The Second Business Unit: How to Manage It

The purpose of this article is to talk about the launch and growth of your second business unit, which could be a new product line or a new geographic market that complements the core or original product line or market.

The main point I want you to take away from this article is this: If your company is having trouble launching and growing its second business unit, then you likely need to address a design flaw in the original or core business unit first.

My own experience as a CEO was that I struggled to lead the launch of the second business unit against the incessant demands of the core business because I didn’t understand this concept well enough.

A majority of my coaching clients are looking for help with launching their second unit, whether it’s a new product or new market, while thinking that things are going pretty well in their core unit. They just need some guidance on launching the second. But after diving into the situation, the client CEO quickly realizes that for the second unit to thrive, the core unit must first evolve.

Since this issue is not well understood, I hope to shed some light on it in this article and share my approach to solving it.

The Health of the Mother Determines the Growth of the Child

Fundamentally, what you’re trying to achieve with the launch of a second business unit is to have the “mass” of the core business executing swiftly and profitably against changing external and internal conditions and with enough capacity and wherewithal to simultaneously pilot, nail, and scale the second unit.

What I didn’t appreciate fully until I had been through it as a CEO myself is that despite all our attempts to free up the […]

By |2023-02-28T17:05:21-08:00February 28th, 2023|

A New, Revised Edition of Organizational Physics Has Just Been Published

I’m pleased to announce that a new, revised edition of Organizational Physics is now available in international hardcover, Kindle, and Audible.

What’s New in the Revised Edition

When I set out to write Organizational Physics ten years ago, I knew then that its underlying principles were sound. I had both the experience of using them as a CEO and as a business scaling coach to other CEOs. I could identify parallels spanning across disciplines as diverse as business, nature, sports, and the laws of physics. My thinking then, and still today, is that if I can spot a principle that cuts across domains, then I can take it to the bank.

In publishing this revised edition, I’m happy to say that the original principles I introduced in the first edition of this book have not changed. On the contrary, my appreciation for their pervasive power and influence over every aspect of life, business, and society has only deepened.

The primary changes between the first and revised editions are that, in addition to updating the graphics and typeface, I’ve added five case studies that provide insider accounts from other CEOs of what it’s really like to scale a business, its ups and downs, and how to leverage Organizational Physics principles to your sustained advantage.

I want to express my sincere gratitude to the CEOs who contributed these case studies, to the many others who contributed testimonials, and to all the clients I’ve coached over the past decade. You make my work possible, and it is transformative because of you.

To new readers, I hope you enjoy and get lasting value from the revised edition of this book as thousands of other business leaders have […]

By |2023-02-12T09:39:18-08:00February 12th, 2023|

Webmasters Podcast

Lex Sisney @ Commission Junction: The Llama Farmer Who Popularized Affiliate Marketing

Lex Sisney shares the story of how he built Commission Junction, the world’s biggest affiliate marketing network. Listen.

Affiliate marketing, in case you don’t already know, is a core part of how “free” websites make money on the Internet. Websites with lots of visitors post ads. When visitors click those ads and buy something from the advertiser, that advertiser pays what’s called an “affiliate bounty” to the website owner.

That might not seem revolutionary, but it was a huge innovation in the way companies could market and sell their products. Prior to affiliate marketing, startups needed large advertising budgets just to get launched. However, thanks to affiliate marketing, startups had a way to sell products without paying any money up front, and that opened the door to tons more entrepreneurs.
Since the concept of affiliate marketing was first invented in the mid-90s, plenty of affiliate marketing networks have been launched. But the biggest and most successful one has been Commission Junction. And, on this episode of Web Masters, we get to hear from Commission Junction founder, Lex Sisney, the man who went from shoveling llama poop on his mother’s farm to launching the world’s preeminent affiliate network.

By |2024-01-18T20:26:08-08:00January 1st, 2023|

Borderless Podcast

My friend @DavidNilssen has just launched his new pod cast #thefutureisborderless and I was the sacrificial first guest. :-) David is a perpetual learner and I’m excited for the results. In this podcast, we discuss the big ideas behind my new book Designed to Scale. You can subscribe and listen to The Future is Borderless below. Enjoy.

YouTube – THe Future is Borderless on YouTube

Spotify – The Future is Borderless on Spotify

iTunes – The Future Is Borderless on Apple Podcasts

By |2024-01-18T20:21:42-08:00September 28th, 2022|

The Cultural Problems at Coinbase Aren’t Cultural

I found the recent employee petition to fire senior leaders at Coinbase—including the President & COO, Chief Product Officer, and Chief People Officer—quite fascinating. If you haven’t seen it yet, it’s worth a quick read. There’s a hidden reason these three roles are being targeted besides their seniority.

To summarize the petition, as the crypto market has collapsed, some members of the employee base are pointing fingers at leadership and calling for the ousting of the President & COO, Chief Product Officer, and Chief People Officer as the primary culprits for the company’s issues. I am sure that there are long-held grievances behind this petition that are only now coming to light because of the stress and fracturing caused by the crypto market collapse.

Certainly, a big part of Coinbase’s problems is that they prematurely scaled and over-hired. They are now laying off 18% of their workforce and that may not be the end of it. Coinbase isn’t the first hyper-growth company to make the mistake of presupposing sustained market demand, and it won’t be the last one either. But what remains unrecognized is that Coinbase actually has some some classic flaws in its organizational structure that are contributing to its breakdowns.

