“A strategy is truly great only if it is greatly executed.” - Nacho Bassino
When she founded Wright Software Solutions, Wendy put a lot of care and energy into determining the metrics that were most valuable to software development industry acquirers.
To appeal to potential software acquirers, Wendy found that she should strive for a year-over-year customer growth greater than 40%, and a Customer Attachment rate to her likely acquirer of at least 70%. These target Valuation Driver Key Performance Indicators (KPIs) formed the basis for Write Software Solution’s company strategy.
But Wendy never operationalized that strategy into missions, objectives, and tasks that her functional area leaders and employees could execute. Wright Solutions had a strategy, but didn’t operate towards that strategy.
When a potential acquirer expressed interest in purchasing her startup, Wendy was caught off guard. The acquirer asked for detailed metrics about growth and attachment. Wendy and her team scrambled to collect data.
Without setting Functional Area priorities and missions, and tracking progress towards those missions, Wright Software Solutions’ customer growth was misaligned with the potential acquirer’s customer base. Wendy missed her Valuation Driver Customer Attachment rate KPI.
This misstep dropped the acquirer’s valuation of Wright Software Solutions by nearly 60%, and the deal fell through.
After setting her company strategy, Wendy needed to set Functional Area missions, proactively measure progress towards those missions, and hold her team accountable through regular updates.
BOSS helps founders translate strategy into operational action. A startup’s overarching strategy is to achieve metrics that potential industry acquirers value the most – Valuation Drivers.
Starting with Valuation Drivers (strategy), founders can establish time-based priorities to focus their use of resources, and their Functional Areas’ efforts.
For example, with Wright Software Solutions’ Valuation Drivers of growth and attachment, Wendy could have assigned her Sales & Marketing Functional Area a priority of aligning initial growth with their potential acquirer’s customer base.
With priorities set, founders then assign Functional Area (FA) missions to achieve Key Performance Indicators (KPIs) that move the company closer to their Valuation Driver targets.
Not all missions will have a KPI, especially earlier in a startup’s lifecycle. For example, a startup early in the Product Phase may not have any employees in its Sales & Marketing FA. So, the founder may set a priority of building the Sales & Marketing FA, starting with a mission of hiring that FA’s leader.
Keeping priorities and missions bound by predictable time frames is helpful for startups. It sets clear expectations, and allows transparency into progress. For example, setting 1-month and 3-month priorities allows time to watch trends in KPIs and to make adjustments.
With their missions assigned, Functional Area leaders can create objectives for their departments, and tasks for individual employees – all working towards achieving the company’s Valuation Driver KPIs.
This structure of Missions, Objectives, Tasks, and Measures (MOTM) creates a chain of accountability and prioritization – from your startup’s leadership, down to individual employees – that aligns the entire company towards the company’s strategy.
In our next post, we’ll show how BOSS maintains accountability and prioritization to allocate company resources, and to make real time operational decisions.
If you want to learn more about the BOSS Startup Science way of establishing clear, transparent priorities, register here and use the code BCP123 for access. Also, stay tuned for our upcoming webinar with Marty Bickford about MOTM, RACI and other important considerations when building your team.