What is Stage Five ?
Sand Hill Partners defines Stage Five as a point of enduring excellence achieved through full leverage of Sand Hill Partners “eight critical success factors”. The eight factors create an internal ecosystem of valuable organizational capabilities that together produce market dominance. To point, the financial measure of enduring excellence is numerous accummulated quarters (in fact, years) of sustained profitable growth. Externally, a Stage Five company has changed the game either for its customers or its industry in a way that creates a significant separation in the market. Internally, a Stage Five company is revered by all its employees as a great place to work.
Stage Five is about enduring greatness. It is set aside as a special distinction for those companies that combine sustained business performance over a long period with loyal, happy employees. In other words, the company has moved from "good to great" and has been able to sustain that greatness over an extended period of time.
Numerous business researchers and authors have attempted to profile and capture the essence of what makes a great company. Bestsellers such as Good to Great by Jim Collins, and HBR articles such as “What Really Works” provide keen insight into the essence of a high-performing business. Those authors, through their research with proven performers, isolate factors that underlie their excellence.
But the question is, how does your business become great? And if you are already winning, how do create enduring greatness? Sand Hill Partners works with the uniqueness of your business and the talents of your people to bring you to Stage Five excellence. With all the complexities a top-performing business must manage, the eight critical success factors provide the set of clear focus areas that will bring you to enduring greatness. The key findings from the bestsellers and other recommended reading from Sand Hill Partners align well and lend credibility to the eight critical success factors. Sand Hill Partners has proven experience in the rarified air of Stage Five.
A major challenge for all Stage Five organizations is to sustain the entrepreneurial culture and values that have been so important in previous stages. One of the key elements of Stage Five is the balance of the entrepreneurial passion and the operational excellence that an organization must have as it transitions from a sprint to a marathon. An enduring great company must have an intentional process for embracing disruptive technologies that could otherwise send a mature business spinning and crashing. This challenge becomes ever the more difficult as the business continues to expand in its chosen markets. In fact, it is a major part of the chasm that separates an eternal Stage Four from an enduring Stage Five.
True greatness requires not just reinforcing the culture, but leveraging it throughout a very large and growing organization. In the book “Built to Last” the authors' research shows that strategies and practices in high performing companies change as needed. The key difference is their core purpose and core values remain infused across the company as a solid, steady shared mindset. Sand Hill Partners is the Silicon Valley authority on the how to build and manage a high-performance culture that acts as a steady rudder in when the seas get rough.
A reality of reaching the later stages in the model is the leaders and employees often get tired. They’ve been there for the long run and they wish to catch their breath while the organization, in order to sustain its separation from its competitors, must continue to raise the bar on performance. All companies battle complacency; however, Stage Five companies continually defeat it. They build up enough inertia to break through plateaus and dream bigger as an organization.
Unfortunately, assembling the necessary breakthrough energy exposes a difficult truth about people. The right people who can drive an enduring great are almost always very different from those who are successful in Stages One, Two and often Three. This simple fact derails most companies in the hunt for Stage Five acheivement. Huge internal tensions and disruptions arise in the transition of leadership that often must occur from a Stage Four to a Stage Five organization. Sand Hill Partners has eased this tough transition in numerous organizations and can show you how to steer clear of the turbulence and keep the company on track.
Most companies never reach Stage Five; they never achieve enduring greatness. They fall prey to bureaucratic systems, processes, and rules. They lose the ability they once had to operate around flexibility and principles. A true Stage Five company operates on organizational structures and systems that are fast, flexible yet still provide the right kinds of accountabilities for individuals and teams. Sand Hill Partners has vast experience helping large organizations become quick and agile. Speed, with attention to flawless execution, like Toyota in its pursuit of excellence, is imperative to enduring as a great Stage Five organization.
Tensions arise when any organization gets sucked into short-term pressures, which eclipse the long-term vision, strategy and organizational objectives. Growing organizations of all sizes do daily battle with one of Sand Hill Partners immutable laws:
There are always more opportunities than resources.
