An old tale with a new take
What Aesop’s The Fox and the Grapes can teach us about strategic growth in business.
The Fox and the Grapes
A famished fox saw some clusters of ripe black grapes hanging from a trellised vine. She resorted to all her tricks to get at them, but wearied herself in vain, for she could not reach them. At last she turned away, hiding her disappointment and saying: “The grapes are sour, and not ripe as I thought.”
People who speak disparagingly of things that they cannot attain would do well to apply this story to themselves.
Successful entrepreneurs don’t complain, they find solutions.
Putting key lessons into practice
Not every opportunity is suitable for every entrepreneur, no matter how famished they might be for new ideas — it’s sometimes better not to act on impulse and wait for more strategic positioning before chasing a new opportunity.
It doesn’t mean giving up, it means learning to look at a problem from different perspectives.
Hastiness and impatience lead to loss of clarity when making strategic decisions, and increase the risk of making decisions based on false assumptions. Patience, flexibility, methodology and good timing are important strategic elements of success in an entrepreneur’s toolbox; especially as problems become more complex and often involve many different areas and levels of professional knowledge and experience — passion isn’t everything.
Just because she wants the grapes doesn’t mean it’s in the old fox’s interests to have them in this manner and at this precise time. If she’s a successful entrepreneur, she might consider herself lucky she can’t reach the grapes, this doesn’t mean she’s going to give up; instead, she’s going to take a step back and approach the problem from a different perspective.
Finding a different angle
One entrepreneur’s opportunity is another’s complication and risk — they should pick their projects carefully and wisely. To a given problem, there are given solutions, depending on experience and levels of maturity. There was a time when the famished fox would have found a way to reach such low hanging fruit.
Instinctively, she may be disappointed she failed, but did she really give it her all? Her pride, sense of self-efficacy, curiosity and drive nags at her — there was a time when her emotions would have got the better of her — thinking the problem wasn’t with the grapes but with her attitude.
But over the years, she’s become more measured, her motivations shifting to new interests and areas of expertise.
She now has a different understanding of herself and her capabilities — she knows how to take a step back, and view the problem from a different angle. She has new skills and a mindset better adapted to visualising the big picture and thinking strategically.
The benefits of experience
After years as an entrepreneur she now has other strengths to take her projects to a new level. Her strengths lie in bringing together the different elements of her business model. Being unable to reach the grapes is a temporary setback. She knows she can’t completely eliminate risks; her aim is to reduce them to a level she can manage.
She’s done the research and has a great business idea and plan for how to process the grapes and add value by commercialising a consumer product for which she has a clear vision and a distinct market segment. She didn’t come to this spot by accident; these grapes are of the Fragolino varietal and a perfect match for her strategic needs and objectives.
She’s been working on her business model for weeks, and tried many different ways to ensure differentiation of her product in the market. According to her evaluation, backed by solid scientific and market research, the Fragolino grape is the key resource she needs for her product value proposition.
Entrepreneurs are risk management specialists, problem solvers. She needs to figure out how to harvest the raw materials she needs — a key activity in her business model — and which are currently out of reach.
A solution would be a key partner to help her secure the Fragolino grapes. A partner for whom this low hanging fruit isn’t too high; who can organise the crucial supply chain to bring the raw material to the processing plant, to be bottled, labelled, boxed and shipped to distributors.
A partner with the passion and drive to accomplish this key activity in her business model; and who could benefit from her strengths as a strategically minded experienced entrepreneur.
Leveraging partners for growth
Along comes younger fox, an aspiring entrepreneur, who spots the grapes. The older fox explains how she’s too old to take advantage of the opportunity, but has a lot of business experience and a great idea for exploiting the resource, if he’s interested in taking care of that key activity — thus turning the entire operation into a profitable business.
He certainly would love to get involved in the wine business, but he’s unsure, nervous, fearful and thinks entrepreneurship is too risky, preferring a steady job. However, she motivates him, explaining that risk is relative and requires a solid plan to mitigate its negative effects.
With her plan and his efforts and resolve they can reduce any risks to a lower level than a steady job could offer. Plus, there’s the upside benefit of much bigger financial gains, quality of life, and doing something for which he has a passion.
Combining knowledge to become a success
She offers to be his business partner and mentor; he’ll learn about the wine business, research, strategy, negotiation, how to effectively communicate with people, develop products, marketing, sales.
In her new role as mentor and partner, the old fox isn’t full of herself, thinking she knows everything. Rather, she sees the role as a great challenge and responsibility. This will be her first time as a mentor and she’s sure to learn a lot too.
They’re ready for business. This is exactly the sort of challenge the older fox loves and for which she has a passion. She knows these grapes are a special type with a unique strawberry-like taste, and perfect for small niche premium production runs targeted at luxury restaurants and fine food shops.
