Curb your enthusiasm: Why founders fail to focus

The TLDR Snapshot

  • Focus builds great companies. Failure to focus breeds mediocrity.
  • Avoid the five Deadly Distractions of too many offerings, priorities, partners, regions or metrics
  • V2MOMs and OKRs are great tools. Use them.

When it comes to growing a company in the cloud’s third wave, there isn’t one single thing that translates to success. However, there is a common trait that some of the most successful early and growth stage companies share – the ability to focus.

But here’s the tricky part. Nearly every founder I’ve ever met shares the same superpower. They see opportunities everywhere. Founders are entrepreneurs for a reason – they see potential in an unmet need, and make connections that others might not see.

However, that superpower is also their Achilles heel. Seeing opportunities everywhere makes it hard to focus.

Not long after I founded Appirio, I kicked off one of our first company meetings by talking about our seven priorities for the year. That’s right, seven things, all equally weighted. I was so enthusiastic about our opportunities that I didn’t realize I had lost my focus.

Here’s the thing about going a million directions at once: it gets you nowhere.

Here’s the thing about going a million directions at once: it gets you nowhere. Focus pays off, and I mean that in the most literal way possible.

Take Endava, for instance. Endava is a global, publicly-traded third-wave digital consultancy closing in on 10,000 employees. While they have customers across multiple industries, they use their deep expertise in digital payments – a critical cog of the digital economy – as a key differentiator. Digital payments is now 35% of Endava’s revenue, and has been a big factor in their growth. The company is now valued at >$9B, and its 2021 annual EPS increased 113.54% over 2020.

Zennify, our newest investment, is another great example. Zennify is a Salesforce and nCino partner specializing in mid- to large-size financial services and fintech providers. It hires for that expertise (Zennify’s CRO hails from the lending space), its sales and delivery teams know the playbooks, and its great at creating packaged integrations/accelerators for common challenges. Partly due to this focus, Zennify has become a go-to partner for Salesforce’s customers in this sector, growing nearly 50% YoY. That outpaces Salesforce’s YoY growth by nearly 2x.

Acumen, a Salesforce consultancy with nearly half its revenue from the public sector and access to several key contract vehicles, was acquired by Salesforce in December 2020 for $570 million. It is Salesforce’s largest professional services acquisition to date.

In crowded cloud ecosystems like Salesforce, AWS, Google and Microsoft that have an endless supply of partners, focus makes a company stand out.

In crowded cloud ecosystems like Salesforce, AWS, Google and Microsoft that have an endless supply of partners, focus makes a company stand out. If you’re an executive at a financial services provider or an AE selling into a bank, would you rather work with a generalist who claims they can do it all, or a specialist who knows exactly what works and what doesn’t?

But focus isn’t just about sales. When you have a defined focus, every decision gets easier.

Need to make a critical hire? If you’re clear about the responsibilities, skills and expectations for a role, you’ll make a better decision on which candidates will be the best fit.

Need to drive results in a new area or new offering? If you prioritize initiatives, and are clear about what’s vital and what can wait, you can create alignment and make a significant impact a whole lot faster.

Need to predict what customers will need next? If you’re deeply entrenched with customers in a specific area, you’ll have insight others don’t to help predict the future more accurately.

People value focus, and knowing which outcomes matter.

People value focus, and knowing which outcomes matter. That goes for executives and individual contributors. Last year resignation rates were highest among employees who worked in fields like tech and the service industry that experienced extreme increases in demand. Push people hard in too many directions at once, and they’ll head for the nearest exit. That’s bad news when finding and retaining employees is harder than ever.

The Five Deadly Distractions

Are you as focused as you could be? When it comes to building a services business, we see five telltale signs.

  • Too many offerings
  • Too many strategic priorities
  • Too many partners
  • Too many regions
  • Too many metrics

Too many offerings. When a company’s offerings look like a diner menu serving everything from scrambled eggs to peking duck, it’s obvious at a glance that all of it will be average at best. This also applies to the pull between products and services. IT service providers need to be tech-enabled and offer packaged IP for the same reason enterprise software companies need to offer services — customer success. However, be clear about who you are. Are you a product company offering services? Or a services firm that brings products to the relationship?

Too many strategic priorities. Remember my story about having seven different strategic priorities one year for Appirio? I don’t do that anymore, and neither should you. If you have two or three strategic priorities, everyone in the company will be able to tell you what they are without struggling for an answer. If you have seven, or ten, or twenty, no one will have a clue what to do.

Too many partners. Early stage companies have a tendency to spread their efforts across too many partners, thinking there’s more value in adding more logos to a website than creating revenue-generating relationships. When you have a few important partners, you can invest the time and energy to build them into powerful relationships. Too many partners means your company won’t matter much to any of them. Our advisor Gary Rinedollar wrote a great piece on this topic.

Too many regions. Expanding into new countries or markets can drive growth, diversify your business and give you access to global talent. However, it can also be a huge distraction if you aren’t ready or you’re going for the wrong reasons. Our advisor Jean Manaud offers some words of caution on this front, and why companies need to be thoughtful about expansion plans – especially internationally.

Too many metrics. Having too many metrics — especially if they’re not measuring the right things or measuring them meaningfully — is worse than having none at all. For technology services companies, there are really five that everyone should be paying attention to:

  • Revenue
  • Year on Year revenue growth
  • Utilization
  • Customer satisfaction
  • Employee attrition

There are cases where this might change based on the business or the priorities for the year, but as a general rule if you don’t get these five right, your other metrics won’t matter much.

Focus means simplify

Companies like Salesforce and Google have the luxury of being able to hire dozens of entrepreneurial thinkers with literal genius-level IQs. Many of these people are legends in the industry, and former founders themselves.

This means that every year executives at Salesforce and Google have to decide which brilliant, potentially billion dollar ideas they will pursue and which they will not. How on Earth does anybody make decisions like that? How do they know they’re making the best choices?

They use corporate strategy frameworks.

Salesforce uses V2MOM (Vision, Values, Methods, Obstacles, and Measures). Google uses OKR (Objectives and Key Results). If you don’t use these frameworks yet, you should look into them immediately. These are critical tools for maintaining alignment.

We used the V2MOM framework at Appirio, starting at the leadership level and cascading to each individual. No framework is perfect, but it provided the simplicity and alignment we needed. It also ensured I didn’t push seven different priorities in the same year.

Simplicity is at the core of OKRs as well, which are now used by thousands of companies and have spawned its own software market segment. While OKRs are often thought of as a technique to drive agility and alignment, when paired with design thinking they can also have a big impact on innovation and prioritizing what gets investment.

I’ll leave you with this quote from Albert Einstein; “Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.”

Don’t be a complexifier. Be a simplifier.

Focus.

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