Your organization exists in a state of plate spinning rather than actual growth.

Examine your current situation by asking yourself how many different business ventures you maintain at present. Your business operates across multiple segments and geographic areas while introducing new products through multiple partnership agreements. It feels busy. The presentation appears strong when displayed on a board slide. Multiple market pursuit at one time represents strategy dilution rather than actual business expansion. The death of focus leads to reduced profit margins. Your fundamental duty as a Founder or CEO or senior leader involves making strategic decisions. The following article demonstrates methods to identify potential risks early and evaluate your business portfolio and redirect resources for achieving better outcomes. Strategy requires selecting which initiatives to abandon instead of pursuing additional tasks. Harvard Business Review

Fast takeaways

The power of concentration leads to exponential growth while spreading resources results in thinning capabilities. Strategy requires making deliberate decisions between options. When all tasks receive equal importance then none of them gain proper attention. Harvard Business Review

The available resources in your organization remain limited. Your organization faces three critical limitations which stem from its limited staff numbers and restricted financial and employee morale. MIT Sloan

The pursuit of additional markets leads to the destruction resources and restricted leadership availability.

Kill fast. The implementation of defined exit criteria helps maintain both financial stability of strategic direction

The attraction of multiple markets becomes too appealing because it seems to generate additional revenue paths and flexible business options. The actual results from pursuing multiple markets usually turn out to be contrary to expectations. Sales cycles lengthen. CAC drifts up. Product teams create unappealing generic features that fail to satisfy any customer base. Operations juggle edge cases. The financial department loses its ability to track unit economic performance. The organization shifts from being efficient to becoming overwhelmed with work.

Three silent costs appear:

1. Attention tax. Executive time gets diced across too many reviews and escalations. Decisions slow down.
2. Coordination drag. Cross-functional alignment breaks. Handoffs multiply. Rework explodes.
3. Capital misallocation. The company dedicates its funds to unproven business experiments while its most promising projects receive insufficiently receive financial support. Strategic resource allocation through focused funding methods performs better than random funding distribution. McKinsey & Company

Internal link: Deep dive on triage and focus in our The Importance of Making Informed Choices

https://3msbusiness.store/the-importance-of-making-informed-choices/

The following indicators will alert you when your business attempts to handle too many opportunities

These indicators serve as warning signs which appear before the financial statements start showing problems.

• Revenue dilution per initiative. The company generates more revenue but each individual business opportunity generates less revenue during three consecutive quarters.
• Rising blended CAC/Payback. The expansion of marketing efforts into different segments leads to higher customer acquisition costs and longer payback periods.
• Sales cycle creep. The introduction of new verticals requires organizations to handle additional legal and compliance and procurement procedures which extend the sales process duration. Close rates fall.
• Roadmap bloat. Your backlog grows with “one-off” requests. The release schedule becomes longer and the content becomes less substantial.
• Support escalations. The number of support requests transitions from basic usage questions to product deficiency complaints.
• Leader bandwidth. The calendar reveals your workload through twenty active initiatives that require five minutes each. The activity resembles whack-a-mole more than leadership work.

Monitor these indicators each week. When three or more indicators turn yellow you should reduce the project scope.

Use a basic yet demanding evaluation method to assess your business investments

A 200-cell model is unnecessary for your needs. A straightforward evaluation system exists which you can use to assess your business within one hour.

1) Market Attractiveness

The calculation of total addressable profit should replace TAM in your assessment.

• Total addressable profit (not just TAM).
• Growth rate and purchase frequency.
• The power of buyers concentrates in this market segment.

2) Strategic Fit

Your core business advantage should receive support from this opportunity.

Your current go-to-market strategy should work in this market segment without requiring exceptional efforts.

The initiative will enhance your network effects and data loops and brand value.

3) Unit Economics

The current LTV/CAC ratio stands as the only valid measurement for evaluation purposes.

• LTV/CAC today, not “after we scale.”
• Gross margin after discounts and delivery costs.
• Sales cycle length and win rate.

4) Resource Reality

The leader position requires a person who dedicates at least 50% of their time to the role.

• Named leader with ≥50% focus?