The younger fox benefits from her expertise and strategic planning vision, and she from his energy and resourcefulness. They are different types of entrepreneurs, each fulfilling a different function in the running of the business, contrasted yet complementary all at once.
Together they are stronger, than they would have been apart
As a partnership they stand a better chance of succeeding where alone they would have failed. At first, the old fox may have failed, but she failed fast, and quickly pivoted to find a better solution by looking at the problem from different angles.
Reframing the questions, she sought a better fit, seeking answers according to realistic facts on the ground, personal desires, strategic intents and motivations, business model experience, maturity and needs required for bringing about a successful start-up launch.
By taking her time, and a step back, thinking more methodically and strategically, she was able to take several steps forward, make smarter decisions, and a better plan — thus creating the environment for a more efficient and profitable way of working.
With the big picture in mind, she was able to zoom in on specific problems and find the ideal strategic partner to help her fulfil the needs of her business model. All preparation for the final launch action are falling into place, increasing her chances of not failing, and reducing risks to a manageable level.
If all goes according to plan, she’s already thinking about the next growth phase — to scale the business by raising capital, thanks to a carefully prepared business plan.
Famished for ideas, the old fox was determined not to quit until she’d discovered the right strategy. She would not act merely on a whim, but instead took a step back to properly calculate the risks and rewards to secure a higher probability of success — and by mentoring the younger foxes, took her game to a whole new level of personal growth and fulfilment.
For the old fox, it is better to have 50% of a business than 100% of sour grapes; or wait 50% longer for a 100% better chance of reducing risks and avoiding failure.
The younger fox thinks it’s better to have 100% of an experienced crafty fox as a mentor and actual hands-on learning-by-doing experience, than a 50% chance his office job will be unfulfiling, and teach him few practical skills with lower potential financial rewards. It’s a win/win.
Your Organisation’s Values Must Generate Value – Otherwise Why Have Them?
Your values have to be the foundation of your organisation’s present AND its future if you are going to ensure sustainable value for your stakeholders.
In the modern world of business, where social media compels organisations to tell the truth, transparency and ethics have become essential. Consumers no longer only care about getting value for money, but also about what your company values and how that transpires in what you offer.
Defining a set of values that describes your organisation’s heart, i.e. your organisational culture, is immensely personal and, if lived, immensely powerful. Successful leaders realise that an important factor in building brand loyalty is getting their organisations to wear their proverbial hearts on their sleeves and to authentically honour it in the way they do business. Sadly, many organisations define their values as a tick-box exercise that serves as mere decorations for their website.
Just think of infamous examples like KPMG, SAP and Steinhoff as well as more recent culprits like Bain and Gartner: Besides the millions many of them had to pay back, their severely tarnished brands are still costing them dearly. It is clear that if the values you proclaim to espouse are not overt in your client-facing staff and the way you do business; this lack of integrity will eventually catch up with you. As what happened with KPMG, this not only leaves you with less clients, but with a diminished team too. High potential employees do not want to be associated with leaders who don’t honour the organisation’s values.
Related: Here’s How To Value Your Business
For the organisation’s values to truly become visible in how they engage and do business, it has to start with the leaders and their message. Those we lead must see it in our example on a daily basis. Our organisation’s values serve as a moral compass, but if the leaders responsible for steering the ship do not abide by this compass, our crew can’t get us to where we want to go. Our team members either follow us, become disengaged or abandon ship. They will not make an effort to uphold the values within a business where the leaders themselves disown it.
As a business, we make a certain promise or commitment to our clients. However, if our values do not underpin this promise and if we, as the leaders, don’t role-model our values to achieve this, it remains an empty promise. Therefore, it is important to keep the following aspects in mind when selecting or re-viewing your organisation’s values:
- Before defining your values, you should ideally define what kind of culture you want your values to underpin. Consider what is important to you and what is important to your customers: Is your organisation’s culture customer-centric, as it aims to exceed customer expectations, or quality-centric because of its strong focus on excellence? Perhaps your organisational culture leans more toward being cost-centric, as providing real value for money is important to you. A service orientated organisational culture, on the other hand, implies that providing your customers with the best possible experience is top of mind for you. Your organisation’s culture could be one of the above, or your culture could consist of a bit of an eclectic mix.
- Once you have defined the above, choose values that will help your desired culture become a reality and that your team members and customers will buy into. Again, ensure that it captures the heart of your organisation.
- Values are personal and we all interpret them in our own way. Although we don’t want to promote a homogeneous culture, we do have to communicate what we mean by our values. Therefore, the next step is to craft a set of behaviours that describe how the individuals in your organisation will live these values. Again, it is important to emphasise that the example must be set by the leaders but that it is the responsibility of every team member to role-model these behaviours.
