Morgan Hill’s Approach to Alignment
Although working in the startup space means wearing a number of different hats (depending on the needs of the client), one of the primary tasks is evaluating the current state (“as-is”) of the five major disciplines (company, talent, product, revenue, operations) and finding creative ways to reach the strategic future state (“to-be”).
The first step should always be the alignment of each discipline to the proper stage of a company (discovery, validation, efficiency, scale).
Last week, we reviewed our approach to alignment, a critical 90-day phase we refer to as Baseline and Alignment. Once we agree (together) upon the “as-is” of each discipline, our elite executives can quickly get companies aligned using the Path to Value Playbook.
This week, we delve deeper into the importance of ‘Baseline and Alignment’ by highlighting barriers to startup success that misalignment creates – some of which you may be experiencing first-hand as an executive or investor.
Our approach always begins with achieving alignment in each discipline. We reach alignment by focusing on the “sub-disciplines” that define the over-arching discipline in question.
Take revenue, for example, which includes the sub-disciplines of marketing, sales, channel and digital. Often times a company’s marketing efforts are not in line with its sales efforts. This leads to poor messaging, high customer acquisition costs, and a stagnant audience full of partially-interested entities. An immense amount of time and money may be allotted to kickstart marketing efforts, but if the initial approach is proving ineffective, it’s because the marketing strategy has not come into alignment with the sales strategy. No matter how strong your sales team is, they will not be able to piggyback the company to success.
To right-size this level of effort, we apply a prescriptive “playbook” to get the area aligned. In this example, we begin by aligning marketing with sales at the validation stage with our drive and messaging “play”. This could mean deploying any number of workshops designed to isolate a target audience, improve data collection for early stage customers, and/or strengthen the branded voice of the company.
Once sub-disciplines are aligned, we are able to better align the five major disciplines using the Path to Value Playbook…
Evaluating the Status of the Five Disciplines
In the company discipline, we are primarily focused on market, strategy, investment. A number of problem areas often emerge within these sub-disciplines, including:
- Raising capital without a fundable business plan
- Focusing too much on profit maximization too early
- Over-planning and executing without a regular feedback loop
- Not adapting the business model to a changing market
- Failing to focus on the business model and discovering you can’t get costs lower than revenue at scale
In the talent discipline, we are primarily concerned with looking at the culture of the company, the attitudinal qualities of the executive team, and the general hiring strategy (or talent pipeline). Common pitfalls we see in the talent discipline include:
- Hiring too many people too early
- Hiring specialists before they are critical (e.g. CFO’s, Customer Service Reps, Database specialists, etc)
- Hiring managers instead of doers
- Having more than one level of hierarchy
- Making poor hiring decisions at the each stage has critical consequences beyond the revenue of the company. It also impacts the culture of the business, creating an unfocused team and an unproductive atmosphere.
In the product discipline, we focus on the product vision, solution productization, services and customer support/engagement. In this critical area of the company, we often find one (or two) of the following oversights:
- Building a product without problem/solution fit
- Investing in product scalability before product/market fit
- Adding “nice-to-have” features without exploring user experience
- As you can see, a lot of wasted effort can go into designing a product that has no relation to market or user need.
- Additional features (wants) are often costly to incorporate and add little value from a user/business perspective. It is crucial that the tech/services team(s) be in constant communication with the marketing/sales (revenue) team to get a full understanding of market gaps that can be capitalized on.
As discussed above, in the revenue discipline we focus on marketing, sales, and channel sub-disciplines. In this area we often see a company making these common mistakes:
Spending too much on customer acquisition before product/market fit and a repeatable scalable business model is designedOvercompensating and missing product/market fit with marketing and press
A lot of startups get weighed down by extremely high customer acquisition costs. What they fail to realize is that it’s a problem of their own making. In the first place, they might be barking up the wrong tree – which is to say their target market is not as refined as it needs to be. By isolating a hyper-focused niche and implementing a marketing strategy to match, they can save thousands of dollars and prevent hundreds of lost hours.
In the operations discipline, attention is given to the financial and corporate infrastructure, legal, human resources, and the potential for incorporating automation tools to increase operational efficiency. Common areas of inefficiency in the operations department include:
- Raising too little money to get through the “Valley of Death” Raising too much money
- Lack of automated tools to help with bookkeeping and data collection (like using an AI-optimized tracking system to speed up the supply chain).
- Note: Too much money isn’t inherently bad, but it usually forces entrepreneurs to give up more of their company than they need to, and gives them the freedom to prematurely scale other dimensions (e.g., over-hiring and over-building). Raising too much is also riskier for investors than if they give startups how much they actually need and then wait to see how they progress.