Align and Thrive: The Importance of Organizational Alignment and Agility

Align and Thrive: The Importance of Organizational Alignment and Agility

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Introduction: The Need for Alignment in Agile Growth Companies

During a recent conversation with a fellow professional, the topic of organizational alignment arose. For a company to grow and adapt, it must be aligned, with all activities reinforcing its objectives. Alignment begins with the CORE – Core Values, Core Purpose, Core Customer, Brand Promise, and Profit/X, and these elements form the foundation upon which everything else is built.

Building Strategy Around Your Core

Once the CORE is established, you can develop a strategy that includes your Flywheel, BHAG, 3HAG, and 13-Week Sprints. The strategy should be based on the CORE without contradicting any of its elements. With a solid strategy, execution then focuses on achieving the targets set out in the strategy.

The Pitfalls of Misaligned Goals

Many companies set Core Values, a five-year plan, and annual goals but fail to align these with their CORE. This misalignment can result in pursuing revenue at the expense of profitability or prioritizing profit to the detriment of essential investments in people, processes, and equipment. Such scenarios are common in Corporate America and often wrongly attributed to short-termism.

The Power of Alignment and Agility

Alignment and agility are crucial for sustainable growth. When a company is aligned, its activities reinforce its Flywheel, target Core Customers, meet customer needs, deliver products and services efficiently, fulfill the Brand Promise, and achieve the Profit/X goal.

Agility enables an organization to respond effectively to a changing world. In an ever-changing environment, decision-making must be pushed to where the information is. Proper decision-making can only happen when the decision-maker knows the organizational intent (Strategy) and the framework for making that decision (CORES).

Conclusion: Aligning Your Organization for Success

To achieve the growth and success you seek, identify your CORES and develop a strategy accordingly. Ensure that everything in your organization aligns with these CORES, and you will be well on your way to thriving in an ever-changing business landscape.

Copyright (c) Marc A. Borrelli 2023
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The Top 5 Benefits of the Entrepreneurial Operating System

The Top 5 Benefits of the Entrepreneurial Operating System

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As an entrepreneur running your own business, you know there are bumps in the road and struggles that both you and your business will face over time. However, with the right people and tools at your disposal, you can anticipate what’s coming, plan for it, and continue a growth plan for your business. From having the right business coach in Atlanta, GA, to a focus on long term strategic planning, there are some basics that every entrepreneur needs.

One of those basics is a Sustainable Growth Platform. To truly grow your business, you need to have a sustainable growth plan. But how do you know if your growth plan is sustainable or not? When you work with a business coach in Atlanta, you not only get the benefits of experience and insight, you have the opportunity to incorporate an Entrepreneurial Operating System or Sustainable Growth Platform.

These systems are focused on helping you strategize, execute, and control the growth of your business. Without a system and plan in place, growth – while exciting – can be strenuous. With a business coach in Atlanta, GA on one side and a Sustainable Growth Platform on the other to help support you and your business, you can’t go wrong.

So, what are some of the major ways that a Sustainable Growth Platform benefits you and your business? 

Consistency In Your Growth Plan

Having a system in place allows you to plan for and accommodate the growth your business needs. You’ll have a plan to help guide you through each stage of your company’s evolution, and ways to plan, prepare for, and deal with any issues that might come up. 

Growth Plan Profits 

It’s no surprise that when you have a sustainable growth plan in place, everything seems to run more efficiently and smoothly. As you’re able to focus more on the business, you’re likely to start seeing an increase in profits. Working out strategies with your business coach in Atlanta, GA ahead of time allows you to avoid setbacks and increase revenue. 

The Right People in the Right Roles

One of the huge benefits of a Sustainable Growth Plan or Entrepreneurial Operating System is that it helps you get the right people into the right roles. With the proper guidance and direction, you can make informed decisions on who to hire, when to promote, and when it simply isn’t working out with an employee.

Accountability 

Having a business coach to help hold you accountable to the steps laid out in your Sustainable Growth Plan benefits both you and the company as a whole. Not only do you have the steps laid out for you, but you also have the opportunity to have frank discussions about where things are falling short, what’s going well, and more. This accountability can help push your business forward unlike anything else.

Outstanding Organization

Whether you are an incredibly organized person or you struggle to keep everything straight, with an Entrepreneurial Operating System or Sustainable Growth Plan you get the tools and support you need to get – and stay – organized. Plus, you can help others in your company get things in place and organized, as well. The better organized you are, the more your company is likely to succeed.

