Building a Great Business: The Blueprint

Sometimes, you'd just like a roadmap to build a great business. Here's the (rough!) blueprint that we've discovered in building great companies.

1. Build a Great Life

To build a great business, first build a great life. Stop doing what you don't love. What excites you? List your passions. From that, what were you born to do? If you'll survive just doing it, that's your career. Where do you need to be in twenty years with it? Choose a goal -- something powerful. Then, chase it down and imagine beating it into submission.

2. Forget Planning. Start Your Business Quickly.

Start your business by seeking your goal. Forget market research. Forget business plans. Forget prototypes. Forget finding the one "great" invention or idea. Forget "being organized." Instead, start quickly: Use a copycat idea, and focus on customers the Fortune 500s aren't targeting. Ask: What can I sell? Start selling it. Yes, sell what you don't have. It'll tell you your product's viability. And most importantly, you'll need cash flow to keep your new company afloat. After you sell something, get all of the logistics done: your product, your licenses, permits, equipment, et al. Continue selling your product, and use that as a steady cash flow for bigger things ahead.

3. Lead Well: Be Humble. Focus on Results.

To lead your business to greater heights (and start building a "real" company), focus your business on consistent, positive results. Along the way: Be humble. Humility enables constant improvement.

4. Get Self-Motivated People.

Start surrounding yourself with the people who share your values, have produced results elsewhere, and didn't take credit for them says Jim Collins, Peter Drucker, Warren Buffett, and a plethora of other business greats. You can't build a great business without great people. Continually focus on recruiting. Here's a dilemma: You can't manage people. The right ones will be self-disciplined. Seek them.

5. @&^% Weaknesses. Exploit World-Class Strengths.

After -- not before -- you have your team, discuss the direction of your company. The team decides the ideas -- not just you. Where are you headed? What are the threats? What do you need to modify? Importantly: what can you do better than any business this world has to offer? Conflict is good. Argue. A culture that breeds yes-men won't tell you what's wrong about your company. Then together with your team, build a disciplined organization based on this three-circle Venn diagram: (1) your business's passions, (2) where it could be the best in the world, and (3) its economic engine (profit/x). In the middle of it, mark down your thirty-year, super-outrageous goal that comes from clear understanding. Then, do everything that follows this diagram. Jim Collins calls that your Hedgehog. Give people a direction related to your Hedgehog, then get heck out of the way.

6. Discipline Your Company, not Your People.

Next, build catalytic mechanisms that automate your company's Hedgehog. It must eject those who don't fit your values quickly and make those who do fit thrive. Be a clock-building genius, not a time-telling genius (e.g. build a culture that produces innovative products). If you think you have a people problem, you probably don't; you have a systems problem. Fix quickly.

7. Market to the Right People, not the Masses.

To market your products, use disruptive innovation to target the right people. People don't buy because of the product's quality. They buy because of who else is buying. Know the venturesome innovators of your industry, who you'll find when you seek disruptive innovation by targeting underserved markets. Target them. Only. Only. Only. They'll attract the majority. You can't. Start tinkering with small experiments. Get your offering out quickly for "beta" testing. If you're not failing, you're not experimenting enough.

8. Focus on Profits, while Keeping Cash Flow Up.

To keep your business alive, know your finances. Keep good books. Keep positive cash flow. Analyze your numbers: How will you improve your basic profitability ratios (e.g. profit/sales)? Improve cash flow? Most important, how will you improve your primary economic denominator (i.e. profit/x)? F&^% growth. Growth for growth's sake is a clear path to bankruptcy. Instead, build a great business first--then grow when you have the people to handle it.

9. Keep Focused. Eliminate distractions.

Look at your Hedgehog. Scan your company. Does everything fit your Hedgehog? Do your processes, structures, policies align with it. If something's not, eliminate it. Also, find ways to accelerate your Hedgehog. Technology can help here. And only here.

10. Improve. Constantly. Forever. For Eternity.

Repeat Steps 4, 5, 6, 7, 8, and 9. Done? Repeat again. It's a never-ending loop. Oh, and have fun! [Editor's Note: The article's not perfect, yet. We're constantly revising this, so come back often! | Thank you to our clients, as well as Peter Drucker, Jim Collins, and William Hewlett for their inspiration.]

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