EP5 – Understanding the Seasons of Business Growth

The Growability® podcast is designed to teach business owners and non-profit leaders a more excellent way to run their business. This episode covers the 4 Business Seasons and how to maximize each season for growth.

Podcast Transcript:

Joshua MacLeod:
Multiplication in a business is a result of simplification in a business. You can’t multiply complexity. When you multiply complexity, you have chaos. When you multiply simplicity, you have profit.

Growability® Announcer:
Welcome to the Growability Podcast, teaching business and nonprofit leaders, a more excellent way to run a business. Visit growability.com for leadership, coaching, consultation and business collaboration needs. Today’s episode is about the critical importance of understanding your business season as you create goals. Here are your hosts, Bernie Anderson and Joshua MacLeod.

Bernie Anderson:
Last week, Joshua, You and I talked about BHAGs, Big, Hairy, Audacious Goals. And we talked last week about the fact that these BHAGs, these Big, Hairy, Audacious, Goals are rooted deeply in our vision. What’s the difference between a Big, Hairy, Audacious Goal and a Big, Hairy, Ridiculous Goal? Like to me, that’s a fine line, right? I just think that would be helpful if we talked a little bit about that. And I think that leads us into some pretty interesting solutions and conversations.

Joshua MacLeod:
I noticed that you wrote in the tag for our show today, we’re going to give the definition of a pipe dream. Like what’s the difference between a Big, Hairy, Audacious Goals and a pipe dream.

Bernie Anderson:
And a pipe dream. Pipe dream are the dreams that you have when you’re smoking an opium pipe. So, that’s where that comes from. So your Big, Hairy, Ridiculous Goal is the thing that like, dude, you’re just smoking opium, right? So they’re not realistic. They’re only what you dream about and not actually what you can do anything about. Right?

Joshua MacLeod:
How do you protect yourself from a Big, Hairy, Ridiculous Goal or a pipe dream when you’re creating a Big, Hairy, Audacious Goal? I think the big answer to that is understanding your business season and understanding what stage of the game that you’re actually at. Your Big, Hairy, Audacious Goals, they don’t necessarily have to be seasonal. There is a bit of a dream in that.

Bernie Anderson:
Yeah, I think that’s good.

Joshua MacLeod:
But if a Big, Hairy, Audacious Goal can’t be simplified into smaller goals, then it’s too big of a goal. Just like in the natural world, we have four seasons we have spring, we have summer, we have fall and we have winter. Any business that’s going to achieve a goal. Any business that’s actually going to complete the circle, bring in profits, serve a customer, accomplish that thing that you set out to do, They have to go through the different seasons.

Bernie Anderson:
Like I think it might be helpful for folks if we broke that down just a little bit to what does that actually mean? Like how do we look at those seasons in such a way that maybe will make sense to people?

Joshua MacLeod:
Let me give you an example of an organization that started with a Big, Hairy, Audacious Goal and then went through seasons to reach a different, Big, Hairy, Audacious Goal.

Bernie Anderson:
Perfect. Perfect.

Joshua MacLeod:
So the company I’m going to talk about is one that everybody understands and knows is McDonald’s. The McDonald brothers, Dick and Mac McDonald, they graduated high school in 1929. They were living in New Hampshire and their big goal, their Big, Hairy, Audacious Goal was to be in the film industry in California. So McDonald brothers had a Big, Hairy, Audacious Goal. What was it? Own a Hollywood studio and create films and make that work.

Joshua MacLeod:
So with their high school degrees, they jumped out into their car. They drove to California. They started working at stage hands in a movie theater, Big, Hairy, Audacious Goal. What happened was this is right the beginning of the great depression. And that was a pretty miserable time to own a movie theater. So what they ended up doing is they bought a 750 seat theater called The Beacon Theater and quickly went out of business. So their Big, Hairy, Audacious Goal happened on paper, but the reality of it wasn’t very exciting. So then they started their second Big, Hairy, Audacious Goal, which is let’s create a restaurant business. So the way that that came about is as they were working in their theater, that was failing, they noticed that the only person making any money in town was the guy on the corner, selling hotdogs at the hotdog stand.

Joshua MacLeod:
So the McDonald brothers go to the hot dog guy. And they’re like, okay, how does this work? What are you doing? And they realized that we can do this. We can set up a hot dog, stand. Our big dream, the big, really great dream of being in the movies, wasn’t really something we could accomplish, but a hotdog thing. This is something we can do. So instead of a hotdog stand, the McDonald brothers started a hamburger stand. Their hamburger stand was a big hit and people could go and they could get a cheap meal in the great depression. This really works. And they started, what I would say is the first stage of growing a business. This is your startup phase. So there’s three critical ingredients for [crosstalk 00:05:10].