A Stage Five company demonstrates mastery at maintaining a maniacal focus on its strategy. They manage around the temptation to jump into things they are not very good at, that aren't in their core capabilities.
Eight Critical Success Factors
There are eight Critical Success Factors for enduring greatly as a Stage Five organization.
Change The Game
The first is the ability to change the game. The iPod and iTunes have changed the consumer and business sides of the music industry. Stage Five companies continually leverage the unrivaled capabilities within their organizations to affect change in their markets. They do this by creating and actively nurturing uniqueness within their organizations. Sand Hill Partners can show your organization how to identify and develop the special organizational gifts that can transform a market. The key is to identify the various knowledge domains that exist within a company and create powerful intersection points. Sand Hill Partners can then perform a value analysis of a company's processes, customers and partners designed to pinpoint the game changing opportunities that can be uniquely exploited by your organization.
The second factor is maintaining market leadership while moving into adjacent markets and continuing to dominant those chosen segments. Southwest Airlines recently extended its core operating model into a focused offering designed for the business traveler. A business traveler can have one of the first 20 opportunities to select their own seat for an additional fee. The key point is to identify an an enter an adjacent markets where the organization can utilize its competitive advantages to expand. Southwest leverages its well-honed process for on time arrivals to create a new organizational capability and business model targeting an adjacent, lucrative market. A goal of Stage Five is to execute and grow revenue from adjacent market expansion market opportunity that have been thoroughly evaluated and, most importantly, builds on the uniqueness of the organizations capabilities.
A third area, is having great customer and market intelligence. such as how some organizations have their leaders spend 20 percent of their time studying their competitors and looking for opportunities where their organization can dominate. During Stage Five, the company gains enormous feedback and data points on the product, market, technology, and customers that no one else will have. Sand Hill Partners can work with you on how and where to capture the most important data, and then how to convert it into unique customer and product insights that will drive the product roadmap and build more barriers for eventual competitors. This becomes the engine driving true sustainable market leadership.
World Class Business Processes
The fourth area is where Toyota excels; they say “we get great results with average people managing great processes. Others get average results with great people managing broken processes.” The focus on utilizing systems and processes and continuing to improve those processes as the organization continues to raise its bar in terms of performance. Stage Five is a time of constantly improving and renewing the organizations business processes. There needs to be laser like focus and effort on honing the organizations processes such that they create a source of competitive advantage for company. The competitive work processes need to leverage there capabilities to create separation and the other processes need to drive for efficiencies
Great organizations continue to raise the bar in terms of expectations of performance. They make it work through the use of an intentional and carefully designed performance management process. Their ability to envision better results, to inspire their members to achieve better results, their maniacal focus on execution, and ability to stay focused on what’s important are all critical elements.
High Performance Culture - Shared Mindset
The sixth area is its ability to continue to maintain and to foster a high performance culture with a shared mindset. This requires attention, focus, and hard work on the part of leaders and teams to continue to build and to support these two elements, which become intangibles in successful organizations, which are difficult to duplicate.
Stage Five is the time to solidify the company’s competitive advantage in it market through a shared mindset and capable talent. As the company continues to grow profitably soon the number of new Stage Five employees will exceed the Stage Four headcount, and it is assured there will be differences in how employees perceive the vision, strategy, reward systems and even their role in contributing to it all. One of Sand Hill Partners immutable laws is:
Organizations are perfectly designed to get the results that they get.
This means it’s important to be deliberate in determining the cultural attributes and intangibles, which will differentiate the organization; and there are few times more critical than when the company is enduring greatly by rapidly doubling and tripling in size in Stage Five. Sand Hill Partners can show you how to consciously design and plan activities to reinforce the culture and distinctive competence needed by the organization to endure greatly.
The seventh key factor associated with a stage five organization is its ability to develop leadership capability at every level and part of the organization. That it’s not reliant on a few leaders, but throughout teams, departments, processes, divisions, there are many, many leaders who are able to envision, inspire, execute and stay focused. These companies invest a fair portion of their budget towards building leadership capability throughout the organization. The reality is the different stages of company growth require different skill sets for success. The different skills are equally valuable – what is important is applying them at the right time. This truth is most apparent at the leadership level, and unfortunately is also where it can be most challenging to manage. Rare are the Bill Gates of the world, executives who can start as employee #1, and successfully lead a company through all five stages of growth. There are special skills that make for good early stage leaders. It takes a true pioneer to start with an idea, form a strong core team, get them inspired around a vision, and energetically build the first product. The successful early stage pioneers most often are people with unusually high levels of perseverance and innovation.
