Last Tuesday, I had a standing meeting in an empty hotel event space. The hotel was an old Elks Lodge that was restored and repurposed, but the walls and ceiling still had their earlier 19th century decorative flourishes and patterns.
I spoke with a consultant and his partner who had built a business providing training to enterprise level clients. The consultant had landed a whale through his public speaking many years prior, and he wanted to figure out how to gain new clients without having to speak at a thousand events? He thought that maybe the solution was search engine optimization.
We had an interesting conversation, but one thing that stood out was a model that I shared with them that I’ve been developing and playing with over the last couple of years:
In a business, there are two vectors of growth:
These are like horns on a bull.
Your first priority is optimization. Most businesses are inherently under optimized. This is because of a few common causes:
- Once something new works, we’re lazy and/or scared of ruining it, so rather than improve on it we leave it as is.
- We don’t see new successes as a class of opportunity, because we’re so focused on harvesting the fruit of the initial return (like the consultant landing a whale.)
- The environment and the business are in a constant state of flux. Entropy prevails.
There is a whole industry of consultants who make their dime simply on optimizing under-optimized businesses (for example, creating systems and workflows, updating infrastructure with the latest technology, etc.)
You start with optimization because there are low risk un-realized profits within the business. At some point though, you hit a threshold of diminishing returns.
That’s when it’s time to focus more on the innovation horn. Those efforts are the pioneering work of entrepreneurship. They’re high risk and largely doomed to failure, but the successes carry all the losses and form the foundation of your next rounds of optimization.
As it related to the consultant I was speaking with, he had been successful getting clients by speaking in the insurance industry. He was thinking about using SEO (innovation) to get clients in aerospace (innovation). The initial things I would look at would be, has he maxed out his possible insurance industry clients (optimization)? Has he spoken at the events where he would harvest another whale from this industry (optimization)?
The horn model is a simple framework to organize attention. It’s a perspective to assess the activities that you might do and focus on what will probably create value.
Selection is inherently strategic and the horns model provides a strategic lens to your options.
Featured image is The Young Bull by Paulus Potter (1625-54). Used under public domain.