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Performance & Growth

Find Unlimited Growth

Deliver real value to clients and watch your business boom.

Pavlo Phitidis

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How do you position your business within a customer problem, and not through product and service features?

Entrepreneurship has many attributes ascribed to it. Passion, creativity, interest in knowledge, adaptability, industriousness, and the list goes on. Over the years, we have developed an entrepreneurial assessment that looks at 14 attributes.

We use it for a number of purposes that can be roughly divided into two camps:

In service of the entrepreneur (your attributes; how they work for you and against you in your everyday life), and in service of building a business (the process of building a business into an asset of value requires particular support structures to achieve the end goal of a successful sale in three, five or even 15 years from today).

We build our business in the image of our personality, with all the attributes impacting on the end result. Being aware of them makes the difference between moving forward and remaining in one place, irrespective of how smart or hard you work. Being aware of them helps prevent self-doubt creeping in where awareness of an unproductive, personality-driven pattern of behaviour should be.

Separate your business from yourself

Andre has an interesting entrepreneurial profile. His attributes are weighted heavily in favour of interest in knowledge, innovation, adaptability and industriousness.

Backed by his technical skill set, these attributes fuel his desire to make his products better. And make more products. However, 16 years on, business growth eludes him.

His business seemed stuck in an annual turnover band of R18 million to R23 million. For the last seven years, the turnover bounced within this range. His furniture was well priced, well made, well designed and very competitive with many wonderful features that, as he explained in detail, set him apart from his competitors.

After further discussion, we agreed to work together to tackle this problem. The market opportunity in the furniture industry is in the billions. Doubling his turnover in two or three years should not be a hard task.

When I asked him why he did what he did, he spoke with excitement about his products. He was elated by the new CNC panel saw that he had recently acquired.

His meticulous nature had seen him break up his production process into neat, well-defined activities making up four business units of design, production, promotion and dispatch. This new investment would increase the efficiency of his operation by 13%, he proudly explained and showed me how the CNC machine would hopefully improve his sales performance.

I was doubtful about the acquisition and also struggled to see the link. He went on to explain that his sales staff could then take the multitude of briefs from clients and translate them quicker than his competitors into quotable, better priced designs. I continued to ask questions about the machine’s necessity.

Service, he said, better service builds trust and confidence in our ability to deliver, he told me with pleading eyes whilst he stood by the CNC machine, resting a hand lovingly on the control panel as if it were his star performer. I could see that Andre was not even that sure about his argument himself!

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Productive allocation of resources

We ran a business diagnostic on his operations. The results were not surprising. His business systems were heavily weighted in favour of the back-office activities of design and production capability. The front-office was very light in sales and marketing.

It was clear that Andre had built his business in the image of his personality, both consciously and unconsciously. He found his greatest meaning in design and production and his thirst for innovation, new product development, industriousness and conscientiousness had resulted in directing all his investment, time and energy into the part of the business that fed his personality attributes.

Immediately we knew where to look and went out to the market. He had a very exciting group of clients. Andre served corporates, big, medium and small business with office furniture. In some cases he secured work from the companies’ CEOs and designed and built furniture for their homes too.

He had a number of independent retailers on his books, some historical sales with a big brand discount retailer and had recently opened up business with a competing retailer group that served the middle market with furniture credit sales. Andre proudly told me how this left him with a well-diversified customer base to counter the risks of an uncertain economy.

Like Andre, many of us have to operate with limited resources. Directing these resources to give us the best result is one of the single biggest challenges we face as business owners. Andre’s ‘spray and pray’ selling strategy was tearing him, his staff and his business apart.

He could never build momentum in any one direction. His sales staff were all over the place and seldom was the same product sold more than three times. His design and machine repurpose costs were consuming the profit he was making and the business started and ended every year as it had started that year. There was no real progress being made.

Market segmentation

One of the first tasks that I set for Andre was to segment his market. This required him to define the multitude of people and businesses that needed furniture.

Once this was done, we organised them into groups with common features. For example, businesses were broken up into corporates, big, medium, and small businesses and small-office-home-offices (SOHO). We further broke them up into regions and type. Some of the types were service businesses, manufacturing business and retail businesses.