- Finally, your organisation’s values must come alive and inspire, as they are intended to, and it is your responsibility as a leader to make this happen. Ask your team and your customers to tell you how they will feel if these values are lived authentically, and then measure the organisation against their feedback. If your team and your customers do not experience your values in this way on a daily basis, chances are your values are probably still dormant.
It is the responsibility off all leaders to inspire hope and trust in the organisation’s future in good times as well as bad times. To keep your team engaged, you constantly have to paint an emotive picture of what the future looks like for your organisation. If you connect this picture to your values and role-model them as a leader, they become a powerful tool for fostering the emotions and engagement that will help your team members buy into your vision.
How You Can Achieve Growth Through Access To Markets
If your goal is to scale your business, you need to increase your sales and access to markets. We found the best way to do that was through key strategic partners whose existing clients were our target market.
Many sales-led organisations have come to the same conclusion at some stage in their business growth life-cycle: In order to build a sales-led business for scale, you need to adopt a multi-channel sales distribution strategy. In our world, this means a combination of direct sales (boots on the ground), digital marketing and strategic partnerships.
After five years we had grown Merchant Capital as far as we could organically. We needed a much larger sales distribution channel. Understanding the need for a multi-channel sales distribution strategy is one thing, execution is something else entirely. After paying significant school fees, our strategic partnership distribution strategy was crystallised, and off we went to bring our chosen partners on board.
1. Finding strategic partners
Re-calibrating our sales strategy led us to the conclusion that we needed a strategic partner who could bring us ‘one-to-many’. In other words, we needed to identify potential partners (‘one’) who have ‘many’ sweet spot clients who are also our target clients, and whom they are already servicing with other products daily.
The end result of this three-year process has been strategic partnerships with Standard Bank and Discovery Insure. In the case of Standard Bank, every business that utilises a Standard Bank point of sale (POS) system can apply for a cash advance from Merchant Capital. Thanks to the partnership, Standard Bank POS merchants can access a cash advance within less than 24 hours of application.
It sounds incredibly simple and straightforward, but the process of identifying the right partner, creating the value proposition and then building a relationship that can result in such a partnership is anything but.
The most crucial element in this process was identifying partners who could benefit as much from a relationship with us as we could from them — in other words, ensuring a strong mutual value proposition.
When you have a business need, it’s easy to convince yourself that your prospect or potential partner needs you as much as you need them. Unless you are absolutely sure that this is the case however, there’s a strong possibility that you end up having a life-changing initial meeting and then never hear from them again.
This can happen for one of two reasons: Either you haven’t found the right partner who will also benefit from a partnership with you, or you haven’t been able to adequately distil that value. If this happens, very often you’ve missed your opportunity and won’t get a second chance.
We therefore had to be extremely disciplined in identifying which partners we wanted to approach. We focused on removing any subjectivity from the process by building an objective ‘partner scorecard’ that allowed us to weight certain attributes of the partner (such as a large client base, deep client relationship and mutual value proposition) with what we could offer them. This empowered us to make educated decisions.
2. Making first connections
Identifying the right partners is only the first step — now you need to make contact. By design, the partners we had identified were behemoth corporates with much larger priorities than meeting us, and convincing them on the upside of a strategic partnership needed to be robust and well-articulated.
Step one is getting your foot in the door. We began the process by identifying ‘champions’ within the partner organisation. This process takes time. We were able to secure meetings and found that running pilots was a good way to provide demonstrable evidence of the proposed ‘win-win’ proposition.
Early on in a business life-cycle (before any traction and brand equity exist), we found that leveraging off our network of shareholders and mentors to make introductions to the appropriate decision-makers within the organisation was of great assistance.
When we signed our previous investment deals, this was actually a key consideration for us. For obvious reasons, growth funding holds value, but the network and mentorship that the right board and shareholders bring to the table can be much more valuable.
Until you’re able to build brand equity and gain traction with a partner (or client), the right networks, introductions and referrals help you secure the meetings you need to prove yourself. And then you need to start small. Don’t expect a meeting with the CEO. Start with someone who could be your champion within the organisation.
3. Finding your champion
Finding a business sponsor to champion the partnership within the corporate partner is fundamental to your overall success. They will understand the internal friction and potential hurdles in navigating the naysayers within the organisation.
There will always be people, and rightly so, who challenge the partnership and ask why they can’t just do it themselves. If you don’t have an internal champion who is engaged and passionately buys into the partnership, then the initiative will most likely fall over and die.
Being the first mover in a partnership with an innovative start-up has many advantages if the product takes off. Often, these people want to be involved on the ground floor.
That said, big corporations are still taking a chance teaming up with young companies (brand risk and financial losses, to name a few). The upside of having already landed a smaller partner where significant traction can be demonstrated goes a long way in softening the initial concerns and risks from the large corporate’s perspective.