When it comes to long-term strategic planning, you have to have the right pieces in place. A strong Sustainable Growth Plan or Entrepreneurial Operating System is the first step. Working with a business coach in Atlanta, GA such as Marc Borelli, you’re able to take your business to the next level easier than you ever expected.

 

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WFH during COVID did result in the falling of productivity that many feared. Surveys showed that productivity remained the same and, in some cases, increased. However, a new study of more than 10,000 employees at an Asian technology company from April 2019 to August 2020 provides a different picture. Using software installed on employees’ computers that tracked what the employee was doing, the research confirmed that the employees worked hard. Total hours worked were 30% higher than pre-COVID, including an 18% increase in working outside regular hours. But this additional effort failed to translate into an increase in output. 

This research confirms early survey evidence where both employers and employees felt they were producing as much as before. However, the correct measure of productivity is output per working hour, not hours worked. Using this measure of productivity, productivity fell by 20%.

The research further analyzed the time the employees spent in:

  • “collaboration hours,” time spent in various types of meetings, and
  • “focus hours,” time where they could concentrate on their tasks and weren’t interrupted, even by email. 

The data showed that despite working additional hours, the employees had less focus time than before the pandemic as meetings consumed the extra time. The study supports Bartleby’s law which states that “80% of the time of 80% of the people in meetings is wasted.”

Why were there so many meetings?

  1. Managers can check on their team’s performance as they are less sure of the team’s commitment.
  2. Managers call many to validate their existence when they are not in the office. 
  3. The increased difficulty of co-ordinating employees who are working remotely. 

The latter suggests that WFM is inefficient, not to mention that remote employees also spend less time being evaluated, trained, and coached.

So, while workers saved commuting time, they didn’t hourly pay fell. However, WFH did not impact all employees similarly.

  • Those who the longest tenure with the company were the most productive, suggesting they could use well-formed relationships to work more effectively. Simon Sinek explained this in a recent video. 
  • Employees with children worked around 20 minutes a day more than those without, implying an even more significant fall in their productivity, presumably because they were distracted by child-care duties.

The researchers point out that the firm’s staff are nearly all college-educated whose roles “involve significant cognitive work, developing new software or hardware applications or solutions, collaborating with teams of professionals, working with clients, and engaging in innovation and continuous improvement.” The impact on other types of employees could be very different.

WFH expectedly resulted in teething and coordination problems as it was imposed suddenly. However, since the study stopped last August, there is a question of whether employee productivity has increased since. Most important from the research is that employees achieved the same output with slightly less ‘focus time’ than at the office. The real culprit of inefficiency was the time spent in meetings. 

Conclusion

So, to increase your firm’s productivity, don’t have as many meetings and keep them short. Ensure that the behaviors you accept and expect as part of your firm’s culture are not encouraging non-productive meetings. Also, with a move for more WFH, start building behaviors that will encourage meeting efficiency. Finally, there are a number of ways to improve meeting productivity as I mentioned in Not Another **** Meeting.

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EOS is just that, an Operating System

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Welcome to those unfamiliar with EOS, the Entrepreneurial Operating System. This system aims to bolster businesses by synchronizing six key components that optimize operational effectiveness. These components include:

  1. Vision
  2. People
  3. Issues
  4. Traction (meetings and goals or “Rocks”)
  5. Processes
  6. Data

I advocate for EOS, as every company should utilize a system that enhances its performance. However, through my experiences working with clients implementing EOS, I’ve realized that it serves primarily as an Operating System rather than a business model that creates an agile growth company.

As defined by Wikipedia, an Operating System is “the software that supports a computer’s basic functions, such as scheduling tasks, executing applications, and controlling peripherals.” In a business context, I describe it as “a framework that underpins a company’s essential functions, like establishing a vision, assembling the right team, refining meetings, setting goals (rocks), and so on.” Although I risk ruffling the feathers of EOS Implementers®, I contend that EOS meets these criteria to a certain extent but often falls short of empowering companies to construct a growth engine.

Let’s delve into what is required to create a growth company.

 

The Hedgehog Concept

In Good to Great, Jim Collins discussed the Hedgehog Concept named after Isaiah Berlin’s essay, “The Hedgehog and the Fox,” dividing the world into hedgehogs and foxes. The theme is based on an ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.” Collins found that those companies that became great followed the Hedgehog Concept. Those companies which didn’t tend to be foxes never gained the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent. 

