strategic priorities of the business and the director may not need to think about the operations. In startups, the distinction is less clear as everyone needs to think on all three levels.
Getting the tactics right
Going back to the recruiting example, we didn’t have a clear tactical plan:
- How do we expect to get the right candidates? If via inbound applications then, where should we get the job description posted and how do we get it there? How do we prioritize our time across all the places we could advertise the opening?
- What does the right candidate look like?
- How do we want to run the recruiting process? What are we testing for in our interviews and how are we performing those tests?
- …and common for all of the above – how do we know if we are doing well? Do we have granular enough milestones that our measure of success is not limited to the final output (a recruited candidate) only?
For the second example of growth, the challenge was similar:
- If we need to grow 25% per month, what are the ways to get there?
- What can we do in our existing marketing channels? What are our levers and how much can we squeeze them?
- What are the other channels we should engage in? How can we approach them? Do we have the expertise or do we need to seek that externally?
- How do we prioritize our time across the different options?
When the above is done well, our strategy drives the tactics we deploy, which – in turn – defines what tasks we must do and the problems we must solve today and tomorrow.
When we learn from the two examples above (I have an endless list of such examples), we become more effective entrepreneurs and company-builders. So remember:
- We must have the right strategy and goals,
- We must break the strategy down into tactics that can be executed, and
- We must break the tactics down into operational tasks
Entrepreneurship is probably 90% operational execution. It’s about closing a deal here, split testing there, and tweaking the marketing to get the right outcome. But in the end, it’s important that we have the right direction and the right actions. Doing the wrong things perfectly won’t get you where you want to be.