Delusions of Grandeur or Reaching for the Stars?
• Segment domination
• Billion dollar company
• #1 in our industry
Do any of these sound like your company mission? Many companies aspire to these heights but few actually achieve them. After all, there is only one #1 in any given segment. But, does that mean everyone else is an “also-ran”? And, is this kind of goal setting good for the company?
Typically the far-reaching goals are set in corporate boardrooms by executives that have self-motivated to the point where they believe the goal is attainable, if not “within reach.” There may be one or two in the group who are a bit concerned about setting such a high goal, but in many corporate cultures, dissenting would be career suicide. So, the goal is set.
In an effort to galvanize the troops, the goal is shared with the rest of the organization along with admonishments to “execute, execute, execute!” Unfortunately, while the execs were goal setting, the rest of the organization was slogging through the details of the day-to-day business. When they hear about the new grand vision, they may start to wonder what was in the coffee in the boardroom. It’s like being told you have to eat an elephant when you thought you were coming for sushi.
It’s great for companies to have BHAGS (Big Harry Audacious Goals), but I see a couple of problems with the way they are carried out in many organizations.
Set interim goals that are achievable. Let’s say you are a small software company competing in a segment with companies many, many, many times your size. Does it make sense to define your market in the same way they define theirs?
Start with defining a market that you can win. Usually these means focusing more tightly on a subsegment within the broader target market that you want to dominate. For example, instead of just focusing on “manufacturers”, focus on food manufacturers. If that space would still be tough to own, look for something even smaller within that segment, such as meat packers, that isn’t well served by your competitors.
Companies that think big often have challenges with this segmentation. When the marketing department shows the market analysis findings there is a collective gasp when they see the small numbers associated with the segment.
Don’t let that scare you. It is more profitable to own a small segment than it is to flounder around aimlessly in a larger one. It costs less to develop products for a specific segment. It costs less to sell into that segment. It costs less to market to that segment. And, it costs less to support that segment.
I once knew of a small software company that defined their target market as “flexible packaging manufacturers in the US.” Flexible packaging is all the paper, tin foil, plastic and other types of wrappers that manufacturers and distributors use to package their products. At the time I worked with them, they had fewer than 400 target customers in their market as I recall. But they owned this segment. Everyone in this space knew who they were and no other competitor could even touch them.
In the end, this company was acquired by a larger company, and, unfortunately, I haven’t seen the same segment domination carried on within the larger company. But, it could have been. And, this segment could have launched ownership of other similar segments.
For more on segmentation in the high technology market, read Geoffrey Moore’s series of books starting with Crossing the Chasm. Moore's books should be required reading for anyone in technology marketing.
Interim goals should be actionable. Just like individual goal setting, corporate goals should be actionable. Everyone within the organization should feel like they can understand how they can help achieve that goal.
Becoming a billion dollar company, especially if you are sitting somewhere far south of that, won’t feel actionable to most of organization. It feels like a sales goal.
Focusing on a specific industry segment feels more actionable because everyone in the organization understands that they can help achieve the goal by better understanding the segment. It is no longer sale’s goal. It is owned by the entire organization.
The sledgehammer approach. If, after communicating the goal to the rest of the organization, the executives start to talk about who “gets it” and who “doesn’t get it” you know you have problems. It may be true that you have some folks who can buy-into the big picture and others who can’t, but the fault doesn’t necessarily lie on the shoulders of the rank-and-file.
The executive team may have spent several days holed away in an off-site meeting coming up with this goal. Chances are there were many smaller meetings leading up to this one as well where the ideas were tossed about. The “sales process” that they put themselves through may have taken months. Is it any wonder that an hour-long company-wide meeting isn’t enough to bring everybody on board?
The only cure for this is old fashioned hard work. You hired smart people. Or, at least, I hope you did. Have some faith in them. If you are open to their questions and patiently work through them, and if you did a good job goal setting, they will buy-in. If you treat them with respect and like the talented professionals they are, you will find many in the group who will anoint themselves “champions for the cause.”
But this is hard work. This is where real executive talent starts to shine. Executives who can create a decent plan are, frankly, common. Those who can communicate a plan and effectively get buy-in are a much rarer breed.