In their Harvard Business Review article, Building A Startup That Will Last, Hemant Taneja and Ken Chenault challenge the mantra that has guided fast-growth tech startups.
“The potential for career-defining gains got the best of many investors and advisors, and we failed to coach founders on the fundamentals of sustainability. We are only now recognizing how untenable the “move fast and break things” attitude was to become.” *
Taneja and Chenault outline a few tenets on how to build a business that will last for the long-term. You might recognise them.
1. Focus on societal impact
When I’m working with business owners on creating a business plan, one thing I ask them to create is a vision of their company in the future.
Usually, the first thing people write down is a larger turnover number. But that’s not what I’m looking for.
If money is your motivator, it’s fine. But for most of us, money isn’t the thing that makes us get out of bed and hit it hard every day. And even if money is your motivator, you’ll struggle to attract quality staff to a mission focused on making you rich.
Most business owners want to make a difference or leave a legacy. That’s the theme that comes back to me time and time again as I talk to owners about their vision.
So when you think about your financial planning business, start thinking about the impact you can have on your local community, your region or your country.
In the changing business environment we find ourselves in, there’s plenty of space for new ideas, new approaches and serving of new markets.
When you ask yourself, “Who do I serve?” you open up the door to making a societal impact.
“In Jim Collins and Jerry Porras’ research of “visionary companies” that had endured for over 50 years, they did not find a single company that stated “maximizing shareholder wealth,” “profit maximization,” or even “maximizing growth” as a driving force of their activity…Instead, what defined the companies Collins and Porras described in Built to Last was a deep commitment to a core set of values that provided the company with a sense of purpose – an understanding of the role they played in society and how they created value for others.” *
2. Be ready for the second and third act
Times change and so must you and your business. Just because your business or business model was dominant for a long time is no guarantee of future success.
We’re at this point right now in financial services I believe.
Serving the ‘at retirement’ market has been the bedrock of the financial planning profession. We’re approaching the end of the demographics that drove the success of that approach and some firms are already well down the road creating models that serve more than the top 7%-9% of the population.
If you’re building a business for the next 50 years, it’s going to look different to those that succeeded in the last 50.
We know this, but changing and re-inventing ourselves is tough. Sometimes it’s easier to keep doing what works and hope we can find a buyer when we’re ready to exit.
Yet the great firms are not thinking like that. They’re looking at new markets, running business experiments and trying to find the formula that will take them into act two or act three of their business career.
“Enduring companies are not one-trick ponies. Founders with a long-term vision will recognize that they need to make transitions beyond a highly successful first act. Market preferences, technological capabilities, and regulations change. What was once novel becomes a commodity over time.” *
3. Move beyond the founder
For most startups, decision-making falls to the founder or a small team of initial leaders. Yet to succeed and endure, decision-making has to move away from the founder/s.
In most small businesses, everything eventually comes back through the business owner, so they become the bottleneck.
If you want your people to grow and develop you need to start giving them more scope to make and own decisions. You’re creating future leaders, not just better employees.
When you take the time to help people mature and grow, you make your own life much easier and give yourself options other than a mere sale to some external buyer.
Continuity and succession can only happen if you have the future leaders of your business in place when you’re ready to move on.
“While a principled founding team can create a great company, an enduring company requires a system of leadership that is implemented very early in its history. It is rooted in people practices that help a company constantly recruit, develop, and retain leadership talent at all levels – and make decisions that are aligned with the company’s vision and values.” *
Why is this relevant to you?
I love this article because it reinforces the decisions you have made or are making right now in your business.
Yes, at times it can feel hard or slow going, but stick with it. Good business principles stand the test of time. Fast doesn’t usually mean good.
You can do well, by doing good. Profits and long-term value are not created by taking shortcuts. When you focus on the value you can bring to wider society, and we’re certainly in a profession that can do that, you can build a business that navigates changing times and continues to deliver for clients, suppliers, shareholders, staff and your community.
“…the best businesses are intrinsically aligned with the long-term interests of society. Economic gains hinge on respect, and companies today cannot earn respect unless they are committed not only to objectively examining the consequences of their creations but also evolving to have a holistically positive impact on society.” *
* Source: Harvard Business Review: Building a Startup That Will Last