Regions located the businesses — provinces and then proximity to Andre’s factory. We indulged ourselves further by organising these businesses into groups that included more features such as ‘care about design or don’t care about design’ and so on.

We landed up with 47 groupings all in all. The next step was to assess the sizes of the groups in market potential. Once done, we combined groups that had 80% similar features and settled on 15 groups of which eight were sizable groups in terms of market potential.

The fight began. Andre wanted to serve six of the eight and include three of the remaining seven since the work would be interesting. I locked the door of the meeting room. At 3am the next morning we had agreed on the single group Andre would focus on. It was to be the SOHO.

With the recession on hand, retrenchments likely and job growth slow, we believed that this would be a growing market. It was already sizable and Andre was getting 37% of current sales from this market. Full of enthusiasm, Andre started to create designs on his pad that he thought this market would love. We produced a ‘research questionnaire template’ for Andre to take to his current customers. It was designed to ask them what design features they wanted.

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Repositioning to achieve focus

What he came back with astounded him. The designs that he had played with three weeks before, after we agreed on the SOHO, were all ripped out of his file and torn up. Back at the drawing board, Andre created final designs that went well beyond furniture features.

They included the method of selling, now that he understood the problems of his SOHO clients. They incorporated annual sales calls to touch up the furniture at no additional cost, giving Andre a long-term relationship from his previous once off sales. It also gave him sight of which SOHO clients were growing; the leap from a SOHO to a medium-sized office for any of his clients was a small one. So too was the design capability that Andre offered and that his factory could deliver.

The designs were also exciting. They gave his clients versatility. A set of three tables could double up as a board room table as well as three separate workstations maximising the use of small spaces. The materials he used gave the furniture a very classy feel, something important to a SOHO entrepreneur who wants to lift his image for clients.

Three and a half years on from our first meeting, Andre’s business is approaching R49 million in annual turnover. He does one thing very well; design, produce, promote and deliver furniture suited to the SOHO market. He is now looking at the early stages of increasing his range to accommodate some SOHO clients moving into medium sized offices.

The lever to get Andre’s business to grow annual turnovers from R20 million to R50 million was largely one thing. He positioned his business to solve the problems of a well-defined customer group.

Checklist

Have you considered the following when choosing your market segment:

  • Separate your market into categories. Now give each category a % of your sales. Who is your biggest segment, and where is there room to grow?
  • If you were to narrow your focus, which segment offers the biggest growth opportunity?
  • Have you created a questionnaire for that segment asking what they want and need from you? You might be surprised by what they say.
  • Based on the above questionnaire, does your product or service offering deliver on these needs?
  • What can you change to meet those needs?
  • What value adds can you offer that will make the lives of your clients easier

Pavlo Phitidis is the CEO of Aurik Business Incubator, an organisation that works with entrepreneurs to build their businesses into valuable assets. Pavlo is a regular commentator on entrepreneurship on 702 Talk Radio and 567 Cape Talk Radio. He can be contacted at www.aurik.co.za

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Performance & Growth

Elon Musk’s Formula For Successfully Growing Companies Faster

There is no denying the many ways in which Elon Musk is unique. There is also no denying the fact that you can learn something beneficial from him.

Manish Dudharejia

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Elon Musk needs no introduction.

Let me start by saying I am a huge fan of Elon Musk and the energy he brings to the business world. His major companies include: Tesla, SpaceX, Boring Company, HyperLoop, Solar City, and Giga Factory.

All Musk companies have a major theme, vision and technology

These companies all have one major theme in common; they are set on pushing boundaries. In fact, this innovative concept has practically become synonymous with Musk’s name.

Combined with groundbreaking technology and a strong passion for improving life (both in and outside of Earth), Musk’s unique vision is one of the most valuable contributions in bringing humanity to the next level.

One his quotes has always stuck with me: 

“If you get up in the morning and think the future is going to be better, it is a bright day. Otherwise, it’s not.”

Related: Elon Musk’s Lessons On Getting To Mars

Musk, the most influential entrepreneur today

Musk is the most influential entrepreneur of our generation. His approach has inspired many others to try new things and to make a real difference in the world. So what is it about his formula that is so special?

Well, truth be told, it’s really not that complicated. The bulk of his strategy can be traced back to several key cornerstones.