The team possesses current operational capacity.

• Clear budget and stage gates?

Each factor should receive a score from 1 to 5. Any score below 12/20 indicates you should either hold or terminate the initiative. Be brave.

The BCG Growth-Share Matrix serves as a portfolio tool to help you make systematic decisions by focusing resources on areas where advantages meet growth potential. Boston Consulting Group

Set goals that force choice

Unlimited ambition creates disorganizes everything. The system consists of two main sections.

The annual “One Big Outcome” defines the essential victory through a single statement. The company aims to achieve #1 market position for mid-market GCC contractors in service costing with a 30% market share.

The system includes three to four measurable key results for each quarterly OKR with a maximum of three OKRs. The system will delay any initiative that fails to advance a KR.

The organization should link financial resources and personnel numbers to these OKRs. No ghost projects.

The link to the article “Where to Begin When Building a Culture of Innovation” and roadmap reset guidance can be found at https: https://3msbusiness.store/where-to-begin-when-building-a-culture-of-innovation/

The organization should allocate resources with absolute dedication

Great strategy fails to deliver results when capital resources and human resources and time resources are not properly synchronized.

Each priority requires a dedicated single-threaded owner who will take full responsibility for its execution. No committees.

The capacity map displays how each team member spends their time through percentage allocations. Your organization faces a reality check when any employee reaches 120% capacity.

The funding process follows a stage-gate system which distributes money through four stages: Discover → Validate → Build → Scale. The evaluation process at each stage requires specific criteria to determine whether to proceed or terminate the project. Stage-Gate International

The organization conducts its weekly operations through a standardized process which occurs at the same time and displays identical information while making uniform choices. The organization maintains brief meetings that produce swift decisions.

The practice of disciplined resource reallocation through CEO-led reviews every quarter leads to better value creation because it directs capital and talent toward the most profitable opportunities. McKinsey & Company

The system should enable adaptability through efficient processes instead of unnecessary tasks

Your organization requires fast learning abilities instead of continuous movement.

The organization conducts three focus sprints during each 90-day period which generate better results than twelve months of unproductive work.

The process of hypothesis-driven experimentation requires managers to establish test plans and performance metrics and success thresholds and termination dates before beginning work. The system should give performance bonuses to managers who end their projects with low success potential. MIT Sloan

The organization should maintain direct contact with its customers through ten active dialogues per segment during each quarter. The organization should use factual data instead of personal opinions for decision-making.

The strategy exists in different versions. The current quarter’s business strategy exists as version 1.0. The organization will deploy v1.1 after conducting their learning review.

Mini-case study 1

The B2B SaaS company attempted to serve five different market segments simultaneously which included healthcare and logistics and retail and finance and education. The company experienced sales cycle fragmentation and extended demo sessions and engineering teams worked on multiple projects simultaneously. The CEO conducted a brief portfolio assessment after the company achieved no growth during the previous year. The financial analysis showed logistics delivered the highest LTV/CAC ratio and best gross margin through its ability to secure multiple mid-market deals. The company eliminated three verticals from its operations while putting one on hold to focus all marketing efforts and SDR activities and product development on logistics applications. The company released targeted content for each segment and improved their ICP definition and created new demo content that demonstrated two essential workflows. The company achieved a 100% increase in win rate and reduced CAC by 28% while achieving 121% net revenue retention during the following two quarters.

Mini-case study 2

The regional contractor entered five new markets at once by offering telecom services and HVAC solutions and solar power and smart metering and facilities maintenance. The company experienced delayed cash flow while its workforce spent time moving between sites which resulted in high idle periods. The company implemented stage-gate procedures and selected water and sanitation services and electrical maintenance as their main business focus because they already had established crews and customer relationships. The company ended its solar EPC business while forming telecom partnerships and implemented standardized bid documentation. The company achieved an 18% increase in fleet utilization while reducing rework and achieving a 7% increase in gross margin during the three-quarter period. The company achieved better profit margins and more loyal customers and improved operational safety through its reduced market presence.

A functional “Focus Operating System” exists for real-world implementation

The system requires only seven days to implement.

