Atlassian Flywheel, SWOT Analysis, Global risks outlook, Flywheel momentum & Why coaching creates excellence
28th March 2021 Evolution Partners Newsletter
“No, no, you’re not thinking; you’re just being logical” – Niels Bohr addressing Albert Einstein
Hope you’re Thriving!
I’ve enjoyed a good week with some interesting meetings on my new book and a 2-day workshop with a new team. It’s always great to start with a new leadership team because almost everything they are learning is new, and we’re working on an exciting new future for the first time with them.
I came across the quote above from Niels Bohr in the past week and it’s really got me thinking about the difference between thinking logical which is a key factor in so much of the work that we do and actually thinking. Because we can logically just set goals, we can logically think about how markets or customers will perform, but it’s the thinking between the lines that really matters and that has really influenced my thinking in today’s newsletter.
Are You Doing the SWOT Analysis Backwards?
The SWOT framework of Strengths Weaknesses Opportunities and Threats was developed by Albert Humphrey, at the Stanford Research Institute back in the 1960s and is a staple of business schools and business planning all around the world, and has been for decades. But what if applying the SWOT framework was actually being logical and not really thinking? Recently I came across an HBR article that looks at the SWOT in a different manner than I thought you might be interested in.
From the article
“There are few tools more ubiquitous in management, marketing, and other key business functions than the SWOT analysis: It involves listing the strengths, weaknesses, opportunities, and threats facing your firm, division, functional area, or other aspects of your organization, products, or services. The results of a SWOT analysis can be (and almost always are) presented simply as a 2 x 2 grid, with one dimension representing the internal versus external factors, and the other depicting positive versus negative valence.
The problem is, as typically conducted, the SWOT is not really an analysis or diagnosis at all. It is simply a list and categorization of the internal and external situational factors related to the subject that you’re evaluating, usually produced during a group brainstorming session. The resulting document is typically less than insightful and does not offer a clear path to action. It is simply an elegant organizational tool. That might be part of its attractiveness — besides its catchy acronym — and a key reason for its popularity. “
I hope you enjoy the article Are You Doing the SWOT Analysis Backwards?
Thinking about the 2021 Global Risks that are within your control
Also this week I came across this global risks outlook from the World Economic Forum that lists the risks we’re facing on an axis of impact and likelihood. What’s really interesting are the things that are in our direct control or that we can mitigate against. If we consider something like cybersecurity failure which is in the top 25% of risks that is something that we may be able to plan against. In my book Made to Thrive, I dedicated the 5th role of a CEO to Succession Planning which is considering what are the risks that could disrupt profits or continuity of the cash flow and the business as time goes on. And this is an interesting chart to look at each year. Sure it may not change all the time but climate action failure is a big problem that, according to the World Economic Forum, would have a high impact and is likely as well. However, it’s outside of your circle of control. See this link for a slide deck I presented on the circle of influence and circle of control.
Then we have things like a debt crisis which I’ve spoken about the concerns I have about growing inflation here, here and here in recent newsletters but it’s something that you need to be concerned or conscious of as a CEO leader and how that might impact the continuity of your business. Take a look at the chart below “the 2021 Global Risks Outlook” and consider which of these are inside your circle of control, or outside it, and are there any of these risks that you should consider as you look toward the future.
How Atlassian was built
In 2001, Mike Cannon-Brookes sent an email to his college classmates in Sydney, asking if anyone was interested in helping him launch a tech startup after graduation. Back then, entrepreneurship wasn’t a popular career path in Australia; and Mike’s only taker was Scott Farquhar, a fellow student who shared Mike’s passion for computers and his frustration for the corporate grind. Together they launched Atlassian, a two-man tech support service that they managed from their bedrooms at all hours of the night. Unable to make money, Scott and Mike decided to pivot and sell some of the software they’d developed for themselves. Out of that grew Jira, a project-management tool that’s used in all sorts of endeavours, from pizza delivery to the exploration of Mars. Today, Atlassian is valued at over $50 billion and Scott and Mike are Australia’s first startup-to-IPO tech billionaires.
How the Atlassian Flywheel builds momentum
One of the really interesting parts of the interview is that when they failed at tech support, they pivoted to sell the software they had developed and were using themselves. And that became the genesis of the Atlassian flywheel because without knowing it they had discovered that if they love to use the software because of the better features they had developed, that others will also love the software which became a point of momentum at 12 o’clock on the Atlassian flywheel below.
As you can see if they build great products with better features which they love to use, they can’t help but create word of mouth promoters. Other people will love the product as well and they will want to talk about it with people they know. If they then have their word of mouth promoters they can’t help but lower their customer acquisition cost because everyone is talking about their software. If they have a lower customer acquisition cost that means that they can’t help but spend less on sales and marketing.
As you can see Atlassian spend 19% of their revenues on sales and marketing compared to Salesforce who spend 50% of their revenues on sales and marketing.
If they spend less on sales and marketing they can’t help but spend more on research and development, and as you can see they are spending 35% of their revenues on research and development compared to an industry average of 15%. If they spend more on research and development they can’t help but build great products with better features that everyone loves to use. And that brings us back to 12 o’clock on the Atlassian flywheel and they complete one turn which gives them more momentum for subsequent turns.
In this week’s podcast, Kevin and I have a great discussion about Jim Collin’s flywheel concept and we cover the following items;
- How to create your flywheel
- Why flywheels matter and why they build momentum in a business
- How to validate your flywheel
- How to speed up your flywheel
- How to leverage your flywheel
- How to measure your flywheel
- How to optimise your flywheel
More details about this flywheel podcast below.