Musk is committed to challenging convention

One of the traits that makes Elon Musk so influential is his keen eye for understanding human truth. In essence, human truth encapsulates the deeper meaning behind universally-accepted status quos. In other words, it is the common thoughts and feelings that unite us all.

Musk’s formula for innovation starts by identifying the what and the why of certain pain points in day-to-day life. One of his more recent ideas, from SpaceX towers, aims to change the very perception of air travel.

What is human truth?

The human truth of air travel is that most people do not genuinely enjoy spending hours on a cramped airplane. Travelers like to get to their destinations as quickly as humanly possible. Musk’s ambitious plan is to create a revolutionary rocket system that transports passengers from any one city to another in under an hour.

For instance, a flight from New York City to Los Angeles would take roughly 25 minutes. Perhaps the best part of the plan; tickets will cost as much as a typical economy-class ticket. If you haven’t seen the videos, definitely check out part one and two.

This is not Musk’s only idea (both past and present) to challenge convention. Throughout each idea, the driving force effectively finds inefficiencies and works to create solutions that have never been done before. In many cases with Musk’s ideas, have never even been fathomed.

Related: 5 Habits That Made Elon Musk An Innovator

Musk understand everyone involved is a vector

dharmesh-shah-and-elon-musk

Recently, Dharmesh Shah, founder of HubSpot, got the opportunity to meet and converse with Musk at a dinner for legendary founders at Sequoia Capital. Like so many others, Shah wanted to know what Musk does to create a successful company. Shah asked him: “What’s your advice to build a great company that grows every day?”

Musk is a physics man, and his response reflected this fact perfectly. He told Shah to think of it in simple terms of getting a company from point A to point B. Each person within an operation is a vector that exerts energy to achieve this goal. Everyone has a quantity of both magnitude and direction.

A company’s progress is determined by the sum of all these vectors. If some vectors are exerting energy in one direction, while others are doing so in a different direction, the impact will be sub-optimal. For example, if an employee is exerting a force of 10 in one way, and another is exerting a force of 10 in the opposite, the total impact is zero.

For a company to achieve maximum impact, all vectors must be exerting energy in the same direction. In short, for a company to thrive, all parties must be consistently devoting their efforts to a common vision.

Firmly align team goals with customer needs

One of the biggest problems that plague many companies is a misalignment with internal team goals. When this is the case, misalignment with the customers’ needs is all but inevitable. Maintaining common goals within a company gets more and more complicated throughout growth; even more so when third-parties are introduced to the mix.

One of the basic human truths Musk factors into his business plans is that all people want a positive end-to-end customer experience. A stellar end-to-end customer experience involves outstanding products, sales strategies, and service options. Throughout each venture, Musk’s primary goal is to ensure these components happen.

Related: How To Market Like (Elon) Musk

Perhaps the best example is with his famous Tesla car. Many of the major car companies we know follow a common business model. While most have their own stores, a good portion of the sales aspect comes from third-party dealerships. Throughout this process, the unique brand values are being filtered through a number of different visions and mentalities. In turn, it becomes incredibly easy for core values to get lost in translation.

At Tesla, the authentic products are exclusively sold at their own stores. There are no outside dealerships involved to aid the sales cycle. Service options are available from branded Tesla centers. The Tesla computer system within the cars conducts all of its own updates and is equipped with technology to seamlessly guide users to the nearest Tesla charging stations.

If a user wants to sell their vehicle, they can do so through the Tesla website. At no point in the customer experience does the user need to branch out to any outside parties for assistance. When this is the case, keeping team goals aligned with customer needs is much easier and branded values do not run the risk of being muddled by external mindsets.

Conclusion

Elon Musk has already made a significant impact in improving the way we live. His superlative knowledge and dedication to the greater good is truly a once-in-a-lifetime phenomenon.

However, his core ideologies can be applied to virtually all business models. In 20, 50, or 100 years down the road, my hope is that more people catch on to his profound philosophies and continue to push human development to a brighter future.

This article was originally posted here on Entrepreneur.com.

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Performance & Growth

4 Ways To Make Your Business More Authentic And Successful

How to build an authentic presence that translates to your employees and customers.

