Sean K., one of our lucky Valentine's contest winners, asked, "What are the Top 3 characteristics of the companies you work with or study that perform in the top quartile of all the companies. IE: if you were to rank all the companies that you work with/study, the top 25% in performance - what characteristics do they employ/have etc."
Great question, Sean!
Companies that are performing well and in the top tier of their industries are somehow able to have high quality growth year after year, product cycle after product cycle. Jim Collins pointed out in his book Good To Great, that he looked exhaustively for companies who demonstrated cumulative growth of three times the market over fifteen years. We have had the privilege of working with many top performing companies here at Rhythm Systems. In fact, most of our clients are performing well beyond the top 25% in their industries.
Working with our clients, we have noticed 3 key characteristics to share:
1) Leadership that is biased towards DOING and accountability. These companies are typically led by a CEO and an executive team that are hands on versus hands off. They are able to manage at a macro level and not micro-manage their managers. They are able to provide guidance and coaching to help their employees solve problems. Here is how they lead:
- Face brutal facts fast. They don’t just take unpleasant news well. They actively seek it out. They celebrate when people highlight that priorities and KPIs have gone from Green to Red. They do not celebrate the failure. Rather they celebrate the person for bringing it to their attention faster. Instead of killing the messenger with bad news, they thank them. They want to face all brutal facts earlier and faster, giving them more time to find solutions. This allows them to solve problems faster than their competition.
- Serious about accountability. They are very consistent about getting a regular weekly status, and holding people accountable to do what they say they are going to do. If goals are not being met, they don’t get angry. They stay focused and hold their teams accountable to finding solutions to achieve the goals.
- Look for Bright Spots. Bright Spots are not just victories. They are victories that can be replicated across other departments and teams. They are very hard to find, and very powerful when discovered. You won’t find them unless you are actively looking for them. These leaders make it their job to observe and look for bright spots. They let their people do the work to succeed while they observe and look for bright spots to scale.
2) Powerful and exciting offerings (Products or Services). You cannot lead your team to the promised land if the promised land does not have giant grapes! You need giant grapes. You need winning moves that are exciting and powerful that give you growth. If your strategy is not sound, your rewards will be small. Powerful winning moves do not come from accidents. Year over year growth, product cycle over product cycle. How do they do that?
- Regular rhythm to work on winning moves. They work on it before their current products and services get old. They work on it while their existing stuff is still remarkable.
- Eat their own children. Instead of protecting their products or their turfs, they are willing to cannibalize their own products and services. This is hard. Usually the new stuff starts out slow, and it is hard to be willing to take two steps back and one step forward in the beginning. That is how it feels when your new product or service eats into the revenue stream of your current cash cow. But while the current product might be a cash cow, it is not a sacred cow. So eat it or someone else will.
- Exciting winning moves keep them focused. When you have giant grapes in front of you, other ideas pale in comparison. It is easier to keep your teams focused instead of getting distracted by other, less important ideas.
3) Discipline and consistent execution. I know… this sounds boring. Jeff Berstein, one of our top CEOs, shared with me, “My business is executing so well that it’s getting boring.” But Jeff was still on his toes, still holding his team accountable to results, and still excited about his winning moves!
- Consistent weekly rhythm with a focus on achieving the right results at the end of the quarter. I call this the 13-Week Race. These companies run a very disciplined 13-Week Race, quarter after quarter. Mike Praeger, another top CEO, shared with me that he had never missed planning and running a 13-Week Race. Entering their fifteenth year of business at AvidXchange, Mike celebrated the successful completion of fifty-six 13-Week Races.
- Boring, but not complacent. Get your processes and rhythms so strong that it is becomes just like breathing. This discipline gives these companies the confidence to take out the competition by taking calculated risks in growing their business. When your business is predictable and boring, you have more energy and attention to think outside the box and take the right calculated risks to grow past your competition.
- Weekly Adjustment Meetings. Instead of spending 80% of their weekly meetings discussing the status of priorities and KPIs, they prepare well for these meetings and spend 80% of the weekly meeting working on solutions and any needed adjustments to achieve their goals for the quarter.