Category: Fundamentals

“Were we right about last week?” I asked my project manager.

She laughed, “Not really.”

Yesterday, we reviewed our new forecasting system as part of our standing management meeting. The goal is to be able to predict how our operations are going to look over a month out. I.e. Who will work on what and when for the next month.

Similarly, on the growth plan I’ve been developing, there are financial forecasts for a variety of scenarios.

No forecast I’ve ever developed has been accurate. While I’m sure I could be better at planning and analysis, the reason they and the ops forecast haven’t proved true is because no one can predict the future.

In Portland, we have a growing brewery chain called, “Migration Brewing.” I was fortunate to hear their story at a Rotary Club meeting yesterday from one of their founders, McKean Banzer-Lausberg.

They started a brewery in a smaller leased space in 2009. In the next eight years, they expanded to take over the building and started to distribute their beer to bars around the city via their pickup truck. This got the attention of a large distributor who struck a deal with them. The following year, they setup a mass production brewery and expanded from draft to cans. Now their beer is available around the pacific rim and in the Western US.

The big inflection point for their business was distribution and mass production. Distribution connected them to a much larger pond of customers that stretched far beyond Portland. Mass production enabled them to service that pond.

Could they have jumped ahead ten years and started with the beer factory and the distribution?

Probably not.

If you go into their flagship brewery on Glisan, you’ll see around twenty beers on tap. These are always rotating with new beers being introduced to the line-up. McKean explained, “People come to a brew-pub to try something new. It has to always be fresh. But it’s also our test pool for new beer and tells us what people like.”

On Monday, I dropped my car off at the dealer to investigate a dummy light.They told me not to expect an update before Wednesday. As I rode my bike home, I thought, “They’re operating off of a queue.”

One of the common challenges in growing the operational side of a business is inconsistent demand. The need for your product or service doesn’t drip in a steady flow, rather it arrives in the spike of peaks and valleys.

This wreaks havoc internally because the effects are delayed and magnified.

If you’ve ever sat in stop and go traffic on the freeway, this effect is what you experienced. Some half wit changed lanes two miles up the road and cut someone off, causing them to slam on their brakes. Now the cars following them begin and reinforce the wave of speed up and stop, speed up and stop.

The solution is slack in the system in the form of a buffer.

I played Magic the Gathering when I was a kid. If you’re unfamiliar, it’s a deck building game where you duel with another player as wizards with fantasy armies (nerd alert.) As an adult in my thirties, I was surprised that it was still around. I used to live in a neighborhood near a gaming store that hosted “Friday Night Magic” and I picked up the game again and played for awhile.

What makes it fun is that it’s complex. There’s no one way to beat an opponent, but many strategies to emerge victorious with lots of decisions to get there. For example, one player might play a “control” deck and use their cards to sabotage the efforts of the other player who tries to flood the battlefield with small creatures.

They’re both playing Magic, but they’re not playing the same game.

Your business is similar.

This weekend, I taught my “little” from the Big Brothers Big Sisters program how to rappel. I set him up at the top of a hill and showed him how to tie in and use a friction device and a special safety knot to descend a double rope. He practiced a few times and then I took him to a steeper hill with a small cliff on it and he was able to rappel down that too. He’s scared of heights and was pretty psyched about all this. Afterwards, as we drove to an ice cream parlor, he repaid his rappel lesson by telling me a story about Thor.

The story takes place in a castle’s hall that is full of giants. They challenge Thor to a variety of tasks: wrestling a crone, an eating contest, a drinking contest, and a foot race. Despite being a god, Thor loses on every account and is humiliated. Only when he is leaving does the lord of the castle reveal to him that every contest was fixed in some manner. The crone was actually old age and all strength falls to that, the eating contest was against fire who eats all, the drinking contest was rigged with a drinking horn that had a hole connected to the sea, and the foot race was against thought, “for no action is faster than thought.” (The actual story involves more characters and scenes: https://norse-mythology.org/tale-utgarda-loki/ )

No action is faster than thought is a good lesson to take from a story.

Many problems can be anticipated long before you encounter them. One of the goals of a business growth plan is to bring these to light and address them on paper before they are realized as an obstacle to the business.

No one can predict the future, but that doesn’t mean the future is unpredictable.

Featured image is Thor and party facing the immense jötunn Skrymir in an illustration (1902) by Elmer Boyd Smith. Used under public domain.

One of the questions that I’ve been puzzling over for the past year is, “What makes behavior strategic?”

This question arose from my StrengthsFinder’s report, where it listed one of my strengths as “Strategic.” In the context of StrengthsFinder, that is someone who “can sort through the clutter to find the best route.”

I wrote earlier this week on the benefit of questions and one of the effects of having a good long term question is that it sifts gold from the dust of your experience. Just by holding the question across the passage of time, answers begin to appear as your mind forms connections.

Some of the gold that I’ve sifted from the river is:

• The location of strategy is at the beginning of an endeavor. Strategy concerns how you start ( Beginnings as Leverage Points ). Additionally, you can always start again, at any moment, and give yourself the opportunity for strategy.
• A strategic perspective is oriented towards anticipation and prediction. What could happen?
• Strategic behavior is about working in the future. It’s about making choices that warp the possible in your favor.
• The practice of strategy is planning. The product of strategy is a plan.

Beyond just honing my strengths, I’ve been curious about how to approach small business growth from a strategic lens. As in, “What does a strategic approach to small business growth look like?”

The short answer is that it’s the development and execution of a growth plan. The long answer I’ll explore in future posts.

Featured image is Phidias Showing the Frieze of the Parthenon to Pericles, Aspasia, Alcibiades and Friends, by Sir Lawrence Alma-Tadema, 1868. Pericles held the title of “Strategos,” an ancient greek military general role that is the origin of the word strategy. He fought Sparta in the Peloponnesian War and initiated the project to build the Parthenon. This painting has to be one of my favorites that I’ve encountered. Used under public domain.

Businesses are whole systems. To make a comparison to your body, there are organs that have entirely different roles, but they all contribute to bringing you to life.

In any business, you’ll need some sort of function that keeps its organs healthy:

• Finance
• Marketing
• Operations
• Leading
• People

None of these can be allowed to fall into disrepair or the entire business suffers.

Last year, we had projects that went over budget, zombied projects that stalled in our clients’ hands, and several other operational mishaps. Because of this, our team has spent this year’s weekly meetings discussing operational improvements.

I remember a time when I was our project manager and the only one who developed SOP’s. The systems I created worked well and I was proud of them. In the intervening time, I hired a couple different project managers and added clients and staff. We stopped using some of my systems and tried alternatives. Eventually, things ended up in a half-baked state.

There are four constraints that prevent a business’s growth. A business will expand until it hits one of these limits. They are: customers, fulfillment, profitability, and owner goals.

The most common limit on growth is the availability of customers. Not possible customers, but actual customers. There are a thousand different ways that this can manifest, from a declining market, to poor visibility, to pricing-customer fit, and etc.

Less common is a lack of ability to fulfill. This is an operational obstacle where you have customers that want to buy, but there are internal issues that prevent you from effectively delivering the value. This can also show up in a variety of ways, from inventory challenges, to lack of available employees, inefficient processes, and etc.