Dane Jasper

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My business (Sonic, but not the burger joint) is significantly smaller than most of its competitors, so being authentic is one of our strongest competitive edges. And this authenticity comes in many forms – it’s the people you hire, how well you stimulate engagement, and how you motivate your team. Being authentic in these aspects is not always easy, but as an entrepreneur, you learn that the best things never are.

But, how do you build an authentic business?

1. Hire nice people

Never underestimate the power of being nice. Hiring genuinely nice people has been an invaluable cornerstone of my entire business philosophy. If you hire nice people, they are kind to your customers, who reward you with their loyalty, and that cycle sustains itself. It seems simple, but I’m surprised by how often this idea falls by the wayside.

Related: 11 Steps to Starting a Successful Business in Your 20s

I know what you’re thinking: Well, duh! Because you always hire the best and the brightest, right? Right?!

Probably not. You’re strapped for time, you’re growing at a rate you had never imagined and you settle for Joe, the guy who came in for his interview with his shirt inside out. You can do better. Really take your time, hire an awesome HR team and empower your managers to help hire nice people – this will set the tone for your entire enterprise.

2. Motivate them

So, you’ve hired your nice people. You sent Joe packing and went with Amelia, who took a little longer to find but is a much better fit for your organisation – good for you. Now, how do you get all those nice people motivated to do their best work for your company? Their motivation will come directly from you, from your passion for the industry and the authentic way in which that needs to be communicated.

Remind yourself why you’re pursuing something in the first place at times when that thing is most challenging or your business’s deeper purpose seems murky.

For me, I’m motivated by the fact that Sonic really is fixing the internet in America by giving our customers a fair choice for their internet provider. I communicate this motive with employees at quarterly company meetings, I sit down with groups of new hires every few months to share Sonic’s story, I have lunch in the breakroom, and I never stop reminding everyone ‘why’ our work matters. I authentically care about what we are doing, and I share that over and over.

3. Engage them

engagement-advice

Your vision for your organisation is meaningless unless you share it with the people you need to help you achieve it. They need to know what they are working toward other than just a paycheck.

  • What is the end goal?
  • What is the real purpose behind your mission, your business’s core values?
  • And how are they contributing?

Sharing your vision will allow employees to be a part of something bigger, something more than ‘just another job’, which is much more powerful than a cool, new cappuccino machine. That vision will be the long-term drive of your organisation, and it will push your employees to do their best work. This can be a conversation in the hallway, the beginning of a presentation or a cake delivered to each employee. Whatever form it takes, be relentless.

Related: Top Tips For Building A Successful Business From Your Home

4. Pay attention to the little things

You’ve hired the right people. They’re motivated and engaged. Now how do we keep them happy? First, focus on what key factors make your business special. For us, it’s a multitude of things, but one example is our ‘All Hands’ meetings. This is something we’ve done since the beginning and the impact remains huge.

It’s my opportunity to engage, motivate and reward the people of Sonic. We pass out awards for the month’s standout employees, we talk about the past and the future and we don’t take ourselves too seriously. It’s real. It’s authentic. There is emotion, because I am so very proud of every one of the team.

And, it’s so important. Along with free pizza on Fridays and successful launch celebrations, these meetings bring us back together and remind everyone that they’re part of a team – an especially awesome team.

Keeping these activities happening even with a company’s exponential growth is huge. They are the defining aspects of your entire enterprise and the core of the organisation’s authenticity. Keep what separates you from the competition; compete with them not by emulating them, but by doing the opposite: doing what makes your business genuine and unique. Your customers will recognise it and so will the people who work for you. I assure you it will make all the difference.

This article was originally posted here on Entrepreneur.com.

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Performance & Growth

17 Most Important Performance Management Decisions Leaders Will Need To Make

Is your organisation geared to handle its own growth strategies? Are you sure?

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Roadmap to success

The 17 most important performance management decisions you need to make as a leadership team to build a high-growth organisation. Understand what they are, make them, and your business will thrive.

If you’re awesome, you’ll succeed. If you succeed, you’ll grow. As you grow, the scale will change everything and, then, you won’t be awesome anymore — unless you change a lot of what made you awesome in the first place. This is known as the scale up paradox. In a nutshell, what got you here, won’t get you there! The ability to recognise this and change yourself and your business is what separates great businesses from brands that have faded into obscurity.