The Hedgehog Concept is based on the questions prompted by the three confluences of questions. 

  • What can you be the best in the world at?
  • What are you deeply passionate about?
  • What drives your economic engine?

The EOS Model® doesn’t focus on the hedgehog concept, so many companies using EOS have goals and strategies based on bravado rather than understanding what will enable them to be great.

Knowing your hedgehog concept will keep the organization focused on something that aligns its passion with what it can be the best at. Being good at something means you are good but indistinguishable from many others. If you stand above the crowd if you are the best at something. Finally, the economic engine keeps the company focused on a metric that drives profit.

Vision

While the EOS Method® works to develop a ten-year goal, I find that it is not as compelling as Jim Collins’ BHAG. A BHAG, Big Hairy Audacious Goal, is a clear and persuasive statement and serves as a unifying focal point of effort with a defined finish line. It engages people, is tangible, energizing, highly focused, and often creates immense team effort. People “get it” immediately; it takes little or no explanation. 

A visionary BHAG is a 10–25-year compelling goal that stretches your company to achieve greatness. It should be a huge, daunting task, like climbing Everest or going to the moon, which at first glance, no one in the company knows how on earth you will achieve.

As Collins noted, the best BHAGs require both “building for the long term and exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?”

Profit/X = Economic Engine

The BHAG’s economic engine is the concept of Profit/X. In Good to Great, Jim Collins defines this strategic metric as “One and only one ratio to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” Unfortunately, too many companies don’t have an economic engine, so they fail to deliver hoped-for profits. This metric is not easily identified; however, Collins noticed that the companies that took the time to discuss, debate, and agree on one key driver for their economic engine are the ones that went from good to great.

Profit/X is how you choose to make money; it is a strategic metric, not an operational one. This ratio is a key driver in your financial engine and when you decide how to spend money. When developing your Profit/X, you need to have one that is unique and not the industry average because if you choose the latter, everyone will be pricing and driving costs the same way to maximize it. Like the BHAG, a correctly defined Profit/X will promote teamwork as everyone can focus on their role to drive the metric, from how many people to hire, where to open new operations, etc.

Value Creation

“A Business That Doesn’t Create Value for Others is a Hobby.” So, what value does your organization create? Value creation is linked to what your company can excel at. However, businesses must identify the problem they aim to solve for their customers. Clayton Christensen defined this as “What is the job your customer is hiring you or your products to do?” Many organizations mistakenly define the job based on their activity rather than focusing on their customers’ needs. Identifying the job to be done can help target marketing and sales efforts toward addressing customers’ problems rather than simply promoting the company’s activities. The EOS Model® does not sufficiently address this essential question, which is critical for a company’s growth.

Core Customer

Understanding your company’s Core Customer is vital. If have found that many businesses cannot identify their Core Customer. Some of the key metrics of a Core Customer are one that pays on time, allows you to make a satisfactory profit, and refers you. Focusing on the wrong Core Customer can lead to misguided marketing and sales activities, reducing profitability and cash flow and ultimately weakening the company’s performance and growth.

Brand Promise

The EOS Model® does not address the question of Brand Promise, which is crucial for a company’s growth. Your Brand Promise is what convinces your target audience to buy from you, stands as a testament to your commitment, and serves as a measurable benchmark for your company’s performance. Some organizations have a Brand Promise, but if it’s not quantifiable, it becomes “valueless” because nobody knows if you’re delivering on it, rendering it useless to prospects and clients.

Value Delivery

Value delivery is essential for understanding how customers perceive your organization’s performance. While the EOS Model® discusses various metrics, value delivery does not receive adequate attention. Companies must determine whether their customers are satisfied with their performance. A CEO might assume that their customers are “Very Satisfied,” but they may be overlooking the reality of customer dissatisfaction and lack of recommendations without measuring it.

Critical Number and Counter Critical Number

The EOS Model® effectively deals with goals (Rocks) and meetings but fails to align Rocks with the long-term goals of the company, Rock should be tied to the quarter’s Critical Number, which drives the organization toward its long-term goals. Tying Rocks with the Critical Number maintains organizational focus. In addition, a Counter Critical Number is crucial to prevent the critical number from overwhelming the company and causing unintended consequences.

Focusing on a Critical Number and Counter Critical Number during the 13-Week Sprint is crucial for developing focus and alignment within the organization.

