Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 23: goals and benchmarks and effective development and communication of them 3

Posted in startups, strategy and planning by Timothy Platt on August 27, 2016

This is my 23rd posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 499 and loosely following for Parts 1-22.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I laid out and began addressing a set of four bullet pointed issues in Part 22 that can be of crucial importance in building a startup and certainly where that means bringing a founding team together that has to be able to work together to bring this new venture into successful reality:

• “Delving into at least some of the questions and challenges that arise when selecting and setting goals,
• “And when determining what performance benchmarks are realistically achievable, and in some crucial sense necessary to achieve too.
• “I am also going to discuss those issues from the perspective of what is often thought of as a core Personnel evaluation approach; I will discuss them in terms of goals and stretch goals.
• “And I will also discuss all of this in terms of fallbacks and plan B alternatives too: more traditionally considered operational and strategic terms.”

I did not explicitly note this in Part 22 but as a collaterally related point of observation, similar point-by-point requirements can and usually do emerge for the executive leadership team of an already established business too, if for example they have to enter into and successfully carry through on anything like a significant reorganizational change. So the basic issues that I raise here have wider-ranging relevance to businesses and definitely during periods of transition or more fundamental change, when any “business as usual” approaches would most likely have to be up for review and reconsideration. But setting those considerations aside, and the issues of how generally applicable those four points can be for businesses, and returning to the beginning-stage business narrative that I am pursuing here, I will focus from here on in this posting on successfully setting up and organizing a startup.

I focused on the first of those four points in Part 22, and on developing and maintaining an informed consensus of agreement on what should be done in a startup’s now and in preparing for its impending next steps, and with what priorities for all of this. I chose that set of issues as the highest priority and essentially universally applicable ones to discuss here, because I have seen startups flounder and suffer from a lack of being able to communicate, discuss, compromise and ultimately reach agreement on what the business should do and how, as it launches and with all of the members of the founding team feeling onboard for that.

What should you look out for in this?

• If a proposed and at least initially included member of a founding team simply cannot accept and go along with otherwise consensus decisions reached and agreed to, and regardless of good faith effort on the part of other team members to include them in this discussion and decision making, this might be the wrong startup for them.
• And that is something that everyone there needs to acknowledge and address soon, and certainly if the member of this team who cannot and will not listen to or consider input from others is the founder who is supposedly leading this team. That threatens the viability of this proposed startup venture from its initial planning stage and certainly if this is a business proposal that of necessity would require an actively involved team effort for it to succeed.
• If it is not going to be possible to reach anything like an inclusive consensus, and even for identifying the more important and pressingly immediate details and decisions that have to be made, that needs to be known early and up-front too – that is just as serious a warning sign. And it is one that indicates fundamental gaps and inconsistencies in the basic business model and as that is understood by various team members involved here.
• But assuming that this venture is feasible at least to the level of its founding team being able to work together on it, and that the basic business model in place is sound, effort still has to be made and on an ongoing basis to keep team member communications open and inclusive and from day one of the initial pre-launch planning stage and going forward from there.

And with that added, I specifically note here that the “questions and challenges that arise when selecting and setting goals” that I have been addressing here from the first bullet point as repeated above, are actually meta-issues: more general-principle organizing issues about how more specific operational issues would best be addressed. And with that noted and added in here to what began as a Part 22 discussion, I turn to the second bullet point and its issues, which fit here as a direct continuation of the first bullet point and its narrative. I wrote that bullet point in terms of benchmarks, and begin addressing them as a key element in defining and selecting early operational and strategic goals. And here, I will also switch to considering more directly-operational issues that would have to be decided upon, prioritized, and drafted in terms of specific operational processes. And I also find myself peeling back the layers of a “meta- onion” one step further as I parse out operational and strategic goals and how they would be addressed.

I find myself facing two very distinct, and I add equally important approaches that I could take here in furthering this overall discussion:

• I could discuss business model and business-specific operational and strategic decision points, and the process selection and formulation issues that enter into them. And this would mean developing and exploring at least one specific case-in-point business scenario, mining it for working early stage business development process examples and how they were decided upon and with what effect.
• Or I could step back and approach this set of issues from the perspective of what might be considered universally applicable operational and strategic requirements, that would apply regardless of industry or business type. Think of this as a set of meta-process examples that any more-specific process examples would have to effectively support and sustain in the individual business at hand.

I am going to at least begin this step of this discussion thread with the second, and more meta- of those process options, and will do so from the fundamentals, as these process decisions are amongst the most fundamental that a business founder and their team can make.

• I define startup and early stage businesses as business development stages, and early growth stages going beyond them and even business stages in general and their transitions, primarily in terms of business strength and agility, and ability to both survive and even thrive in the face of change. And for the first business development stages, and early growth stages that arise immediately after them and certainly for those first two pre-profitability stages of this, financial constraints are foundational to success at any level and according to essentially any meaningful business success criteria that might be applied. If a beginning business runs out of liquidity and credit before it can begin bringing in new revenue from its efforts so as to replenish its active working funds and its reserves, it is over – dead as a new business venture.
• So ultimately, effective operational and strategic process selection, design, prioritization and execution as would be carried out by a founder and their team, has to be carried out within the doable, viable fiscal parameters that they can sustain. And this means arriving at and maintaining a dynamic balance between taking the actions – and accepting the cash expenditures needed to actually build towards the business model in place, and in the face of competition and its pressures while remaining solvent.

At least one of the new online businesses that I briefly worked with leading up to the first dot-com bubble burst, spent down most of their cash reserves in what sports fans sometimes call a “Hail Mary pass ,” buying incredibly expensive advertising time during that year’s Super Bowl – when they were in trouble from not reaching their potential customers effectively and failing to thrive from that and when those potential customers would not be watching the game, or at least when they would not be thinking dot-com purchases or investments if they were! I offer this as a principle-violating example here, that I had the misfortune to see coming without being able to influence the decisions made.

Benchmarking and its issues enter into this here, and how the needs and requirements of fiscal prudence would operationally be met. I am going to continue this discussion there, and with the second bullet point from above as it applies to this context:

• “And when determining what performance benchmarks are realistically achievable, and in some crucial sense necessary to achieve too.”

Then after that, I am going to continue that discussion with some more business-specific and business model-specific examples. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too and at its Page 2 continuation.

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