Growth and Value: Partners in Success

by Ken Thoreson

Building your business requires both leadership and management, and the first step in that journey is understanding the difference between the two. Leadership is the ability to make things happen by encouraging and channeling others' contributions, addressing important issues and acting as a catalyst for change and continuous improvement. Management is the skill of attaining predefined objectives with others' cooperation and effort.

The best companies, like other successful organizations, are led by individuals who have clear vision -- and the ability to establish specific objectives for working toward their organizational goals. Executives at partner companies that have leveled off, stalled or are struggling to break even may lack both vision and objectives.

An executive vision should address the following questions:

• What does your organization look like now? What will it look like in three years in terms of revenues, number of employees and specialty areas?
• How do you define success? What will the company's net worth be in three years? What are its profit goals?
• How do you want to be known by your clients, your competitors, the business community -- and by Microsoft?
• What's your ultimate goal? Do you have an exit strategy that calls for acquiring other companies or being acquired yourself? Or do you want to build a long-term corporate organization?

Answering these questions will help you fine-tune your vision, focus your efforts and inspire your employees. They'll also help you and your managers set the objectives to spur your company's growth.
Among other considerations, sales-related objectives might include:

• Revenue growth objectives by dollars or percentage
• Gross margin dollars generated by practice
• Percentage and dollars by practice area generated by new or current customers
• Revenue per employee
• Percentage of service dollars vs. products generated
• Managed services dollars vs. total revenue
• Number of net new clients added each quarter
• Percentage of won/lost accounts per proposal generation

Managers can use predefined objectives to create sales and marketing programs and dashboards to measure effectiveness. Leaders can use these objectives to judge management performance and promote the organization's continuous improvement. The results: Employee performance and morale will improve, customer satisfaction will increase, revenue and margin goals will be exceeded -- and your organization will begin to build value.

Improving your organization's value is critical in our maturing industry. Certainly, you can define value as retained earnings, recurring revenue values and balance sheet results, but it's also important to evaluate sales factors such as customer retention, net new client acquisition ratios or client penetration rates and lifetime value ratios. Your intellectual property, patents, employee non-compete agreements, brand recognition and even employee retention percentages are also important components to consider in building your organization's long-term value.

One last word: As a professional -- no matter what your level of responsibility -- you must also focus on personal growth. What's your plan for increasing your individual value this year? Moving forward requires all of us to manage personal development as well as our companies' growth plans