As a small business owner who has recently opened a new company, I'm continuously on the hunt for ways to grow my firm and make it the best place to work. I think about companies like Spanx. What got Sara Blakely her big break? It was the ladies restroom, where she took the buyer of Neiman-Marcus to show her the benefits of Spanx. And then there's Microsoft. How did Bill Gates get his start? In the family garage. Not that I'm looking to be the Microsoft of the executive search world, but if you're like me, you have an appreciation for what it takes to be successful in business.
Some companies are just better than others. It could be name recognition, innovation, market share, or any number of other qualities that makes a good company stand out from the pack. So what is it about a company that makes it a good company? I'm sure there are many definitions, but I'd like to focus on four tenets of success:
- Competitive advantage
- Above-average management
- Market leadership
- Company culture
Michael Porter pioneered the concept of "competitive advantage." He distilled it into two areas: "differentiation advantage" and "price advantage." Differentiation advantage is when a company is manufacturing a better product or delivering a superior service than the competitors. Value or price advantage is when your product and or service is the lowest cost compared to the market. Porter says -- and I agree -- that price differentiation is difficult to maintain, but the best way to grow a company is through superior service and products.
Usually behind every good, solid company there are top quality leaders, and an important characteristic in any management team is experience. Experienced managers can not only lead a company through market phases, but they can also provide mentorship for the next generation of managers.
An important ingredient in becoming a growing company is market leadership. Leadership can come in many forms, but the reputation that comes along with this marker is priceless. The label of "industry standard" is one that every company strives for and is probably the hardest to maintain. As the old adage states "it's lonely at the top," and being number two doesn't get you in the history books. (Unless you're Avis.) We've seen companies move toward market leadership by buying and merging with other successful companies to improve their market share, but if you don't have the investment capital, having a competitive differentiation and strong leaders is essential to growth.
"Corporate fit" is probably the phrase we hear at my company most often. But what does it mean exactly?
According to Frances Frei and Anne Morriss at Harvard Business Review:
"Culture guides discretionary behavior and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn't in the room, which is of course most of the time."
Your company shouldn't be something that people dread coming to every day. Our philosophy is to "make money, work hard, and have fun" every day. Your team should look forward to going to their jobs. In fact, my clients ask me to recruit people that they want to go out with for a drink after work. You don't have to create an "easy" atmosphere; that's why they call it work. But at the same time, while people enjoy challenges, they don't necessarily relish undue stress. While the work may be challenging, the culture shouldn't add to people's anxiety. So why is culture important? Simple. It's because most of the time it is happy, passionate people that work to win, and winners tend grow.
What is it about a company that is poised for growth? If your company has a competitive advantage, above-average management, and market leadership, you're probably in a good place. But don't sit on your laurels because it takes determination, vision, and passion to make it happen every day.
"Young seedling growing in sunlight" image via Shutterstock.