The employees don’t recognize these structural flaws—only the symptoms—so they are pointing fingers at these leaders to get them ousted. CEO Brian Armstrong doesn’t recognize these flaws either, so he is pointing fingers right back at the employees to “grow up or get out.” The irony is that, if these structural flaws remain, the leaders may change but the underlying issues at Coinbase will remain.

None of these structural issues that I’m going to point out are very apparent during the good times. In fact, many of Coinbase’s […]

By |2022-12-14T03:27:44-08:00June 17th, 2022|

Subkit Interview

Subkit did a nice interview of me this week under Go Solo. One piece of advice that I would share with new aspiring coaches, and that I didn’t mention in the article, is to have a process to take clients through. Meaning, don’t sell yourself. Sell your process. Of course, having a process doesn’t mean there is no flexibility in the client engagement. Every client is unique. But the process itself provides the architecture to deliver results for each client. Anyway, having a process to follow isn’t something that I fully appreciated when I launched my coaching practice twenty years ago. It’s one of those things where the value is only fully realized in hindsight and I would consider it essential. Hope this concept helps others in their own coaching journey.

By |2022-06-08T16:48:06-07:00June 8th, 2022|

A New and Better SWOT Analysis

SWOT is a solid framework for strategic planning. The concept is pretty simple and has been around since the 1960s. The idea behind it is that, to achieve operational excellence and drive the right strategy, you should assess your organization’s internal Strengths and Weaknesses and its external Opportunities and Threats (SWOT).

I like the SWOT analysis framework a lot. However, if you’re like me, you may have found that the actual usable outputs from a SWOT analysis have not been as effective as you had hoped. The “data” ends up being bullet points. The “insights” don’t reveal the root cause. The process generates a lot of opinions but it can feel harder than it should be to align the team on concrete action steps based on a SWOT analysis.

It’s time to solve these problems. It’s time for an evolution of the SWOT. What might this look like?

After working with several hundred companies around the world, I have developed two powerful tools that you can deploy immediately to take your SWOT Analysis to a whole new level.

I call them the Entropy Survey and the Top-Level OKRs Strategy Survey. Here’s a high-level summary of what you can achieve with them and how they relate to SWOT:

These two tools each complement the other. Using them provides three big advantages when compared to a traditional SWOT analysis:

  1.  It allows for better and faster data gathering.
  2.  It provides powerful mental models for your team to visualize its strengths, weaknesses, opportunities, and threats.
  3.  It identifies the root cause of problems so that […]
By |2022-05-12T20:48:44-07:00May 12th, 2022|

Listen to Designed to Scale on Audible and iTunes

I’m happy to announce that my new book Designed to Scale is now available on Audible and iTunes.

Before you buy, I’d like you to know that this is a VERY hard book to listen to as audio only. There are core concepts and visual images that require reading and reflection. If you prefer audio books, make sure to download the Audiobook Images PDF that is included with the audiobook to guide your listening. I’ve also been recording short videos on key concepts from the book that you can find links to here



By |2022-04-13T08:42:27-07:00April 13th, 2022|

Introduction to the 4-quadrant Structure Map

This is an intro video to the Organizational Physics 4-quadrant Structure Map tool.
Download the Structure Map template.
Buy the book Designed to Scale on Amazon.

The Structure Map is a powerful thinking tool to deploy the 6 Rules of Structure and identify any current structural breakdowns occurring in your business, to design the right new scalable growth structure, and to have easier and more pointed structural conversations with your team.

By |2022-03-24T10:52:37-07:00March 24th, 2022|

The Right Structure for Your Business Stage

What is the right organizational structure for the current and emerging lifecycle stage of your core business and any business units? Using the Organizational Physics Strategy Map as a guide, this video shows that:

  • A Pilot It stage initiative requires very limited structure.
  • A Nail It stage initiative benefits from a functional structure.
  • A Scale It stage initiative requires an evolving structure (based on the functions defined in the Nail It stage).
  • A Milk It stage structure requires making a break or escape from the legacy structure.

Additional Resources Referenced in this Video:
Buy the book Organizational Physics (best book for understanding lifecycle strategy)
Take the Top-Level OKRs Strategy Survey
Buy the book Designed to Scale

By |2022-03-09T22:08:07-08:00March 8th, 2022|

Design Controls Behavior

Design controls behavior. If you want new business behaviors, change the the organizational structure The 6 Rules of Structure provide visibility into key underlying polarities at work within every business. A key idea is to not treat polarities as problems to be solved. Polarities (e.g., short-range vs. long-range, efficiency vs. effectiveness, control vs. autonomy) must be harnessed to create the right amount of tension in the business for sustained strategic execution.
Buy the book Designed to Scale on Amazon.

By |2022-03-06T10:04:27-08:00March 6th, 2022|

The 6 Rules of Structure

There are 6 Rules of Structure to follow when designing a scalable business structure. They are:
1. If the strategy or lifecycle stage changes, change the structure.
2. Don’t allow short-range functions to control long-range ones.
3. Don’t allow efficiency functions to control effectiveness ones.
4. Don’t allow centralized control to overpower decentralized autonomy.
5. Put people into roles where they can focus and thrive.
6. Process brings structure alive.

Buy the Book Designed to Scale on Amazon.

By |2022-03-03T15:08:22-08:00March 3rd, 2022|
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