All successful teams have a playbook that they use to navigate through the game. Which play to call next is determined by referring to a well-defined (and refined) set of plays that a team has practiced again and again in response to each anticipated situation that may come up during a game. While the specific tactics will vary from playbook to playbook, there is generally a common underlying pattern that will remain constant. This is also true for the Entrepreneur’s Playbook.
All companies, and not just Silicon Valley techie startups but small businesses alike, go through four distinct, yet predictable stages. This phenomenon was identified by Bobby Martin, author of The Hockey Stick Principles, a book based off his study of 172 companies, many of which you’ve probably heard of. These four stages can vary in appearance depending upon company size and industry, but should be recognizable enough for any seasoned entrepreneur to apply.
In order, they are:
Tinkering – You are feeling the business out. Perhaps not yet totally convinced of the veracity of the idea, you retain your day-job as a main source of income while experimenting, seeing what works and what doesn’t. At this stage you are by no means fully committed to the business.
The Blade Years – The beginning of the hockey stick, the blade years are the most difficult time for the business owner. The idea is still unproven and will perhaps undergo major changes here, but you are all in and working full time (and then some) trying to make it happen. Profits – if there are any – are extremely thin. Typically, this will last three to five grueling years. No more than half of all businesses will ever make it out of the Blade Years. Some stagnate here while others are forced to leave the game entirely.
The Growth Inflection Point – As the name implies, this is where the company finally finds its break. Having refined the business processes and product all through the Blade Years, the business is ready to capitalize on opportunities as they come. This is the bend in the hockey stick, right before opportunities shoot upward. The challenge is positioning the company to maintain the coming growth.
Surging Growth – The two words every entrepreneur wants to hear! Those that make it here experience rapid growth. Entrepreneurs at this point must transition into more of a leadership role or find someone else who can.
After asking yourself where your business is on this curve, the next logical step is to compare how closely your business tracks with the model. Are you a few years into going full time with it and still making tweaks? Sounds like you’re doing The Blade Years right. Adjusting an idea on the side to see if people are willing to pay for it? Consider how much longer you want to be Tinkering.
The focus of most of the conversation in The Hockey Stick Principles naturally falls on the first two stages because that is where the majority of business owners are, and, sadly the furthest most of them will ever achieve before leaving the game. Fact is, many never make it out of The Blade Years, succumbing to the stress on their lives from the small or nonexistent profits and time commitment of doing everything. There has got to be a better way!
The Better Way
Fortunately, there is a strong correlation between this model and the roles and functions we defined in previous posts. Which stage of the hockey stick you are in determines which of the three key roles of business you will need to perform. While there isn’t really a fully functional business when you’re Tinkering, of course any work there is to do will most likely be done by you serving as the Technician. There is a great need for the Entrepreneur however, to get the vision of the company squared away before it becomes real.
Transitioning into the Blade Years means even more of Technician work for you, as you will likely lack the margins initially to bring on many other staff members but you will (hopefully) be filling up with work as you advance through. With or without staff, the Manager is still required to define and refine the business model during this stage, of course in full alignment with the Entrepreneurial vision. Developing the Manager role will be essential, as you will need a cross functional team to prepare for any substantial growth.
A shaky foundation will eventually give way, and could cause the whole business to come crashing down. If the proper systems are not put in place during the Blade Years, then the stresses brought on at the Growth Inflection Point will show their accumulated fractures. These issues can be in any area of the business; hiring and management, order fulfillment, billing, etc. A small issue in a small business becomes a big issue in a big(ger) business.
Finally, Surging Growth presents its own unique set of challenges. Managing rapid growth is an ongoing struggle, and the business owner will have to change just as rapidly. If they cannot transition into an executive role, they will need to hire someone who can and relinquish some control to a CEO and perhaps board of directors.
Your Playbook for a Winning Team
As with anything in business, this is a general set of observations that have been shown to apply to many different situations. Just because stock and bond prices tend to move in opposite directions does not mean that this specific stock and that specific bond will always go against each other. Certain parts of the hockey stick model may match up better than others with your business at different times, but the underlying principles ought to hold true.
The final warning when using the Entrepreneur’s Playbook – don’t rush it. If you are in the Blade Years, you’re there for a reason and there’s a particular job to do. Trying to rush into the Growth Inflection Point, while understandably tempting, can ultimately destroy your business if you don’t yet have the necessary procedural and operational details that take time to develop and are crucial to support growing organizations. Remember, Dream BIG, Start Small! While you may have grand visions of becoming the next Apple, recall that Apple existed in The Blade Years long before most people bought their first Mac. If Steve Jobs had tried to sell your whole city their Macs before he had the processes in place, then we likely would not be discussing Apple now.
So, if you want to play in the BIG leagues, use this model to create your own playbook. If you find that you’re more cut out for running the plays rather than creating them, do what all the most successful teams do and hire a coach. A seasoned coach who has the demonstrated experience in creating playbooks can help lead your team through championship performance year after year.