Team Alignment

While the EOS Model® effectively addresses having the “Right People” in the “Right Seats,” it does not consider alignment among the leadership team and employee satisfaction. Assessing the alignment of leadership and employee satisfaction is necessary to ensure everyone is working in the same direction and committed to the company’s success.

Conclusion

While I appreciate the EOS Model®, I believe it fails to address many aspects required to develop a healthy agile growth company. By incorporating additional elements from the Gravitas’ 7 Attributes of Agile Growth® model, businesses can create a more comprehensive system that promotes agile growth while maintaining smooth operations. The 7 Attributes of Agile Growth® focus on Leadership, Strategy, Execution, Customer, Profit, Systems, and Talent.

If you are interested in transitioning to an agile growth company with the help of a certified Gravitas Agile Growth coach, please feel free to reach out to me.

Copyright (c) 2021, Marc A. Borrelli

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I know many business leaders and CEOs who follow the concept of 13-Weeks Sprints, whether they have adapted them from the Rockefeller Habits, EOS, or elsewhere. While 13-Week Sprints are great, many select their “Rocks” without tying them to the three to five corporate objectives for the next year, leading to the company’s 3HAG (3 Year Highly Achievable Goal) and BHAG (Big Hairy Audacious Goal). Thus, why many have ten to twenty “Rocks” that they are tracking and accomplishing, the team still feels like there is no coordination and everyone is going in different directions without alignment. Without alignment, nothing really gets accomplished. To resolve this, in each 13-Week Sprint, you need a Critical Number!

What is the Critical Number?

When determining the three to five corporate objectives for the next year, develop a theme for each quarter. Within that theme, identify the one critical number or metric that needs to be attained to move the company towards its objectives over the next quarter. Examples among my clients include reducing defects in software that they produce, project completion times, customer support response times, and employee utilization. Once the critical metric is identified, determine your “Rocks” for the 13-Weeks Sprint to move that metric to its desired result and rank them. The “Rocks” should be objectives across the organization that all support the achievement of that critical number.

When identifying the critical number for the period, frame it with a sense of urgency. “If we don’t hit this critical number, customer satisfaction will fall and drag down revenue, causing us to lose money and die, so it is essential to achieve this number.” That may seem a little extreme, but by framing it that way, the entire organization realizes its importance and has a ripple effect.

What About Your Counter Critical Number?

So, having identified your critical number and supporting “Rocks,” the following question to answer is, “What is the counter-critical number?” The necessary counter metric ensures that the focus on the key metric for the quarter doesn’t damage the company elsewhere. For example, suppose the critical number is customer support times, and we want to improve efficiency. In hitting that critical metric, we might provide worse customer support but achieve the support times we desire. 

So the appropriate counter-critical number might be customer support satisfaction scores. We need to reduce customer support time but maintain or exceed a customer satisfaction score of X. Thus, the counter number stops the organization from hitting the critical metric at a detriment to other areas of the organization.

Selecting the appropriate counter-critical number needs work, as we often don’t anticipate all the changes that can result from setting the critical metric. Think of metrics for sales teams, as great salespeople are excellent at figuring out how to hit their targets with the least amount of effort and gaming the system. Many sales metrics have resulted in bad outcomes because no one thought through the ramifications of the targets. So get your team together and challenge each other about what you would do to hit the critical number that might damage the company. Do not take pride in the authorship of the critical metric or argue that certain behaviors would never occur within your team. To quote Douglas Adams, “A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.”

As you work through this, a great rule is the “And” rule. You can only respond to any suggestion by agreeing with at least 10% of it and then improving on it by saying “And.” No “Buts” allowed!

Communicate and Celebrate!

Throughout the quarter, update the organization on its progress towards the critical number and maintaining the counter-critical number. Do this in weekly updates. Suppose you can’t generate the critical and counter-critical metrics weekly. In that case, they are bad proxies because, by the time you report them, it will be too late to correct to implement correcting actions to achieve them.

