The Six Processes
The thrill for anyone involved with entrepreneurial companies comes from the satisfaction derived from growing the company and the accompanying changes those companies undergo. The management challenge in entrepreneurial companies is based on the fact that these companies must change as they grow. Entreprenurial companies change strategies, outgrow their management, and are inherently unstable.
Many eCEO’s attempt to address these challenges by hiring top-graded talent to fill many of its top positions and in the process often diminish some of the spirit and glue that has allowed an organization to perform its critical tasks. Adding talented people is good, losing momentum can be an unintentional consequence. Some people refer to organizational memory or a network of relationships, but we do not think that is the issue. Organization charts and the organizations they represent are a static, momentary view of how work is organized. Again, an organization and a job description are about what is, but an entrepreneurial organization is all about what it is going to be. Moving towards the future causes an organization to go though continuous change.
To keep the business running. An eCEO (entrepreneurial CEO) must recognize that what he needs to run his business is not an organizational chart (maybe not just an organizational chart), but an awareness of what critical processes will knit the organizational entities of the business together and create a climate for effective decision making. He must identify who (individuals and groups) owns that process (run it) and who (individuals and groups) make the decisions that the process serves up.
Each Process allocates critical resources and selects priorities. They require work product from multiple functions and trade-offs in upstream and down-stream tasks and costs.
An example is the product development process. This is not an engineering task alone. The product development process requires an insightful understanding of customers, competitors, development costs, customer acquisition costs and full knowledge of how the product is installed and serviced. This implies input from many functional specialties: Sales, marketing, development, QA, customer service and finance to name the obvious. But who in the company owns the process of collecting the input, setting the goals, assembling the resources and monitoring progress as well as owning the specification, date, product cost and project cost.
At the start of an entrepreneurial company, this process is typically owned by the eCEO. It is often the central “idea” of the business -- fulfilling an unmet need by creating a new product. But over time, the eCEO hands this off to others. It may be someone in Engineering, it may be marketing, and it may be a COO or a product or program manager. But someone has to “own” the process and keep delivering results.
There are six essential processes crucial to any entrepreneurial business. Organizations and leadership will transform overtime, but recognizing that these processes exist, require a process owner and a decision making body, is critical to organization health and effectiveness.
The six processes are:
1. Team Building
2. Product Development
3. Customer Acquisition
4. Customer Deployment
5. Supply Chain
6. Command and Control
1. Team Building is the process of specifying, sourcing, recruiting, compensating, developing, evaluating, training, integrating, promoting and firing talent. It requires skill in understanding the organization and what tasks need to be completed. It requires a process to establish fair relative pay and benefit practices; it requires highly developed interviewing and assessment skills. It requires time and dedication.
Most eCEO’s dedicate a significant portion of their time to recruiting and grooming their team. They need to understand the strengths and capabilities of their team to know how their talents can be most effectively deployed. eCEO’s, who manage an ever changing business, do not develop their employees in the same way that leaders of larger, more stable organizations do. In the later, an enormous amount of energy is devoted to addressing employee “development needs” in order to better fit the specification of a particular job. In entrepreneurial companies, the focus is generally on what strengths they have and putting the employee into a role where those strengths can be exploited. Frankly, I think that strategy develops better people.
2. Product Development is described above, but it requires some kind of market/ customer research, glow-in-the dark engineering talent, systems to manage complex products, a product introduction cycle that combines customer input with sincere listening skills.
3. The Customer Acquisition Process is not just Sales. It starts with a value proposition for the customer and an understanding what the life time value of a customer is likely to be. It requires an understanding of the cost and the method of acquiring customers in the competitive battlefield. It requires mere humans to assist the customer in their understanding of the value of the company's offering, usually with the aid of marketing, product management, etc. It requires important sales disciplines such as customer identification, customer qualification, pipeline management, forecasting, lead generation, contracting and contract management.
4. The customer deployment could be considered the completion of the acquisition process. Physically delivering the product or service to the customer and integrating into their business process or personal lives. It covers field operations, customer service, customer satisfaction monitoring, billing, collections and assembling customer experience feedback to input into the development, acquisition and supply chain processes. The key measures here are customer satisfaction, churn, renewal rates, maintenance income streams and costs to support customers. The process owner needs to clarify company strategy in terms of timing, cost and satisfaction trade offs.
5. The Supply Chain process is one of sourcing components and converting them (manufacturing) into the desired form and delivering them to customers. It is often quite complicated, involving many steps in many locations often in different countries. Sometimes it is quite simple, such as shipping a software disc or providing a web address and password.
6. The Command and Control Process collects information from all the other processes and building a mental and financial picture of the business and its interdependencies. How much of this year's and next year's revenue depends on the new products under development? How efficient is sales? What is the real cost of delivering our offering to a customer. When do we need more cash and how much of the company will we have to sell in order to pay for it.
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