From niche market leader to industry fixture23rd April 2015
Small, fast-growing businesses, initially the underdogs, can end up as market leaders in their chosen niche. What to do next? Some businesses will be comfortable with slower growth, focusing more on cash generation. Others might look to M&A activity to stimulate the next phase of growth. Others still will attempt to continue to grow organically by investing in the penetration of new markets.
TIM Group is following this latter path. But we’re learning that the second and subsequent markets make life much more complicated. Take company direction and team spirit. When we were small and focused on just one market, our direction was obvious. We could (and did) take team spirit for granted. We felt we knew instinctively what was required of us, roles were fluid and we could assume individuals would adapt to each new challenge.
As we grew larger, and entered new markets, we found that both company and individual objectives are less clear. From the company point of view, how much should we invest in defensive measures for our existing products and services? From the individual point of view, how do we ensure the teams understand the importance of the decisions we reach, and rally behind them? As we learn about a new market, how do we ensure we share the knowledge about the peculiarities of each market? How do we keep what may now be very separate teams motivated and focused on common goals?
As our set of services has become more complex, and teams more diversified, we’ve learned that the following operating principles really matter:
- High performing individuals: we encourage high performance by, for example, holding constructive performance reviews that focus on an individual’s level of impact
- Teamwork: we encourage teamwork by, for example, using company and individual Objectives and Key Results (OKRs) that align our activities within and across teams.
- Continuous improvement: as an organisation and individuals we encourage continuous improvement, reflecting and adapting our practices based on experience
- Mutual trust and respect: we’ve found that mutual trust and respect is the bedrock of all our efforts and also cannot be taken for granted. All our operating principles rely on, and reinforce mutual trust and respect. For example, we encourage curiosity about others’ views, using the Eight Behaviours of Smarter Teams*
In short, as we grow from niche player to industry fixture, we are having to grow up and adopt what we regard as best practice in the critical areas above.
Some of the old crowd, who have been with us from the beginning, did not take easily to new processes. Many felt the informality of the old small company was an attraction. New employees can be sceptical too. As one way to help rally support from old and new, we developed an operating slogan: “Our best today, better tomorrow.” This slogan paraphrases a famous operating principle for the Washington Post, in the era of Ben Bradlee. Ben wanted to put out his best paper today, but a better paper tomorrow. All our operating principles are aimed at improving our company performance, but our operating slogan says to the old crowd “we are all getting better,” and helps the new crowd understand that we are a company that takes continuous improvement seriously.
We also set out a vision for where we want to get to, taking account of where we have come from. Today, we distribute and value trade ideas from around 4000 contributors to several hundred buy-side firms. Tomorrow, we aspire to quantify and distribute electronic advice to every financial desktop. This vision is critical to the way we set our company objectives, individual objectives, and ultimately how successful we are in breaking out of our initial niche market.
This series of blogs describes our experiences with the operating principles we have adopted. We are a relatively small company, which makes it easier for us to adopt and spread the principles we regard as best practice. Easier – but it has not been easy!
*The Eight Behaviours of Smarter Teams by Roger Schwartz and Associates