A recent issue of Fortune magazine covered interviews with 21 luminaries from all walks of life in which they were asked for the one piece of advice that got them to where they are today. There were, of course, 21 different answers given that there were 21 different circumstances.
There is, however, one concept that is essential for long-term success for all companies — the concept of “shared expectations.” What are the criteria for success? Are these the same criteria for you, your board, your management team and your investors? In all cases, it is important that expectations are put in written form so that there is no misinterpretation or misunderstanding on what success looks like and the strategy and resources to achieve it.
Everyone needs to share expectations or we cannot optimize our business or our life. So what should our shared expectations look like? Before we invest our time or money in a company, these expectations must be clear.
A good example of shared expectations was covered in a recent business plan discussion relating to a rapidly growing company that had developed a unique medical product and was building a leadership position in its industry. This could have easily been a business planning meeting for many companies. In order to assure shared expectations as a basis on which to allocate resources and measure the company’s success, there were three overriding business imperatives (expectations) that were defined and put in writing for the company’s board, managers and investors.
Everyone knew what needed to be done, how the company would be measured and where resources would be allocated. It was agreed that the company must do three things:
Improve the fundamentals:
The company needed to rapidly strengthen its sales and distribution system where they were inefficient, while at the same time continuing to improve its sales and distribution systems where they were already strong. This means ensuring a reliable and secure supply of cost competitive, high quality products from its research and manufacturing units. Additionally, the company determined that it needed to continue to build its brand and reputation. Success could only be obtained if the fundamentals were right. This was both an immediate and long-term imperative and took priority over everything else.
Delight the customer:
This means that the client will want to tell someone about the great experience of dealing with the firm. The company decided to ensure it was offering a superior value sufficient enough to get the customer to pay. This expectation was recognized by their decision to focus on the product development process.
Add breath to the business:
The company recognized that it must show consistent high growth while reducing its vulnerability as a single product business by adding another credible business platform which leveraged its strengths in the marketplace. It was agreed that this might be less urgent than the other imperatives but, ultimately, it was every bit as important. Based on a clear understanding of what was expected by all the company constituencies, resources were allocated, results were measured and the company became a leader in its industry. While there were ups and downs along the way, everyone knew the company’s strategies and supported necessary adjustments along the way as long as progress was being demonstrated and the overall agreed on financial objectives were realized.
If there are not clear and written shared expectations among you, your key managers, your board and your investors, now is the time to put them in place. Not only do they give you a basis for making decisions and expending resources but they are critical in that you and those who surround you know what is expected, can communicate clearly and regularly on the achievement of those expectations, and have a solid basis to determine what success looks like and whether it was achieved.
Steven Mendell is chair of the Chairmen’s RoundTable. CRT mentors provide businesses in San Diego County business advice and mentorship without compensation. Visit: www.chairmensroundtable.com.