Start by making a complete list of all current initiatives and their owners and stages and financial allocations and projected effects.

The 4-lens filter enables you to evaluate initiatives through market assessment and fit evaluation and unit economics analysis and resource availability assessment.

Choose three initiatives from your available options. Your Q-level portfolio consists of these three selected items. All other initiatives need to wait in a backlog.

Each initiative needs a dedicated single-threaded leader who should receive complete authority and focus. The system should provide complete authority and focused work responsibilities to these leaders.

Establish kill criteria at this moment. Create the red lines before emotional reactions begin to influence your decisions. MIT Sloan

The funding process should follow stage-based allocation instead of depending on faith-based decisions. The organization should only release funds after obtaining concrete evidence. Stage-Gate International

7. Build the dashboard. Five measures: pipeline health, win rate, CAC/payback, gross margin, cash runway.
8. Run weekly reviews. Decisions, not status.

The organization needs to establish customer feedback through interviews and NPS verbatim data and lost-deal notes.10.  Archive and learn. What did we stop? Why? What would change our mind?

Financial discipline that protects focus

Multiple market pursuits hide the fact that individual business units generate unprofitable results. The business needs protective measures to maintain its stability through these three elements:

• Gross margin floors by segment. The pilot needs to reach the floor by month six to continue operations.
• CAC payback limits. The maximum time for SMB customers to reach payback should be 12 months while mid-market customers should reach it in 18 months and enterprise customers in 24 months unless their switching costs exceed normal levels.
• Working capital control. The company should avoid extending payment terms to acquire strategic business logos.
• Portfolio cash view. The finance department should present both burn rate and initiative runway data to stakeholders. Organizations that can quickly adjust their resource allocation achieve better results. McKinsey & Company

Market intelligence without analysis paralysis

You don’t require extensive research to obtain the information you need. You need useful signals.

The tracking of three essential segment indicators includes search demand metrics and deal velocity measurements and price competition analysis.

Use GA4 and Search Console to track which content drives qualified sessions instead of general website traffic.

The system monitors competitors through brand and feature alert notifications.

Update your segment brief document once per month by maintaining a single-page summary.

The following actionable strategies help businesses develop flexible business plans

Organizations need to select their main strategic approach between cost leadership and differentiation and focus. The combination of different strategies will create confusion among your teams and your customers. Harvard Business Review

Establish the opposite goals for your organization. Establish specific actions that your organization will avoid performing during this year. Display it for public viewing.

The organization needs to display its available capacity to all teams. The organization should create a resourcing chart that all employees can access. A project cannot begin without sufficient personnel to handle it.

The organization needs to establish clear definitions for its ICP. The ICP definition requires information about industry segment and customer size and application use and purchasing role and spending capacity.

The organization should implement standardized procedures for discovery operations. The organization maintains uniform first call presentation materials and uses MEDDICC or BANT evaluation methods and follows standardized “next step” protocols.

The roadmap needs reduction through feature elimination while increasing completion rates. The company should reduce its features by half while achieving double the number of completed projects.

The organization should establish a dedicated “fast fail” track for short-term experiments which include predetermined termination points. MIT Sloan

The strategic narrative should be more important than all other information. The strategy story needs to be presented on one page which should receive updates every quarter.

TL;DR

Multiple market pursuits create the illusion of expansion yet they damage operational performance and profitability and market concentration. The early warning signs of revenue dilution and CAC drift and cycle creep and roadmap bloat help businesses detect this issue. The evaluation process for market bets requires assessment of attractiveness and strategic alignment and unit economics and resource availability. The organization should establish one major yearly goal while restricting OKRs to specific targets and funding operations based on development stages. Three strategic priorities need capital and personnel alignment through designated owners who must establish termination points. The organization should use 90-day sprints to acquire knowledge through customer validation. Fewer bets. Better bets. Strategy achieves exponential growth through this approach.

CTA

Identify your current overextension points so you can select two essential projects to halt by Friday for maintaining concentration.

The following hashtags are used: #BusinessStrategy #MarketFocus #UnitEconomics #Leadership #Execution #B2BGrowth #GCCBusiness

 

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