Capable and Aligned Talent
The last area is being able to continue to develop capable and aligned talent towards the organization’s mission and objectives, principles and its processes.The essential employee growth in Stage Five means knowing how to quickly get the right people in the right seats. Regardless of the methods used to find good candidates, the high-performing organization needs to be fast about selecting and ramping capable talent. Sand Hill Partners makes this happen with a streamlined process based on two key building blocks:
A performance model is a detailed description of the performance required for success in a specific position; it is a description of how a job should be performed. The truly great companies in this world use performance models for selecting and developing key execs because the wrong person in a key position can kill an organization. A Stage Five organization needs to think of all its initial hires with a similar sensitivity. It’s not that the hires are necessarily expected to be executives, it’s because in a small team with everyone working hard, fast and closely together, the wrong person will, at best, create tremendous misery and, at worst, kill the company. Sand Hill Partners offers expertise in how to make performance models work well in a Stage Four focused on growing profitably.
- Structure and design the role, as it needs to be performed.
- Identify selection criteria that feeds into the Stage Five Selection Process
- Clarify critical performance results and best practices to all involved.
- Assure appraisal and reward systems (e.g. comp plans) are aligned and encourage target performance.
- Determine actions that will remove work environment barriers to high performance.
Stage Five Selection Process
Culled from time-tested principles and best practices learned and applied over 30 years in the selection of employees for new organizations (and key executives in large companies), Sand Hill Partner’s ’Stage Five Selection Process brings manageability to a potentially frenetic hiring process while assuring the company has its best face forward while gleaning the right insights about each candidate. It balances an organizations need for speed and simplicity with proven methods for determining what someone will really do on the job.
Overall, Stage Five companies have internally leveraged and mastered the SHP “Eight Critical Success Factors”
- They developed and scaled their original Business Concepts and Strategy
- They repositioned the role of the CEO and Leadership Team appropriately for each stage of development
- They formalized their processes and systems and built enormous separation capabilities from their execution abilities
- They created and leveraged a shared mindset around core purpose, principles and culture which became an intangible which was difficult for a competitor to copy
- They invested in selecting and developing capable and aligned talent
- They built managing performance and accountability into the core of the culture and processes of the organization
- They established excellent customer and market intelligence which gave insights which no others were able to gain or leverage
- They were able to build into the fabric of the organization the ability to renew itself. This may be the greatest factor of a stage five organization. All enduring organizations go through a period of time that they either act or are acted upon by the market place. Those who have a culture of constantly renewing and learning will be the ones who endure greatly. Creating an organization that learns both through discovery of new ideas and concepts but also through diffusion (sharing and applying of those ideas) better than its competitors becomes a powerhouse in it market.
As we look back at the five stages of company growth, we see the game changed significantly in Stage Three. The new challenges accelerate in Stage Four and Five. Stage Five requires leadership skills that blend envisioning, inspiring, executing and focus with strong process and systems expertise. Sand Hill Partners provides embedded guidance and know-how for process leadership and general management skills. We work with Stage Five organizations around factors such as:
- The role of leadership brand as a source of competitive advantage
- Process ownership responsibilities amongst the leadership team
- Clear executive team roles and responsibilities
- CEO and leadership team focused on the strategic work (i.e. moving from technical and operations to managing the competitive work; managing external environment)
- Building blended capabilities in envision, inspire, execute and focus
Stage Five is all about enduring greatly and it is not for the timid nor the faint of heart. For those that enjoy this rarified air, it is a zone of performance that only a few are able to experience; but once there, the yearning to maintain that level of performance and achievement is like a journey that you never want to end. It is as we teach “Organizations are perfectly designed to get the results that they get”
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