Ambition drives strategy. Looking to their future, leaders want some mix of legs, legacy and liquidity from their ventures. Trying to develop strategies without addressing those three components of ambition is like asking your GPS to plot your route without deciding on the destination.
Legs: They want the venture to have legs, to succeed over a long period of time, providing some mix of income, visibility or stature for themselves, employees or successors.
Legacy: They want to leave something important behind, something that solved an important problem, made a difference or just accomplished something big. They want to be able to look back with pride, and have others remember and admire them.
Liquidity: They want money they can take out of the organization and use for other purposes. That might come through salary or bonus, or might come from selling equity. But it’s real cash money, not asset value.
There’s a lot of tension buried in those three simple words even for a single founder/owner. For example, taking out more in liquidity may directly imperil the legs, the likely staying power of the organization. Or to build a legacy, you may need to take on investors who may imperil your liquidity.
Add in more people and the tension grows. Additional owners and partners may have a different mix of ambitions. Investors almost certainly have their own ambitions, often prioritizing liquidity (via exit) over legacy.Crucial staff members often value legs over liquidity – or may jealously eye leaders’ opportunities for liquidity.
Unfortunately, too many organizations don’t face the questions of ambition openly and directly. Sometimes ambition isn’t viewed as a topic for polite conversation, especially in non-profits or mission-driven business start-ups. Sometimes it’s a power thing: everyone is afraid to ask the boss. They wait until there is a crisis, a forcing function which makes them confront the tensions and differences. This almost guarantees that the solutions will turn adversarial, with zero-sum negotiations, threats, and often costly lose-lose outcomes.
Ambition and Strategy
Even more strikingly, many organizations attempt to develop their multi-year strategies without facing the ambition questions directly. This is truly a case of putting the cart before the horse. It doesn’t matter how powerful your GPS system is or how precisely satellite data pinpoints your current location; no destination, no route.
In practical terms, ambition strongly shapes or limits critical aspects of your strategy. For example:
- Is your succession strategy designed for legs, which may require grooming (and retaining) future leaders? Or just to get you through the next liquidity event? Are you willing to commit some share of the liquidity to retaining future leaders, rather than using it to feed the ambitions of current leaders?
- Are your growth plans driven by longevity (legs) or growing earnings (liquidity) or someone’s desire for a legacy of having built something bigger? Is the investment needed for that growth compatible with your liquidity ambitions?
- Is there a strategy (and enabling process) for generating new offerings to keep the organization alive and relevant, to give it legs? It’s amazing how few service firms (and even some manufacturing firms) have a real NPD (new product development) process, yet somehow entertain expectations for a long-term future.
Some organizations do get alignment on ambition before fleshing out strategy. For example, one firm’s leaders talked openly to each other about their ambitions. They agreed on balanced ambitions for legs, liquidity and legacy. They calibrated growth accordingly, keeping cash/investment needs consistent with their ambition. They shared their personal ambition and timing, agreeing to stagger leader exits over a period of years to help achieve their ambitions.
Has your leadership done that? If you are leadership, have you done it? Do you know what you really want? Are you willing and able to share that with other key stakeholders? If you are working on strategy, are you putting these questions on the table?
Like your GPS tells you, if you want a useful route, you better know where you want to go.
[Opinions in this blog are solely those of Scott Nadler and do not necessarily represent views of Nadler Strategy’s clients or partners, or those cited in the post. To share this blog, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.]