4. Nothing worth having can be rushed
The one word that comes to mind when thinking about this journey and the past three years is grit. In our experience, landing great partnerships takes many years of relationship-building and demonstrating solid business metrics and track record.
As I’ve already mentioned, our discussions with Standard Bank began three years before doing the deal. What we found useful in the early days of the partner discussions was communicating that in the next quarter we were going to achieve certain results and then coming back the following quarter and presenting the fact that we had hit our milestones, or hopefully exceeded them.
Just as you would do with an investor, this built a track record and credibility. The rhythm of checking in every few months and reporting back on progress is a great way to build the relationship over time without being too pushy as well.
Pulling it all together
There are two types of growth: Organic growth and scale. We’re an organisation that wants to scale. We’re aiming for exponential growth. This wouldn’t be possible without exponentially increasing our access to market.
We identified that the best way to do this was through the right strategic partner, but there are many channels that business owners can consider.
The important thing is not to just do what you’ve always done, unless you’re comfortable with organic growth. Evaluate your current model, and critically examine what you need to do to increase your sales, distribution and access to market. There is no one right way to do this. It took us time, and we needed to learn a few tough lessons before we were confident in the direction we wanted to take.
Related: My Business Is Growing… What Now?
5 Lessons On Scaling Up Your Company From An EOY Winner
It takes a combination of grit, hard work and the right strategies to navigate the challenges of the scale up journey. What do some entrepreneurs do differently to make it to the top?
Building a successful company is really hard. Even when you have made it through the start-up phase – product development, market fit, building a team, earning first traction – the process of scaling up remains a challenging road.
Louw Barnardt CA(SA), recently named the Emerging Entrepreneur of the Year at the Sanlam/Business Partners Entrepreneur of the Year® Awards, shared his five top lessons learnt from fast-growing clients and from their own journey of scaling up Outsourced CFO to twenty five full time professionals.
“There are many stumbling blocks that hinder exponential growth at the scale up phase. Successful start-up founders do not always have the right skill set and experience to build a business from five to fifty people or from twenty to two hundred.”
Louw and his team have taken the concept of an ‘Outsourced CFO’ – a go-to finance person for emerging companies – and built a very exciting business from it. “There are hundreds of lessons one learns on the journey of building a scale-up company. These five stand out among all of the biggest lessons learnt.
1. Invest in People
Doing business is all about people. In start-up phase, founders are able to manage almost everything. From the social media post to the invoicing to the recruitment – it all falls on you. One founder can manage this for a short while and a founder team for a bit longer, but somewhere between five and twenty people this changes. The founders can no longer make every call, have every meeting, answer every client query.
It’s critical to build a solid leadership team and then to equip them with enough autonomy and authority to run with the various portfolio’s within the company. Put a head of HR, head of sales, head of client engagements, head of operation and head of finance in place as soon as you can and keep investing in them – it’s the only way to scale out of start-up mode.
2. Manage Cash Flow
The finance function sits at the heart of every business. If the numbers don’t add up, everything comes to nothing quite fast. Founders need to make sure that they have a firm eye fixed on financials. New cloud systems enable entrepreneurs to have access to every detail of revenue, profitability, debtors and cash flow in real time.
That’s right – exact live financial information at your fingertips for decision-making. Foreseeing cash crunches ahead of time and actively being able to navigate to avoid them makes all the difference in the scale-up process. Growth eats cash, so be sure to manage yours on the way up.
3. Streamline and Automate
A start-up can afford to do what needs to be done in the moment. Scale-ups cannot. Automation of company processes is key to enable scale in various company functions.
Automate your sales process with a tool like Sales Force or HubSpot. Automate your marketing with a tool like Hootsuite. Automate your finance with a tool like Xero. Automate your company culture input with a tool like Hi5. Putting a good system in place and investing in the understanding and utilisation of all of its functions is a prerequisite for high growth.
4. Prioritise Strategy
As execution becomes a bigger and bigger part of your company, the strategy that directs that execution plays an ever-increasing role. The most successful management teams set and stick to good habits around strategy: Annual breakaways to direct long term strategy. Quarterly strategy days to cement key strategic priorities for the next 90 days and the likes.
It may seem counterintuitive to have your full management team out of action for so many full days of work, but putting the right strategy in place to execute is the real deep work required to scale.
5. Brand and Awareness is key
The value of owning a top brand and of being top of mind with all your stakeholders cannot be overstated. A stronger brand lifts the market’s perceived value of your offering. Continuously starting conversations and finding ways of reminding your networks and target market of who you are and what amazing things you are doing opens up ever-bigger opportunities that play a huge part in creating scale for our top entrepreneurs.
“Building a company is hard work. But if you do it smartly, the juice is worth the squeeze many times over. Make these five lessons your own to hack the scale up journey as you build the business of your dreams.”
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