Fewer, Bigger, Bolder by Sanjay Khosla

Author:Sanjay Khosla [Khosla, Sanjay]
Language: eng
Format: epub
Publisher: Penguin Group US
Published: 2014-06-24T21:00:00+00:00

HOW BLANK CHECKS WORK

To put the blank-check idea to work, business leaders need to go through a systematic process of picking the best bets, selecting the team, defining goals and plans, kicking off the initiative, and monitoring the results. Here’s what happens at each of these five steps.

1. Picking the best bets. Blank checks are designed to fund big bets, so the bets have to be chosen carefully.

As the business leaders look for targets, they need to keep in mind the Three Ms. The blank-check initiative should involve an aspect of the business that has significant momentum. These bets aren’t Hail Mary passes—they are smart plays that draw on the company’s strengths. Margin potential continues to be important. Cost and price structures of the initiative need to remain competitive. This is particularly true in ventures in developing markets. You have to benchmark against the best out there, which often means the local competition. And the venture should be material—something that produces high impact with the least possible effort. If the only hope is to get small results relative to the company’s size, why waste your time? It contradicts the whole notion of focus. There should be sufficient headroom for the business to grow.

“This is a bet you’re making knowing that you have big odds in your favor,” says Shawn Warren, who served as president of Kraft China. “The Three Ms have to line up and you’ve got to have a strong team to make it work.”

2. Selecting the team. Blank checks are ultimately big and bold bets on a few people, rooted in the faith that they have the potential, the passion, and the perseverance to transform their businesses. Top leadership selects the team leader, and, obviously, the person drafted has to know the area of the business for which the blank check is to be issued. But the team leader need not be the most senior or most experienced manager in the area—more important is for him or her to have the most potential. And that is just the initial criterion.

The business leaders must ask themselves a series of questions about the blank-check candidate. Is this person a natural choice for the challenge based on his or her current responsibilities and span of control? Will this person be willing to take on the responsibility and not be frozen by fear? Is this person capable of thinking in new ways? Does this person have the capacity to inspire others to do things differently? Does this person have a track record of delivering results?

In both assessing potential team leaders and identifying likely initiatives, a useful analytical tool is to ask the candidate: If you had no constraints whatsoever and all the resources in the world, what’s possible with this business? How high could you go? The answer can tell you a lot about the creativity and gumption of the person asked—and also provide clues to areas of the business that hide real potential.

Picking the blank-check team leader marks the first step in assembling a team.

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