One last thing, I currently have one, last spot available for a team in Perth to join a Group Growth Program for leaders who are running a business with $3m to $10m revenue, so if you’ve been hesitating, please reply to this email to register your interest as I don’t know when the next spot will become available or whether I will even create another group.
This week on The Growth Whisperers podcast
Jim Collins Flywheel Concept: How to build unstoppable momentum in your company
The Flywheel effect is a concept developed in the book Good to Great. No matter how dramatic the end result, good-to-great transformations never happen in one fell swoop. In building a great company or social sector enterprise, there is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.
Kevin & Brad discuss The Flywheel concept and how to create your flywheel, how to validate your flywheel and how to speed up your flywheel.
Then they discuss how to leverage your flywheel, how to measure your flywheel and how to optimize your flywheel.
Listen to The Growth Whisperers
From the vault
Why coaching creates excellence
I had a meeting with the owner of a funds management business who was investigating the source of success of some of his clients and is trying to write a book, or guidance note to share with his clients. This is a trend I noticed several years ago in North America where many investors started only committing to invest in businesses that had a reputable coach or advisor maintaining the discipline for the leadership team. If they didn’t already have a coach, they would only invest in a business if the business agreed to get one, as part of the deal. It was a good meeting for me because the person was genuinely trying to understand what was the difference that created success when I worked with clients and my perspective on that. Here’s a bit of paper napkin wisdom from that meeting I thought you might be interested in.
The freedom-discipline doom loop
- People who have a job, then start or buy a business.
- This gives them autonomy and freedom they haven’t had before to ultimately do what they want when they want.
- This wasn’t present when they had a job as they had the discipline of someone telling them what to do.
- Without the discipline of someone telling them what to do, they chase the ‘shiny objects’ or things that are interesting and don’t focus the business on the right things.
This leads to a crisis or poor results.
In the midst of these poor results, the person doesn’t have the required discipline to maintain focus on the right things, and they then execute the wrong things and the loop continues around and around sustaining poor results.
Read more about Why Coaching Creates Excellence and The Mundanity of Excellence
Patrick Lencioni event
In partnership with The Growth Faculty, Evolution Partners is delighted to offer you $100 discount to see Patrick Lencioni in a live virtual event this April: Patrick Lencioni: 4 Pillars of High-Performance Cultures.
New York Times best-selling author of The 5 Dysfunctions of a Team (plus 11 others), Patrick Lencioni is the global pioneer of the organisational health movement.
McKinsey research shows a healthy organisation delivers roughly 3x the returns to stakeholders than less healthy companies. And, companies that institute initiatives to improve health see tangible performance increases in as little as six months.
Named “one of the most in demand speakers in America” by the Wall Street Journal, Patrick Lencioni will deliver a fast-paced, highly practical event teaching business leaders and their teams how to create a healthy organisation and high-performing culture that takes advantage of the talent within their teams.
YOU WILL LEARN:
Practical and highly entertaining, over 2.5 hours you’ll learn:
• The 4 Disciplines Model of organisational health
• The 5 Essential Behaviours required to build a cohesive and high performing team
• The Ideal Team Player framework for identifying, hiring and developing ideal team players
• The 6 Types of Geniuses – Identify your areas of working genius that allow you to thrive at and enjoy work
• PLUS, interactive Q&A with Patrick
You will leave with immediately actionable frameworks and tools that have transformed thousands of businesses globally.
2021 Agile Leadership Summit event
I invite you (and your leadership team) to join me at the April 2021 Agile Leadership Summit.
This virtual summit is going to be a high-value event with concrete, actionable takeaways.
The three featured Keynote speakers are;
Michael Bungay Stanier
Easy Change vs Hard Change“Easy Change” is likely something you’ve already mastered. But “Hard Change” … well, that thing you find difficult to make progress on.
In this practical session, we’ll dig into:
• the difference between Easy Change and Hard Change, and why it matters
• the most common mistake made in trying to “crack” Hard Change
• the hidden force that’s most likely stopping you make progress on Hard Change
What’s Next?! How to Navigate Customer and Employee Interactions in a Pandemic (and Post-Pandemic) EraAs the pandemic continues to shape the world, businesses face new challenges on a daily basis. Smart organisations recognize that the “old way of doing business” doesn’t work anymore and that waiting and hoping for things to “get back to normal” isn’t a viable strategy. In this practical session, we’ll discover: “what’s next” in order to acknowledge the new reality, adapt to a shifting landscape, and thrive in this new environment
Radical Alignment to a Core Strategy
What are the symptoms of a lack of Core Strategy in a company? What struggles do companies face when they aren’t radically aligned around their BHAG? What strategies and tools will this monograph cover (high-level) that will allow you to address these issues and form a Core Strategy for your company to align divisional strategy around?
Building atop highly-rated North American Summits, the first Australia/Asia Agile Leadership is an opportunity for you and your leadership team to come together for a premium learning experience via a half-day series of keynotes and practical, interactive breakout sessions. You’ll learn in three key areas: how to become a highly-skilled coach CEO for your teams, how to build vision through abundance, and how to implement practical tools that create award-winning companies.
Join us for this half-day of learning on April 29, 2021, from 9:00 am -3:00 pm AEST for only: $275 AUD.
Note that this is early bird pricing that ends on April 1st!
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