Reminder: Discounted Registration Deadline is February 29, 2008
Please join Customer Centricity's President Craig Bailey at the
6th Annual SCORE Conference, taking place May 13-15, 2008, at the World
Trade Center in Boston. Early bird registration with discounted pricing
is available through February 29. To learn more and register online,
SCORE website. Craig will be moderating sessions taking place on May
15, including the much anticipated panel discussion entitled Driving
Operational Change to Get the Most Out of Customer Feedback.
Online Networking Survey
We have collected some very interesting data on your use of Networking
Tools, but more responses will make it better/richer. If you haven't
already taken the
3 minute survey, please take it now. We hope to summarize and
publish the results in our next newsletter edition.
What is the Hull Speed of Your Business?
Larlee, Managing Director,
WaiHaka Strategies, LLC
In my free time, and sometimes when I probably should be working, I race
sailboats. Sailing is a multi-variable sport, and to be good at it, you
constantly need to be processing information about sail trim, crew work,
boat speed, race strategy, wind and current, waves, tactics against your
fellow competitors, and generally trying to guess what Mother Nature is
going to do. It is enough to make your head spin, but there are also
periods of time when you are on the open ocean for creative thinking.
For the past 10 years, I was an entrepreneurial executive and founder of
a venture backed professional services company. Growth and expansion
were the operative words used by our management team, and the mandate
from our investors. How can we grow, scale, and expand the company? This
question was on our minds at all times. Faster was better and slowing
down was not an option. This was on my mind during a particularly windy
day when I was out racing my sailboat, and I started thinking about
company growth as it relates to the hull speed of a boat.
Hull speed, or displacement speed as it is sometimes called by
professional sailboat designers, is the top speed at which a sailboat,
powered by the wind, can travel through the water. The weight of a boat
displaces an equal weight of water, and when the boat moves through the
water it needs to move that water around the hull of the boat faster
speeds require moving a greater volume of water around the hull of the
boat, and that is what creates the wake. This also creates friction and
forces against the hull. Every boat hull has a certain shape which
allows it to move a certain amount of water around the hull, and there
is a point where the boat reaches a speed at which it can't go any
faster this is the hull speed.
Interestingly, when a sailboat starts approaching its hull speed, it
starts to become very unstable and you feel there is a very good chance
that you will crash. The boat can be pushed past its hull speed for a
period of time, but go too fast for too long and it is almost inevitable
that something dramatic will happen usually not good drama.
This made me think What is the Hull Speed of a Business? How fast can
a company grow before things start to break? Can you change the shape
and form of the business to allow for rapid growth?
Professional services firms are particularly susceptible to the limits
on growth because they generally operate in a one-to-one performance
environment, meaning that someone has to perform the service each and
every time the client engages you. This is different from a product
company or some service companies which operate in a one-to-many
performance environment. Even if there is a manufacturing process needed
to make a product, it can be completed with efficiencies in volume or
through an automated process so that each individual product is not
If you want to grow and expand your company, you need to make sure the
structure of the business (your hull) is shaped in a way that supports
the growth rate (your speed). The structure of the business is made up
of a number of components that all need to be properly configured to
achieve your desired pace of growth without breaking. Here are a few
things to evaluate before you embark on a growth phase:
PEOPLE Do you have enough people to complete the work? Developing
the processes to recruit and hire the human resources you will need to
do the work is critical if you want to grow. There are different models
full time employees, contract and freelance resources, or subcontract
companies that will help you develop a viable plan to support
different rates of growth. However, if you don't have the people, you
can't do the work.
TALENT Do you have the right people to complete the work? Having
enough individuals to do the work does not guarantee that they have the
proper skills, experience, or aptitude to complete the tasks. Often, it
is easier to find the talent to fill junior roles on the team but you
may not be able to find the proper project managers or client executives
to guide and manage the engagement. Training is an option, but this
takes time and there is no guarantee that a person who goes through
training will achieve competence in the subject. Developing bench
strength, people who currently have one level of role but who can step
up to take on greater roles, will help you insure that you have a farm
team ready to send team members up to the next level.
INFRASTRUCTURE Do you have the proper hardware, software,
systems, and office space? You might have talented, properly trained
people to do the work, but if they don't have a place to work and the
tools to do their tasks then it will be hard for them to meet deadlines.
PROCESSES Does your company have documented and standardized
processes that a project team can follow? Every company operates in
"fire drill" mode once in a while, but I learned a valuable lesson about
having processes from a situation that was brought on by an impending
client deadline. With the alarms going off, and after my motivational
speech to the team about the importance of working hard (and smart) to
put out this client inflicted "fire", one of the folks on my team looked
at me and said, "
when the alarm goes off at the fire house, all of the
firemen know the process to follow to put the fire out -- we don't
Don't expect your team to be in a position to answer the fire alarm if
you don't have standard, documented processes, or if they don't know
MONEY Do you have the capital resources to support your growth?
People with the proper talent, a place to work and the tools to do the
job, along with the training and organizational processes all take
monetary investments to put in place. However, even if you have the
money to invest in all of those things, you will also need the financial
resources to fund your cash flow. The soft under belly of growing
professional services firms is that you often need to pay your people to
do the work prior to collecting payment from your clients. Unless you
get significant payments from your client at the beginning of the
project, you will need to fund the accounts receivable on projects with
working capital or a line of credit. Create a solid financing plan if
you want rapid growth.
To illustrate how these variables and components factor into the growth
of a company, let me offer an example. In most growing companies, one
factor that plays a critical role in supporting growth is reducing the
amount of time from hiring a new employee to having that employee able
to productively contribute to the business. The shorter the time is from
date of hire to self-sufficiency, the better it is for the business. For
sales people, the metric might be date of hire to date of first closed
The term that human resource professionals use to define this new hire
orientation, training, and acclimation process is "onboarding." All of
the variables and components above play into a company's operational
processes and can contribute to an effective and efficient onboarding
experience. Unfortunately, I see too many companies that figure that
they will hire experienced and intelligent people and these new
employees will be able to "figure it out." Why would you invest all of
the time, human resources, and money to find, recruit, interview, and
hire a talented new person to join your team and then hope that they can
figure it out?
Without going into detailed descriptions of all of the operational
processes that need to be in place to create an effective onboarding
process, you need to understand that there is a cause and effect
relationship that interconnects all of these issues. Most important is
to develop best practices and institutionalize individual experience so
that your new team members learn from the best, not just from the
current employee who happens to be available for their training and
orientation. There are many great case studies about companies that have
excelled in the onboarding process; learn from them and customize your
system. Realize that there is significant return on your investment if
you shorten the time to productivity, and there are also significant
negative implications if you do not have operational processes in place
to support your growth objective.
What is the Hull Speed of Your Business? How fast can you grow?
Before you embark on a phase of growth, make sure you have shaped the
business in a way that can handle the speed you want to travel. If you
push the company past your hull speed, you will know it because the
company will start to shake, clients will become unhappy with their work
product, and it won't be the plastic or wood of a boat's hull that will
start to break, it will be your people.
Understand the hull speed of your business before you start to grow too
fast. The good thing is that unlike the hull shape of a boat, you can
change the structure of your organization while you are "under way" (the
sailing term for moving). If you need to change the structure of your
organization to support faster growth, do it before things start to
become unstable because by then, it might be too late to prevent
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