Three Ingredients to Building a Successful Venture

Remember the movie Hoosiers? The small-town Indiana basketball team trying to play with powerhouse legacy championship teams? But they competed and even won in the end. This happens in sports, business, and causes. A small startup enters the game trying to compete with others who seem way out of their league—and win.

Over the past three decades, I have worked with a ton of these highly energized, undersized competitors going up against the giants in their respective industries.

But those small businesses that are ready will possess three things: capital, strategy, and an operator. More on that here:

I call these three elements “table stakes.” Having them doesn’t guarantee success, but not having them almost guarantees eventual failure. 

But to be a small business—to jump from being the big fish in the small pond to being a consequential fish in the big ocean—you’ve got to have those three things…Plus. 

Plus, what? So glad you asked. Here are some keys to playing with the giants broken into three categories: people, structure, and strategy.

People

• Have a clear-headed CEO. Senior leaders don’t have to do everything, but they have to do the right things. They must be objectively decisive—that is, not overreaching with their own personal story and passion. 

• Build a senior leadership team that is comprised of at least 50% high-performers. I am a huge believer that you must have more than talent to win in a team sport or business. That said, the quality of the people on your team is crucial if you are scaling to play in the big leagues. Don’t hire for today; hire for today and tomorrow. Add people to your team who can carry serious water in specific areas. Don’t hire a bunch of generalists who sit at the top dreaming of all the things that “could” be done. Get people who can carry pieces of the organizational vision for the next year.

• Produce a raving fan segment. Identify and capture a customer segment. Get them hooked on your product or service and get them sharing. As Seth Godin said, “Great leaders create movements by empowering the tribe to communicate.”

Structure

• Generate an easily shareable brand story. Create a brand that sizzles and shares itself. The show can’t substitute for substance, but the show must be present. If you have to convince everyone that your idea is genius, it won’t work. Jeff Bezos said, “Your brand is what people say about you when you’re not in the room.” People need to be talking your brand up, and they can’t do that if your story is confusing or lame.

• Construct a model for scale, not just growth. If you want to compete with the giants, you’re not just trying to do slightly better than last year. You’ve got to build a structure of scale. How will you build the organizational capacity if sales triple next quarter or you get the opportunity to launch in forty new markets? Could you pull it off? These questions are tied to, among other things, cash, core leaders, and culture.

Strategy

• Know your limits and hedge your bets. You might get lucky and hit blackjack, but you will likely lose if your plan to compete and win relies on simply chasing lightning in a bottle. Know your path to victory. Invest in your plan, process, and people instead of jumping at every shiny opportunity that presents itself.

• Micromanage your bank account. The number-one thing that sinks businesses is still the cash flow problem. Don’t let yourself live on fumes. Stay on top of your cash and strive for smart, appropriate, and uncomplicated capital.

• Prove the right things right now. Arthur Jones said, “Every organization is perfectly designed to get what it gets,” so know what you are proving and organize to get that done. Everything doesn’t have to be proven at every step—just the right things. What are your right things? Customer base? Financial backing? Product logistics? Figure out what you need to prove and prove it.

• Watch the public/private pendulum. Fail to self-promote and potential customers walk on by. Self-promote too much and your organization can’t keep up with your promises and the results come off as slimy. Identify the season to fly under the radar and choose the right moment to launch big.

• Swing big at the right moment. There’s a time to lay down a sacrifice bunt and there’s a time to swing for the home run—don’t just sit around waiting for industry leaders to make a mistake, but it is okay to wait for your moment. When should you take advantage of your tailwinds and when should you pause and build depth? You’ve got to try smarter, not just harder.

• Run in sprints. Organizational sprinting has appeal no matter your size, but especially right now when you’re making the jump. You’re smaller and nimbler than the big boys, so take off and get yourself a head start. It’s going to take them a bit of time to get their focus and money together, so take advantage and sprint! 

• Level up. If you’re killing it locally, don’t jump straight to a national scale. Start regionally and map out a plan for your national jump . Lay the groundwork for the next jump and move quickly from one level to the next—but be sure not to skip a step.

Conclusion

Jim Collins writes about the flywheel effect in his book, Good to Great. And more recently, he’s written about how for-profits and nonprofits big and small learn to turn the flywheel. Good-to-great companies, he writes, have a “deliberate process of figuring out what [needs] to be done and then simply [do] it.” It isn’t a lucky break that helps them win. It isn’t a flashy new idea. It’s a commitment.

A company making the jump from being an impressive, small player to a stable, big player depends entirely on its ability to master what it takes to turn their flywheel. You can’t luck into that. You have to have the people and structure in place, and then operate a needle-moving strategy.

From the outside, it might look like you’ve fallen into success. But you haven’t actually fallen anywhere. You’ve made a jump.