WSJ's The Experts
This article originally appeared on WSJ.com The Experts.
When founders launch their companies, they often thrive by targeting underserved customers that competitors have ignored. They excel in speed, experimentation and a stream of innovation. But as companies get big and more bureaucratic, internal issues often steal attention from interactions with customers. Senior executives spend more time optimizing functions and negotiating among them. Innovation gets handled centrally, far from the front line. Customers are neither involved nor, in some cases, even welcome.
And growth slows or even grinds to a halt.
To counter self-inflicted stall-out, I offer this solution: micro-battles.
A micro-battle is a discrete, customer-focused initiative that can be pursued by a small team. Micro-battles aim to increase sales by gaining market share or establishing a foothold in a narrow category, or by taking share from a competitor. What’s more, micro-battles allow companies to learn lessons that can be applied to other parts of the business.
Unfortunately, many companies don’t pursue a micro-battle strategy. On the contrary, they tend to have revenue targets that, largely for accounting reasons, are rolled up by geography, category, brand or product. The result? Broad targets such as “Let’s grow sales of gardening and landscaping equipment on the West Coast by 4%.”
A micro-battle, by contrast, narrows the aperture: “Let’s win 50% share in Southern California of the do-it-yourself gardener business in cooperative hardware chains, by displacing Bad Trimmer Co.” Defining micro-battles takes work: You have to know the most profitable customer segments, the reasons for their preferences, the channels they use and how your competitors stack up in each area. You must understand the real economic value of these customer segments, and the threats of the most relevant competitors by each sales channel.
Committing to 50 or so micro-battles over the next six months is very different than debating the mathematical allocation of targets across the entire business. And that’s the point: Micro-battles force everyone to behave like insurgents, focusing only on what is essential to meet a narrow goal. Choosing which micro-battles to pursue involves a discussion about how your company would win each one.
In the Southern California garden equipment case, for example, that might mean the company needs to win in the most important sales channel – the cooperative’s website. Likewise, executives must be sure that the cooperative’s channel partner stores never run out of stock, so the company can’t even launch an equipment offer until it fully sorts out the logistics.
Micro-battles also force you to rethink how you organize to sell. I don’t mean a massive top-down reorganization, but rather assembling the right teams for each battle. Start by assigning joint accountability to, say, the global head of midpriced garden trimmers and the account head for DIY cooperatives in California. Next, assign someone from each key central function, such as the supply chain and customer analytics. Both probably work for headquarters, far from the heat of the micro-battle, so they will need to be embedded with the team. The point is to assemble a cross-functional team that will live and fight together.
With dozens of competitive battles happening around the world, the role of the center must change. Some teams will succeed while others fail, and the center needs to help them all learn quickly. To make the right midcourse adjustments, the center needs to collect and respond to customer, channel and competitive feedback. It should encourage the different teams to share what is working for them.
For the teams that log initial wins, the center should move fast to scale up both winning propositions (what and where you won) and repeatable models (how you won). The point is to find out what works and do it repeatedly in as many places as possible.
Waging micro-battles helps a company do several important things:
Move faster. Micro-battles increase the cadence of the organization by tuning to the pace of the market instead of calendar-based budgeting or planning cycles. I’ve seen successful companies break down micro-battles into 30-day sprints. Executive meetings focus on reviewing dozens of battles in progress, each of which reports every 30 days on missions accomplished or destroyed. That way, executives can adjust resources quickly.
Raise up the voices of customers. As decision-making switches to micro-battles, the voices of customers dealing with the company’s front line grow louder in executive meetings. Discussions might even center on how to support individual customer negotiations.
Improve on specific, not general, abilities. This is another way to keep that entrepreneurial mojo, even in a large company. Too often, senior executive teams favor horizontal, internally focused actions like “building a world-class finance function.” Micro-battles reorient the organization to vertical initiatives, such as “winning in garden equipment Southern California.” That vertical goal that might well require having a finance person embedded in the California team, to help out on partnerships with key distributors.
Micro-battles, with their bias for action, help revive customer-led growth. Senior leaders who empower dozens of teams to wage micro-battles will find that their company, no matter how large, can become an insurgent once again.
James Allen is co-leader of the global strategy practice at Bain & Company and co-author of The Founder’s Mentality.