Working on the Business rather than Working in the Business

For the last 25 years with both my own companies and where I am on the board as an investor, I have always valued the benefit of an annual off-site strategy or value creation session where we purposefully chose a location away from the office with phones and computers off in order to spend time working on the business rather than in the business. 

In recent months, I have been acting as a facilitator for a number of early-stage growth companies for these sessions, which I have thoroughly enjoyed.  I plan to continue doing these following the Arahi framework developed by Jon Andrew and Rupert Morrison who have written this book Strategic Value Creation. Their work has really taught me a great deal!

As part of the intro and scene setting for these sessions, I now share the framework from the Founder’s Mentality book, developed by Bain consultants Chris Zook and James Allen. 

In their research they found that just one in nine companies achieve sustained, profitable growth over 10 years and they found that this reduced growth was not based on market conditions, but on internal factors where companies become complex and this complexity and inherent friction becomes the silent killer of growth.

At the start of a company’s journey, there is clarity. The founder knows exactly who the customer is, what problem they are solving, and why they are different. Decisions are fast, energy is high, and everyone is close to the front line. There is a sense of insurgency, a feeling that the company is taking on an industry on behalf of its customers.

At The Founders Mentality core are three components. The first is the insurgent mission. Great businesses are not just competing, they are fighting for something. They have a clear sense of purpose that is understood throughout the organisation.

The second is a relentless focus on the frontline. Founders spend their time with customers listening and learning what they need.

The third is the owner’s mindset. Founders make decisions quickly, they allocate capital carefully, and they take responsibility for outcomes.

However, as companies grow, things start to change. There is a tendency for leadership to become inward-looking with meetings replacing customer conversations and data replacing direct experience. Layers are added, processes are introduced, reporting increases, and distance emerges between leadership and customers. Over time, the organisation loses its feel for what is actually happening in the market and forgets the mission that was at the original core. The owners mindset dilutes with a shift towards risk aversion, consensus decision-making, and a focus on protecting budgets rather than creating value.

The research showed that the companies that continue to win are those that maintain a deep connection to the frontline and treat those closest to the customer as the most important people in the business.

As part of your off-site value creation off site, I find it’s a great diagnostic question to ask yourselves how are we doing against these three elements of the Founders Mentality?

Is the mission still sharp or has it become generic? Are leaders spending time with customers or mainly in internal meetings? Are decisions made quickly or do they get stuck in layers of approval?

Challenging time allocation is another good question to ask yourselves. If the majority of leadership time is spent internally, the business will inevitably drift away from its customers.

Agreeing what we are not going to do or stop doing is another great outcome from an off-site value creation session as in my experience, many businesses are not short of ideas. They are short of focus, with too many initiatives running in parallel, diluting impact and creating noise.

How strong is your Founders Mentality?