We see plenty of unique challenges at all the midsize companies we evaluate for investment each year. But the most common and potentially most fatal is the myopic founder. It’s not a surprise when we see it, as it generally serves a founder well during the roller coaster that is building a bootstrapped company, but it has to end if you want to scale your business.
Manic can be good. Myopic is always bad. And here’s the difference. Manic behavior drives you to leave your old job and start a company with your personal savings on the line. What sane person would do that? Manic behavior gets you into your customers’ heads so you can anticipate their needs and build a market-driven company with massive customer loyalty. It makes you keep a disciplined vision as you grow, not allowing you to get too far away from the core business as you build a team, expand geographically, introduce new products and enter new markets. Manic behavior gives you that innate feeling that informs what your customers and employees need. Maybe it’s an entrepreneurial sixth sense or maybe it’s that feeling Michael Jordan had when the game around him slowed down while he played at full speed. Or maybe it’s that feeling John Starks had when he dunked over Horace Grant and MJ in the 1993 NBA Eastern Conference Finals.
Myopic is on the same spectrum as Manic but it’s hard to discern when energized, outward focus crosses over into subjective focus, narrowed squarely on the short-term. The short answer is that it’s where you end up after years of burrowing into your business without lifting your head. Myopia turns your vision inward and limits your upside. It keeps you from making forward progress because you stay in protection mode so long that others start passing you by. It’s why your best employees start looking for new challenges somewhere else. It’s when you dismiss your competitors as inferior and out of touch. It’s when you start blaming people for not getting it.
And we private equity investors aren’t immune to the sickness either. When we see a solid winner and then stop investing, or when we start thinking about the exits too soon, we have become myopic. It’s when board meetings focus more on last quarter’s profits than on next year’s growth initiatives. It’s when budgets start to reflect the investor’s guidance rather than management’s intuition. Or when we spend more time planning the board dinner than the content of the board meeting. It is hard to pinpoint when we have made the shift, but the symptoms are unmistakable.
So how do you make sure Mania survives without turning into Myopia? Find yourself a touchstone, a yardstick to gauge your place on the manic-myopic spectrum–a shit-stirrer (as my friend Andy Stefonovich affectionately calls them). This is the person who asks the tough questions; the person who makes you uncomfortable, who creates purposeful disruptions in your business. This is the person who asks you, “When was the last time you visited a customer?” and, “What was the last failure you celebrated?” and, “What little bets are we going to make this year and how are we going to measure their success?” Once you identify a shit-stirrer (in your business, on your board, a peer, CEO friend, or just a trusted outside observer), you can figure out where you stand with a simple question:
Do you seek this person out and let them shake you up?
If you do, you’re still Manic. Your focus is still turned outward and you know their agitation is making you better for the benefit your customers and employees. If you shut this person out, you are Myopic and you better fix it before it’s too late.