Knowing what to change, when to change and how to change is the very essence of scaling up.

Take as an example the way we manage performance. A start-up can run everything on ‘check-ins’. Through frequent check-ins you can zero in on who’s doing what, by when and how. You can keep on top of how things are going and whether you need a course correction. The check-in system is awesome. Until it’s not.

Because you can’t run everything on check-ins when there are 30 people around. The ‘check-in’ system basically means that you are the system. You, the founders, keep everything together. This means you’re the bottleneck. Your personal bandwidth is the ultimate ceiling on your growth. And that is bad news for your health — and your business.

If you’re awesome, and you succeed, and grow, it won’t be long until you can’t sleep because of the many loose threads in your brain: Tasks you need to assign headspace to, projects and people you’re not ‘on top of’, discussions to be had that you can’t get to.

So, to get some sleep, you’ll be forced to take delegation to another level. This is not simply a question of giving away tasks or projects; it means giving away responsibility for entire parts of the business. That’s scary. But if you have great people, it’s also liberating.

Related: 3 Ways To Promote Business Growth In A Troubled Economy

Performance architecture

Now you’re sleeping again. For a while. Because if your people are awesome, you’ll succeed, and you’ll grow, and pretty soon the balls will be dropping again. You’ll realise that what you assumed people were doing, they’re not doing, just because they assumed they should be doing other things. And you’ll long for the days of the ‘check-in’ system when you could be on top of everything through enough ‘check-ins’. But there’s no going back now. You’re too big. You simply can’t check-in with everyone when you’re at or beyond the 30-person mark.

Maybe you’re having a conversation with someone at that point, and they tell you about OKR: Objectives and Key Results. Now there’s a system you can hang your keys on! A rhythm to align on key priorities and targets every two or four weeks (or every month or quarter, if you’re a bit more mature).

Liberation! Suddenly you can be on top of everything without the check-in overwhelm. It’s a thing of beauty, really. Until it’s not.

Because if you’re awesome, and you succeed, and you grow, the day will come when those balls will once again drop. And it won’t be because the senior team aren’t doing what you agreed when you set your quarterly OKRs. It will be because the business is too complex now for OKRs. OKRs still rely on a lot of manual alignment through collaboration and regular ‘check-ins’ at the operating level. Even simpler than that, the balls are dropping because, suddenly, there are a whole lot of new people issues you have never had to deal with before at this level:

  • Accountability vacuums: A rising tendency for important things to fall into ‘no man’s land’ with nobody accountable for them
  • Major differences in contribution: A rising number of people in cruise mode while the rest of the team do all the work
  • Performance politics: Lots of high performers are unhappy because people aren’t being treated fairly. Slackers are getting good reviews and rewards just because their managers are lenient; high performers, on the other hand, are getting the same as them because their team has higher standards
  • Compensation politics: People aren’t satisfied that bonuses and increase decisions are being made fairly
  • High Performance Culture slide: All of this is causing relational friction and culture issues that are impacting performance.

So, right now, there’s way too much going on for OKRs and ‘check-ins’ to work. Things need more alignment and coordination than you’re going to get through your team interactions. You need a new way of aligning the different parts of the business without falling into ‘check-in overwhelm’.

You need a performance architecture with more processes and systems that maintain alignment across teams. Big words. Corporate words, which we know entrepreneurs tend to dislike. But let’s understand them.

Basically what they mean is that, around about this time, performance management needs a major upgrade. Why? And how should you do performance management? Isn’t it an awful relic of industrial-age corporate management, which is why so many top employers are moving to something new?

True enough. The dilemma is that a lot of the new age buzz about liberating talent to thrive without backward-looking performance reviews don’t work in most contexts; most often, it will break things even more than a frustrating, antiquated performance management system would.

The reality is that performance management is much more complex than an annual review and, furthermore, is definitely not a ‘one-size fits all’ approach.

Related: 3 Strategies To Implement A Culture Of Innovation In Your Business (Without Blowing Billions)

If you’re scaling up and keen to build a scalable performance management system that works in your context (and at the same time reinforces your greatest culture assets), here are 17 of the most important performance management decisions you will need to make as a leadership team.

