How to assess if your startup has got a ‘high growth anatomy’​

Remember the conversation that Alice had with the Cheshire cat in Lewis Carol’s Alice’s Adventures in Wonderland?  Alice first encounters the cat at the Duchess’ house in her kitchen and she engages Alice in amusing but sometimes perplexing conversation. Alice didn’t have a clear idea of where she wanted to go, or where she wanted to be, and asked the Cheshire cat Would you tell me, please, which way I ought to walk from here? The Cheshire cat responded You’re sure to get somewhere if you walk long enough.

Many startups have this challenge currently, focused on short-term aspirations, driven out of necessity to generate short-term results for survival. These are uncertain times. We are struggling to find the right balance between caution and optimism, yet the more volatile the environment, the more balance you need, keeping your options open. Today, I would argue that taking less risk is actually more dangerous than ‘do nothing’. Shrewd investment to execute your strategic momentum is key at the present time.

A strong sense of the possible is essential to driving growth. It’s all about simplicity, synergy and scale. These capabilities are all related. As a startup, you can’t scale if you’re not simple, and if you don’t have synergy between the moving parts of your venture.

Simplicity across your business fosters synergy, being agile to bring your best organisation capabilities to bear in every instance on demand. Your team operates individually but leveraging their strengths together in developing opportunities improves the odds of desired outcomes and the momentum to move onto scaling.

So, to help Alice, what are the steps to consider for this simplicity-synergy-scale approach to giving your startup a growth impetus? Here are five basic steps to consider.

1. Focus on what you want to be – not what you are

Don’t base decisions on where you are, base them on what you want to become. One of the first things I ask startups is what type of company they want to become – £1m a year turnover? £2m? £5m? £10m? You must have definite objectives. The decisions you make as a £1m-a-year business are different to one that turns over £10m. If you want to become a £10m business, you have to start thinking like one.

2. Make sure you’re ready and prepared for growth

When you start to scale, things can begin to creak. Weaknesses can be exposed, and you can’t always fix them once the journey has started. You could be held back by your sales processes, or gaps in the team. Think carefully about how scaling and growing your business will affect you – you must be ready, and your processes must be robust.

3. Build a great team

As you scale and grow, you need more people. Your relationship with them might not be as close as with previous ‘founder team’ members, but everyone must realise the importance of your business values. Create the right culture and an environment where people want to be and want to excel – then get out of the way and let them get on with it.

4. Identify your barriers to growth

Once you have objectives, part of developing a strategy for growth involves thinking about possible barriers to scaling. Be honest and pragmatic. There are several factors which could thwart your ambitions to grow, such as lack of leadership skills, lack of funding, and even being in the wrong premises. Identify where the pinch-points could be and the threats they could pose.

5. Try to predict the future

Setting your startup for high grow, having the right products, processes and people, doesn’t always guarantee a smooth ride. You can still experience challenges on your journey, which you need to spot well in advance, before they damage your ambitions. Having a dashboard of key metrics keep you on alert – simple numbers that help you to spot that something isn’t quite working. Then you can fix things or take evasive action. When things go wrong, often it’s because founders haven’t recognised the signs, which can be evident months in advance.

So, given the above framework, how ready are you for growth? Clearly the answer involves some combination of growth strategy and financial management. Startups that do things together across three building blocks seem to be better positioned for a sustainable course of high performance:

  • First, they create clarity and coherence in their strategy, articulating the differentiating capabilities they will need to win in their chosen market.
  • Secondly, they put in place an optimised cost structure and approach to cash allocation. Cost actions are creative and strategic (as opposed to reactive and tactical), freeing up funds to be invested in capabilities most important for growth and critical to success.
  • Third, they build supportive organisations, redesigning their structures, decision processes, skill sets, and cultural elements to closely align their behaviour to their strategy, and to harness the collective actions of their people.

So far this year, one of the most repeated conversations I’ve had is around the growth theme of simplicity-synergy-scale, and I’ve built this into a model of High Growth Anatomy – a blueprint for a startup strategy and plan to provide a self-analysis framework to check on growth readiness. Based on research, intuition and my own experience, it’s proved to be a simple but useful approach providing a transparent analysis.

 I’ve used the term ‘anatomy’, derived from the Greek term anatomēm which means dissection, the branch of natural science which deals with the structural organisation and function of living things. It is characterised by a progressive understanding of the functions of the organs and structures of the body, and so applicable to a startup organisational analysis.

When considering the High Growth Anatomy for startups, I’ve found that founders need to appreciate the importance of getting out of the habit of thinking about the past, and recognise that what got them here today, won’t get them to where they want to be. They need to stimulate themselves to look at their venture from a fresh perspective, go again, and not simply asking themselves the same questions.

