I’ve worked on all three, and all three are challenging and fun. But, the challenges and what’s needed to win are different.
Start Ups
I’ve worked on a number of start ups — reflect.com, Snapchat, Figs, Amber, Edgeworth, Omeza, Roadrunner, and new Procter & Gamble brands like Actonel, Align, Febreze, Fit, Physique, Pur, Solo, Swiffer, Thermacare, Torengos. Even starting up new countries for P&G like China and Vietnam.
There are two keys to winning for a start up.
Identifying an unmet or unsatisfied consumer need or want, and providing a product or service that uniquely delivers better performance, quality, and value.
If there’s a real need, and the product or service really delivers differentiated and ideally uniquely better performance, quality and value, then the start up will have a high probability of success.
Talent will want to work for the potential winner. Investors will be willing to fund the start up.
Fix Ups
This is the classic work of private equity. Find neglected and undervalued businesses and fix them up. This is what I did from 2010 through 2013 with Clayton, Dubilier and Rice (CD&R), and a talented team led by Don Gogel, Joe Rice and Jack Welch.
CD&R was and continues to be very good at fixing up businesses, at least well enough to extract additional value creation from most of them.
The key to fixing up businesses is to clearly define the problem that is getting in the way of better business and financial performance, and/or describe the opportunity that will unlock significant value creation.
A problem well-defined is half solved, an opportunity well-described is half realized.
Then, of course, the key to maximizing value creation is to focus available resources, financial and human resources, on fixing the problem or seizing the opportunity.
In addition, well-executed fix up efforts focus on productivity…cash, cost, and organization/people productivity because they understand how these avenues increase value creation. It is important that focus remains on the few things that make a difference in value creation.
Keep Ups
These are, in my judgment, the most difficult business challenges (and the kinds of businesses I worked on for 36 years at P&G).
Why? Because start ups and fix ups are relatively short-lived, short term challenges…and it’s relatively easier to focus on the two or three things required to start or fix a business up.
New businesses, new brands, new products and new services either successfully start up and make it in a relatively few years or they don’t. The focus is relatively narrow, on the customer and the product or the service, and the clock is running.
Fixing up businesses is also a relatively intense, short-lived effort. Businesses either begin to turn around or they don’t. If they are going to turn around, they generally show encouraging signs of life fairly quickly. The time horizon for the average private equity fix up is 3 to 7 years.
Keep up businesses are long-haul commitments — multiyear, multi-decade, sometimes even multi-century commitments. However, when successful, they are well worth the effort because they generate so much cumulative value.
Winning keep it up businesses consistently and reliably generate significant value creation over long periods of time.
Gillette has been the leader in men’s grooming for 100+ years. Tide has been the leader in laundry for 75+ years. Crest has been the leader in oral care for 60+ years, Pampers has been the leader in baby dipers for 60+ years, and Dawn and Downy, the 50+ year leaders in dish and fabric care. All of these brands are long time category stalwarts with leading market shares and disproportionate profitability.
The keys to keeping a business up are staying close to consumers and understanding their changing needs, wants, and rising expectations, and then leading category innovation to meet those changing needs while also delivering new and continuously improved benefits, and ever higher standards of performance, quality and value.
This uncompromising commitment to the customer as the boss, and relentless pursuit of innovation to delight the customer and stay ahead of competitors, is what it takes to keep businesses growing that have the potential to lead their category and deliver significant value creation for their employees and share owners for 50 or 100 years or more.
Think about how hard it is for a sports team to repeat as champion. “Three peats” are incredibly rare. Think about how hard it is for a politician to win re-election. Very few win more than three times in a row.
Yet, these longstanding brands and businesses stand for election with customers every day in very competitive market places and find ways to win year after year.
It takes flawless execution of leading to win strategies to achieve this consistency of winning results.
All three kinds of businesses — start, fix and keep up — are challenging and fun. And, I’ve enjoyed working on all of them.
But, the most satisfying and rewarding for me are the keep it up businesses that are built to last, the businesses that delight customers year after year and deliver for employees and owners decade after decade.
