When Revenue Outpaces Talent

Do you set annual goals for your business? Update them quarterly? What about seizing opportunity in the moment? Most owner-operators develop a cadence for goal setting. As an entrepreneur turned investor I operated under a continuous flow approach. If they goals needed to change, they changed. Unfortunately, this approach only works in very small teams who can stay in harmony. Eventually, revenue outpaces talent.

A well-assembled team will stomp out a channel in the earth and create preferential revenue flow into your operation. If well-coordinated the operating team (some of which may toggle between sales and ops) will produce outcomes that delight customers. The inbound flow will ultimately overwhelm the handful of operating experts. A formal gate must be built to stabilize the flow. Thus, enters the backlog.

The backlog is a strategic decision to slow revenue growth to pace with talent. When revenue outpaces talent the quality of work degrades. Two solutions are available. First, a schedule is built so operating talent can focus. With focus they gain and then express mastery without interruption. Machines, systems, resources and personnel increase throughput. Second, recruiting, training, development and construction occur. An internal limitation is chosen. Ideally, this is an expensive and rare machine or proprietary process involving several people, coordinated in a special way. This final step reduces talent demand, extending opportunity for the collective to add new team members with less skill.

Sales is overstaffed at this point. Someone among the group must move to customer support. They act as a line of defense, preventing interruption of operating processes. If no-one among this team will switch to support, someone new must be hired. Sales and operations must bifurcate. The bridge between must be formalized. Rules and policies must be enforced. This will be difficult. Good opportunities must be denied. Some turn over will ensue.

When revenue outpaces talent, the talent must increase while the revenue flow is held or reduced –temporarily–after which point the climb must become steady, yet more significant than competitors. This rate of change must be chosen and mapped by leadership. And talent acquisition must be economically viable from within the environment. The CEO must communicate the vision clearly, secure cash and attract people. The new people are how and where the rate of change is garnered. They are systematically trained on the processes. Their individual talents and growth are stacked upon each other’s talents. The ownership of the company takes a cut of this growth, and shares the benefit with the fastest changing personnel, usually in form of bonuses for exceeding highly detailed, minimum requirements.

The march is steadied. Those who outpace the group are promoted or ejected. Tolerances narrow. When revenue outpaces talent, the talent changes. The market demands it. If leadership falters during this situation they are displaced.