Bernie Anderson:
Okay. Okay.

Joshua MacLeod:
This is your spring. This is your startup. And there’s three critical ingredients that happened here for the McDonald brothers. The first is passion. The second is market. And then the third is resource. When they wanted to start a movie theater, they didn’t have any resource. They had passion, they were excited. We’re going to go do this. I’m going to serve. We’re going to build this movie theater. It’s going to be awesome. The market wasn’t there, there weren’t enough customers to actually come and visit their theater.

Bernie Anderson:
Right.

Joshua MacLeod:
So they had one of the three key ingredients to a startup, the passion. And I think a lot of times the leaders that you were mentioning in the beginning of the show, the people who are like great visionaries, who are going to do all this stuff, they’re really good with the passion scene. I’ve got vision, we can go do all this stuff. But they’re missing the other two key ingredients, which are fundamentals to starting an organization.

Joshua MacLeod:
One is a market, which is a group of people who will buy what you’re going to sell. And then the second is a resource. This is the amount of money that you can burn or spend as you start your organization. So the McDonald brothers had to work long enough to where they could buy a hot dog stand. And they realized that people were going to hotdogs stand. So now they had this startup. So of course, you know what the McDonald brothers did. They started selling barbecue at their hot dog stand.

Bernie Anderson:
The McRib. The McRib, that’s their thing.

Joshua MacLeod:
The very early beginnings of the McRib [crosstalk 00:06:51] Donald brothers, they started this hamburger stand, but then they added barbecue to it. And what they found in the second mode of their business, this is where they moved out of startup into growth. They realized that 80% of their sales were coming from hamburgers and less than 20% of their sales was coming from the barbecue.

Joshua MacLeod:
The second season that you have to think about is your growth mode. This is your summer and it’s hot in the summer. You’re sweating. It’s hard work, but you’re growing. The passion of we’re going to do this thing. We’re going to start a movie theater, or we’re going to start a hot dog stand. Now it has to mature into a purpose. A purpose. And we’ve talked about this a lot. And you know, this is something we share with all of our clients. The difference between a passion and a purpose is a passion is often focused on yourself. A purpose is focused on somebody else. So who are we actually benefiting with this? Like we said, on the other podcast, how to create abundance for somebody else. The second is really defining your niche. So they, they took their menu and they completely trimmed it down to where now we are only offering four things.

Joshua MacLeod:
Incidentally, those four things are what the customers are actually buying. So when you have a market, now I have a niche and now I can actually create process. And then they started hiring really good teamwork members. So as a business matures out of the startup mode, out of the spring into the growth mode, into the summer, there’s three fundamental ingredients, your passion matures to purpose, your purpose matures to a niche, and then your niche matures to having a really good team. Now here’s why all of this is important. If I’m creating goals for this year and I am a startup company, those goals are going to be very different than if I’m creating goals for this year and I’m in growth mode. If I don’t have a rock solid passion, market and resource and money to spend, I need to pause and delay and make that I can get that passion, market and resource settled before I move into the second mode.

Joshua MacLeod:
Once I’m in the second mode, then I can make different goals.

Bernie Anderson:
I love that growth is not just get bigger. It’s get focused. And I think that’s important. Like when you’re in the spring, it’s like there’s stuff growing all over the place. And then in summer, it’s like, all right, we’re focused on this thing that actually we know works and we know is what the people want and it’s going to be what actually helps our business to grow.

Joshua MacLeod:
That’s so true. And I think this is something that we see a lot when we’re working with clients is the thing that they’re necessarily excited about in the business is not necessarily the thing that their clients are excited about. And the core business that they think is their core business is not necessarily their core business. Multiplication in a business is a result of simplification in a business. You can’t multiply complexity. When you multiply complexity, you have chaos. When you multiply simplicity, you have profit. So if I can figure out what is that thing that my customer wants, that we can do really great, that my team is really good at. Let’s multiply that. Then you’re creating really good growth. And that’s where you should create goal.

Growability® Announcer:
You are listening to the Growability Podcast. This podcast is a shortened version of the Growability Live Lunch and Learn, streamed each Monday at 12 central, on Growability’s Facebook and YouTube live stream. Every great leader should have a great coach. Visit growability.com to find the perfect coach for your leadership needs.