Also, when establishing the “Rocks,” critical and counter-critical numbers for the quarter, set a celebration budget. If you follow EOS, Verne Harnish, or any other management systems, you are aware of red, amber, green, and super-green targets. Basically, red = miss, amber = close, green = met, super-green = overachieve. The celebration budget should be dependant on the level of achievement, e.g., 

  • if Y% of the “Rocks” are green and none are red, the budget is $X;
  • if all the “Rocks” are green, then the budget is $1.2X; and 
  • if all the “Rocks” are green, but Z% are super-green, then the budget is $1.5X

Have the team, not the leadership, plan the celebrations for the different budgets and share them with the organization. Regardless of what it is, ensure that it’s something that will get everyone excited and motivated to work together to achieve it. If the numbers are reported weekly, everyone knows how they are progressing towards that exciting goal, and if they are missing some, they can adjust to try and achieve them by quarter’s end.

So go and set targets that will lead you to your 3HAG and not trip you up on the way. Celebrate each accomplishment. You will be glad you did.

Copyright (c) 2021 Marc A. Borrelli

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A Dramatic Introduction and Swift Collapse

Last week, the world of football experienced the dramatic birth and collapse of the European Super League (ESL). Living in Atlanta, the defeat reminded me of the Falcon’s 2017 Superbowl and Greg Norman’s 1986 Masters. On Sunday evening, the formation of the ESL was announced, consisting of 12 “founding clubs” from England, Spain, and Italy. Three other unnamed clubs were soon to join, along with another five teams that would qualify annually for the 20-team competition. However, within 48 hours, the ESL was dead.

Financial Motivations and American Influences

The ESL was introduced with a promise to “deliver excitement and drama never seen before in football,” and it surely delivered, albeit not in the way they had intended. The main motivation behind the formation of the ESL was money. The fifteen founding clubs were guaranteed a place every year, bypassing the need for qualification and relegation and enabling them to secure a larger share of revenues with less risk. Broadcasting rights were expected to generate €4bn annually, nearly double the €2.4bn brought in by the Champions League in the 2018-19 season.

The American sports industry is known for its effective money-producing cartels. Professional sports leagues in the United States act as monopoly-like structures that distribute wealth evenly among a self-selected group. These leagues ensure that teams remain in the league regardless of their performance, challenging the American ideal of meritocracy. The European model, on the other hand, is more capitalistic, with club owners taking risks and investing in the potential for rewards. The ESL sought to impose an American-style cartel on European football to reduce risk and transfer more money to the club owners, similar to the recent restructuring of Formula 1 under Liberty Media’s ownership. As Martin Baumann put it, “We can sell just about anything to the Europeans. Why not our hyper-capitalistic cartel-based pro sports system?”

Hubris, Value Creation, and Fan Backlash

Hubris

The collapse of the ESL can be attributed to hubris. The founders neglected the sport’s business model and Ben Horowitz’s sage advice, “Take care of the People, the Products, and the Profits— IN THAT ORDER.” Their arrogance led them to believe that they could easily impose the American sports system on European clubs without considering the cultural differences and deep-rooted traditions. This hubris resulted in the creation of a league that generated widespread contempt, proving that the incompetence of a few powerful individuals should never be underestimated.

Value Creation

The league’s criteria were not based on being the best in Europe but rather on the wealth of the owners, leading to a lack of value creation. The ESL claimed to be an exhibition of elite football, but without the need for qualification, teams would not have had to try very hard, reducing the value of the competition. Furthermore, the selection of clubs based on their owners’ wealth undermined the very essence of what it means to be the best in Europe. For example, Arsenal, a once-powerful club, is currently struggling in the Premier League and would not have been considered one of Europe’s top teams based on their on-field performance. The ESL destroyed any pretense of value creation by focusing on wealth instead of merit.

Fan Backlash

The European model places emphasis on the fans, the players, and the managers, with club success being the primary focus. The ESL completely disregarded this fundamental aspect of European football, leading to fierce backlash from fans who felt betrayed by their clubs. Protests erupted at stadiums and training grounds, with fans burning effigies of club owners and demanding change. Fans were also united in their disdain for the ESL, with a YouGov poll finding that 79% of British football fans opposed the league, and 68% of them “strongly.” This overwhelming response from fans made it clear that any league that does not prioritize the interests of its supporters is destined for failure.

Its founding members’ swift abandonment of the ESL left the American owners no choice but to follow suit.

The Aftermath and Potential Regulation

The outcome of the ESL debacle led to apologies from club owners and even JP Morgan, who underwrote the league’s formation. However, the real threat now lies in regulation. The British government has launched a review into how football is run, and there is pressure for British clubs to adopt the German community-ownership model, where fans own 51 percent of the club.

As the dust settles, it is clear that football is anything but boring.

Copyright (c) 2021 Marc A. Borrelli

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