Performance management intent: What is the main goal of our performance management system? Accountability for performance, coaching for development and improved performance, or both? Harvard Business Review says this is a 70-year old debate. Don’t assume your other leaders see this the same way you do.

Individual appraisals: Do we believe that focusing on individual appraisals would result in better — or worse — business performance? Does it adversely affect team work and a ‘looking beyond my scorecard’ mentality?

Standardisation: Given that various parts of the business are so different, should we be doing the same thing across the business? How do we do performance management differently (if we even should) in areas as different as engineering, sales and customer service?

Target setting processes: Should targets be set from the top down, bottom up, or some combination of the two?

Nature of targets: Should performance targets be activity targets, behaviour targets, intermediate outcome targets (closest to ultimate outcome, that are fully within control) or ultimate outcome targets (even if not within our control)?

Bonuses: Should we link rewards to personal performance ratings? Some say that you should just pay really well and bake everything into a fixed bonus, or into basic compensation, and fire the non-performers. Which works best?

Bonus pool formula: Which proportion of an individual’s bonus should be determined by either individual contribution versus the performance of their team or division, or the business as a whole?

Long-term incentives: What percentage of variable incentive remuneration (VIR) should be long term, and which should be deferred to future years/long term (LTIR)?

Increases: How should performance ratings affect salary increases?

Formal or informal feedback: What is the right balance between formal appraisal and informal continuous feedback?

Feedback sources: Are there objective measures? If not, who gives input to the appraisal? If there are multiple parties, how are their inputs weighted? Is a line manager’s feedback more important than multiple, non-line individuals or ‘bosses’?

Performance appraisal scale: How do we summarise individual performance assessments?

Appraisal frequency: How often do we appraise performance and give feedback? Would this be per assignment or based on time, such as weekly, monthly, quarterly, bi-annually or annually?

Bonuses versus career investment and opportunity: How do we decide which individuals to prioritise for investment in growth and promotions? How do we balance bonuses versus investment in learning, development and promotions?

Dealing with high performance that doesn’t produce results: What do we do when people perform well, but don’t deliver the business results due to issues outside their control?

Performance management roles: Who does what in the performance management process? What belongs to HR? What belongs to line managers?

Performance management software: When do we move from Excel (or similar) to software products that streamline this process? What are the best packages for our business? (Small Improvements and Engagedly are our top recommendations).

Related: Has Your Business Stopped Growing? Here’s How To Turn Things Around

Walter Penfold, MD Everlytic

walter-penfold

  • Fire faster. Bad performers are toxic for the culture. Use the three-month probation period brutally. The culture impact of firing fast is much superior to that of firing slow.
  • Attune to sentiment. Many poor performers are great at upward management. They can look like performers to you, but people around them know the truth. Stay attuned to, and respond to grumblings.
  • Give immediate, direct feedback on any performance issues. This should never wait for a formal performance review. We do a formal 360-review once a year.
  • Keep it super simple to start — we definitely over-complicated it.
  • Centre on weekly one-on-one meetings. Then performance management becomes the way you work, not a chat between strangers once a quarter.

Stuart Townsend, Edge Growth

stuart-townsend

Be realistic. Our training budgets are not realistic enough to enable people to build the competencies we need them to have to deliver the outcomes we expect.

Brad Magrath, Co-founder, Zoona

brad-magrath

  • Invest in growing your managers. We over-estimated the ability of young, inexperienced managers to have honest candid constructive conversations. If they suck at having good performance management discussions, the whole system breaks down.
  • Non-performers weren’t scored as non-performers, leading to ugly train smashes down the line.
  • Bad managers give good ratings to bad performers.
  • Invest in creating role clarity. Performance management didn’t work well initially because we lacked role clarity and agreed metrics.
  • Focus on behaviours, not just outputs.
  • Ensure managers are deliberate around context of feedback: Is it coaching, is it performance, is it brainstorming? Be clear on why the conversation is happening so the message is not mixed.
  • Get huge buy in from the beginning — we didn’t do enough of this. Then people don’t actually do appraisals well and the whole system breaks down again.
  • What you measure is what you get — A-players like the idea of being performance measured objectively. Make sure the metrics are totally objective and have integrity.

The reality

The ability to recognise that what got you here won’t get you there is the first step towards building a high-impact, significant business.

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