With the 2018 Winter Olympics fast approaching, we're reminded of the cornerstone of competition: we play to win. This seems like a simple idea, but it's often misunderstood. The point of any game is to win.
“But Kevin, what about ‘It’s not whether you win or lose, but how you play the game?’” Yes, this is true, but how you play the game is driven by the goal: winning. Cheating is, of course, unethical. Winning is not.
“But Kevin, not everything is about winning.” Of course, it’s not. Playing golf for fun without keeping score can be great fun – but then it is not a game, it’s just an activity. Business is a game where results matter. If you don’t make money, the game is over no matter how much “fun” you have doing it.
This is a point I made in a recent article in Landscape Management (some of which you might recognize from this blog).
Why am I discussing this? Simple. I received a number of comments on the article and I wanted to reiterate the major point that how we play makes all the difference. And the “secret” to how is organizational, or as we say, the system. Great systems consistently outperform great ideas over the long term … and the game of business is not a sprint, but a marathon.
What’s the Secret to Growing Your Business?
The simple answer is, the secret is not really a secret. Like the secret in life is “hard work,” the secret to sustainable growth is “the system.” There are at least 90,000 landscape maintenance, snow and construction businesses in the U.S. and Canada. Fewer than 10 percent of these ever grow larger than $1 million in annual revenue. There’s no crime in that, as there is no requirement to get bigger. Many contractors like to operate smaller lifestyle businesses that provide a good living.
But for those who want to grow—and grow beyond the level of $2 million in annual revenue (and there are more than 15,000 of you out there), the challenge is not in delivering services. The challenge is running an organization. This requires a system that delivers services and does it efficiently.
Think about McDonald’s—not whether you buy or like its burgers. Think about the repeatable systems the restaurant employs to deliver burgers efficiently.
Or think about Vince Lombardi’s Green Bay Packers. Lombardi’s strategies were not complicated. The team ran fewer than a dozen unique plays. Yet, they ran them well almost all the time. This simple system created the opportunity for people to “keep it simple” and make good decisions. This approach gave rise to the “run to daylight” concept. The goal was not to run off-tackle but to execute a scheme and adapt to the defense and run to daylight. That was the goal—gain yards to win.
It’s the system, dude, as they say on the coast. It provides the platform for growth. Yes, you must have good people. But good people plugged in to a good system can become really good. A system has two primary components: the playbook (simple and consistent methods) and reporting (performance numbers to drive accountability and improvement).
Building a football team or burger joint is not so different from growing a contracting business. Leadership is essential, of course, but it must be married to a system. In today’s contracting business:
- The playbook is integrated business management software. It provides the standard operating system driving repeatable and simple business procedures managing the way your people prospect, estimate, sell, on-board, service, upsell, renew, plan, schedule, purchase, route, track labor, invoice and collect money.
- The reporting comes from the business management system. It provides analyses of all these procedures with numbers about sales, job costs, accounts receivable, purchases, payments, service delivery, forecasts and customer performance, just to name a few.
Together the playbook and reporting are essential for growing bigger than $2 million. Is $2 million the magic number when a contractor needs a system? In my experience, yes.
Growth with Less Pain
Growth creates "growing pains." We have all heard this. To reduce this pain, start with accountability. Accountability requires reporting. People must know when they are winning, doing the right things, doing enough of them and achieving goals. Reports drive accountability. Accountability drives responsibility. Responsibility drives thinking.
McDonald’s knows exactly how many burgers it’s sold. Lombardi knew who was doing the job right. Both kept it simple, used the system and monitored the results. These things are essential when the game starts because, as Lombardi said many times, at that point, his job was done. It was up to the team.
Can a business grow without a management system? Yes and no—but mainly, no. No, because the number of moving parts and people outgrow anyone’s ability to control the delivery of a result.
Your business plan must allocate significant investment dollars and time in a system. Yes, trucks and facilities are important investments and are always required. But investing in a system to build your organization makes it possible to employ those trucks and facilities in a way that services your customers, reduces costs and breeds the kind of sustainable culture you need to win.
And isn’t winning what it’s all about?