A new breed of successful business

It is time to change how we measure and interpret success for businesses today. To introduce a definition of business success that is more aligned with our changing business environment i.e. a drive for innovation mixed with a growing distrust of large corporations and lower cost of starting new businesses.

It used to be the case that, to be considered a “success”, a business had to be BIG and have been established (almost) forever.

As a consequence we saw businesses undertake huge expensive acquisition trails to bolt on new businesses and build themselves as big as they could as fast as they could. Its not hard to find talented individuals who have been on the receiving end of redundancies introduced post acquisition to “maximise synergies”. Hoped for synergies rarely play out in the end.

BIG was once good.

Similarly, Jim Collin’s landmark “Good to Great” was attacked as many of the “great” companies profiled in the book went under or got taken over not long after publication. Critics singled out crusty old companies as better examples as these had survived since say the 1880s.

Being able to prove that a business was old and crusty was once good.

Both measures miss the point – BIG and long established companies are rarely great and are therefore rarely a suitable measure of business success.

What is a better measure of business success for the 21st century?

I think a better measure of business success is the rate at which companies start new spin-off companies to explore new markets and opportunities. Rather than judge the originating business or entity on its sole survival and relative size, why not measure it instead on the number and diversity of new businesses it has spawned.

By adopting this alternative mindset of ‘success’, companies would be encouraged and rewarded for taking risks and innovating with new ventures. Promising management teams and future stars could be pulled together into teams to test new market propositions and obtain valuable experience and feedback in the process. The stigma of failure is drastically reduced (“as hey, these are experimental missions”) and with each setback the successful business genes are weeded out and are passed onto the next iteration of the business.

This way business success breeds business success.

And so tomorrow’s great businesses would pay tribute to their business ancestors whilst gazing down proudly (at their rapidly expanding and divergent) business offspring.

What are your thoughts on this alternative interpretation of business success?

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