It’s the time of the year again where budgets are made – and that’s always a moment to ‘ask for more’. We go by the assumption that the business needs to grow, therefor our teams needs to grow. It’s what I experienced many times in the annual budget process at Unit4, and it’s what I sense as something pretty common with the clients I work with these days. There never seem to be way we can free-up resource or create leverage. But why? And more importantly: Imagine if we could?
Leverage
Let’s start with the topic of ‘leverage’. It was a topic I discussed Auren Hoffman, CEO of SafeGraph in my podcast from last week. His take was: ‘One thing that companies don’t think about enough is how to get leverage. Most companies are really focused on just throwing people at the problem and use metrics like ‘Revenue per person’. With every great company that metric should go up over time. With most companies it’s not. A lot of companies will talk about their success and say: ‘we have grown from 500 to 1000 people in past 3 years.’ To me, that’s a failure.
Auren is applying the golden rule in his company that when new employees join they are told ‘You are Warren Buffett. You are a capital Alligator. You have money to spend and your goal is to get yourself leverage.’ There’s a lot of autonomy behind this rule – and it’s helping Auren to grow in the way they desire.
I applaud for this policy. It makes people aware of what’s important, and it makes the think about leverage in everything they do.
Resourcefulness
But I also believe we can do even more. And that’s around the topic of being ‘Resourceful’. As you can read in my upcoming book ‘The Remarkable Effect’, resourcefulness is a key trait remarkable software companies master. In a nutshell it’s about becoming super clear on where you spend your resources and not.
This starts by clearly defining what business you are really in i.e. what change are you seeking to make for your ideal customers. This drives strategic segmentation. This drives strategic positioning. This art of boundary setting and homing in on what’s highly valuable and critical to your customers, and from there focusing on how you can exceed expectations, creates the focus to be remarkable. Once you got this clear the next step is to start focusing on the essence – from a marketing and sales perspective, but very important, also from an R&D perspective.
It’s about critically answering two basic questions (Based on the clarity created above):
- What are the essential ingredients of our solution where only we are differentiated to create something remarkable?
- What are essential ingredients, but not core to our differentiation? For those areas you might want to find someone who’s core business it is to do exactly that – and partner with them.
True resourcefulness comes with true clarity.
So, having this in mind, how are you going to challenge your team as you are heading towards your final 2020 budget? Just imagine what 2020 could look like if you’d become more resourceful and highly leveraged!