Joshua MacLeod:
So the third season, if they get past the growth mode is maturity season. Your purpose established through partnerships. The niche allows you to have a platform. And then the teamwork is maximized through systems. McDonald’s obviously is like the King of systems. So what happened in their maturity phase is that McDonald’s just kept asking the question, is this as good as it possibly can be? Is there a way that we can improve this process? Can we achieve less with more? Can we do this faster? If we place the oven here, will that make a difference than if we place the oven here? If we use this dishwasher, does that make a difference? What they did is they were able to simplify their processes to where instead of a hamburger costing 30 cents, everywhere else, they could provide a hamburger in the great depression for 15 cents. Well now, everybody is going to McDonald’s because they’re getting a good hamburger and they’re getting it fast and they’re getting it cheaper than anywhere else.

Joshua MacLeod:
So they really started to dominate the market. At that point, the business had really gone through all the seasons. You’ve got your startup, your spring, your summer, your growth, your maturity, your fall. And so now the McDonald brothers had to make a decision were they going to keep doing what they were doing? Or were they going to sell the business? They decided that they would sell the franchise. They would sell the whole company to Ray Kroc. And it was a really good buy for Ray Kroc because they sold it for $2.7 million. And Ray Kroc turned it into a hundred billion dollar industry.

Joshua MacLeod:
But in one sense, the McDonald brothers weren’t interested in the blood, sweat, and tears that it would take to go to the next level. They were like we’re retired millionaires we’re buying our cadillacs, we’re off into the sunset. This is great. We started this thing. They’re Big, Hairy, Audacious Goal move from being, let’s create a movie theater and be Hollywood stars to let’s create community restaurants and really serve a ton of people with some good food and quality time and make going out to dinner something that everybody can do.

Joshua MacLeod:
So class let’s review, you have your spring. The key ingredients for your spring is a passion, a market and resource. Then you have your summer, the key ingredients for your summer purpose, niche, and teamwork. Then you have your fall, the key ingredients for fall partnerships, platforms, and systems. And then you have your winter. Your key ingredients for the winter are preparation, service and innovation.

Bernie Anderson:
How does a business owner, a leader in a business, a leader in a non-profit, what are some good ways for them to see what season they’re in?

Joshua MacLeod:
Well, here’s how, you know, if you’re in startup, you are surviving.

Bernie Anderson:
Right.

Joshua MacLeod:
The business needs to move in an up into the right direction. So my first month in the business, I might lose $5,000. If in my next quarter or whatever, I’m losing $4,000 a month. Well, Hey, I’m actually making progress. In the next quarter, I’m losing $2,000 a month. And then in the next quarter, I break even. And then the next quarter, I’m making $2,000 a month. That’s kind of the direction that startups start with. There’s like an idea that you can start with nothing and start a business. That’s actually not true. That’s kind of the same concept as like, my idea is good enough to start a business with, I don’t have to have resources. I’ve got a million dollar idea. Now the million dollars is in the process and the team. It’s not in the idea. The idea is 1%, the execution of the idea is 99%.

Joshua MacLeod:
Get enough customers, keep the lights on, make things go. That’s when you are in your startup mode. In growth, if you have discovered what really works in your business, you’re ready for growth. I think at the point at which you have an aha moment looking at your paycheck and your product and realizing where your paycheck comes from, that’s when you know, okay, I’m in growth.

Bernie Anderson:
So growth is ultimately, it’s ultimately recognizing, the word scale gets used a lot these days, right? But it actually is where you recognize where you can actually scale what you’re doing, where you can actually grow this because I’ve narrowed down my niche to something that, ah, I can reproduce this over and over and over and over again, almost effortlessly. Right?

Joshua MacLeod:
I like that. I think you’re right on that. Growth is the point at which you recognize where you can scale. Maturity is the point in when do you actually scale. If your focus is on, how can I create systems that are going to be so good that they will scale this organization? That’s how I know I’m in that maturity phase. Finally, how do I know if I’m in a decline or renewal? If it’s not fun anymore, you’re in a decline or renewal, that’s just, I’m going through the motions. I’m doing this thing. That’s time to renew.

Growability® Announcer:
Thank you for listening to the Growability Podcast. Do you have a Big, Hairy, Audacious Goal for your business? Do you want to know what business season you are in? Visit growability.com to see how joining a growability collaborative can help you develop vision, rhythm, and community for your business needs.