Startups needs focus and a sense of momentum to achieve real growth. it’s all about getting velocity – you’ve got to be out there on the lunatic fringe to get ahead of the rest. So what are the key traits in the High Growth Anatomy of thriving and growing startups? Here’s a list of statements to evaluate your own High Growth Anatomy and potential to be a High Growth business:

Foresight or Hallucination?

  • We have clear goals of where we are heading in the next 12 and 24 months;
  • We have a plan for where we are aiming to be, but it lacks real focus;

Front-foot or Back-foot?

  • We are moving forward with purpose;            
  • We are mostly fire-fighting;

Clued-up or Clueless?

  • We have very clear insight about how to make a difference in our market;
  • We have little momentum on how to get ahead in our market;

Dexterous or Clumsy?

  • We are agile, we can ‘seize’ the moment when opportunities arise;
  • The organisation is quite ponderous and doesn’t make quick decisions;

Leaning Forward or Leaning Back?

  • We are restless thinkers about the future, eager to grow;          
  • We are thinking about our future, but attention is on oour today;

 Web Enabled or Webbed Feet?

  • We have a clearly articulated digital marketing strategy;
  • We have made limited investment into our digital brand identity;

 Harmonious or Mutinous?      

  • We are united, pulling together with a shared consensus on direction;
  • We’re confused, holding different clichés and conflicting opinions;

 Fresh Thinkers or Copycats?

  • We develop lots of new things, some of them work, some don’t, but we’re always ready to have a go;    
  • We are good at spotting rival’s new moves and responding to them;

 Heads-up or Head-down?

  • When faced with a threat we respond rapidly and decisively;     
  • When faced with a threat, we often step back and take too long to respond;

 Kinship or Cold fish?    

  • We are active in building and developing an inclusive, vibrant culture;
  • We are people and values centric but our culture? It just ‘happens’;

 Aligned or Disconnected?

  • We are an integrated team, all linked-in and linked-up;
  • Our organisation is not well coordinated, more individual silos;

 Insights or Blindspots?

  • We have a very good knowledge of our customers, their customers and our competitors;                     
  • We have a limited knowledge of our customers, their customers and our competitors;

High Growth Anatomy is a set of organisational mindsets that are observable in actions and decisions. Startups have to create their futures, things don’t just happen, and equally it’s the quality of execution differentiates winners from losers.

As is often the case, a good portion of a startup’s success ultimately lies in focus and execution. Through rigorous, forward-looking review processes, startups that achieve high growth are able to keep their strategies relevant, sensing and rapidly adapting to market changes. They’re quicker to innovate, are willing to make calculated big bets, and feel no qualms about killing investments that aren’t paying off.

They also employ a disciplined process that ensures adequate funding for high-growth, core activities. Clear and objective investment criteria prevent parochial concerns from interfering with the allocation of funds to top priorities. These startups manage spending strategically, making rigorous trade-offs based on cost transparency, cash runway and an understanding of their financial model.

Finally, high growth startups are organisationally agile and lean. They align their structures and create nimble mechanisms for decisions in ways that best serve strategic priorities and market realities. They have their best people in pivotal roles. An ethos of continuous improvement prevails, reinforced by systems that reward performance.

Strategic agility determines whether startups successfully ‘cross the chasm’ from one set of game rules to the next. They focus more holistically on the strategic drivers of growth across all aspects of an organisation, be they internal or external factors.

Always look on the bright side of life, as they say in the closing number to Monty Python’s Life of Brian, but few would suggest that the answer to the challenge of growth is as simple as that. There’s no one-view-that-suits-all solution and there are times when realism, pessimism and even cynicism might have a valuable role to play.

Is your startup fit for growth? Adopting the High Growth Anatomy framework, and the three building blocks identified for growth – strategic agility, a focus on cash management and organisation capability, reflect on what you need to do for your startup:

  • A rigorous review of the capabilities needed to achieve a leading position in your sector, versus those that are secondary
  • A dispassionate assessment of where you stand against these capabilities on two fronts: their level of effectiveness, and their relative levels of funding and investment
  • A series of targeted organisational interventions to increase speed and quality of decision making throughout your enterprise

It’s possible to anticipate different outcomes and picture the future. That isn’t to ignore difficulties or give up when plans go awry or underestimate the frustration of goals not met, but more to accentuate elements of what you need to do in order to deliver a growth strategy.

Of course when it comes to growth, you have to be fired by optimism. Everyone’s different. Some have it in bucketloads, others have a thimble full. But try to accentuate the positives: look closely at the present you are constructing, it should look like the future you are dreaming. But recall what the Cheshire cat said to Alice: You can’t go back and change the beginning, but you can start where you are and change the ending.

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