Three is the Magic Number…
I bet some of you of a certain age are now humming this 🙂
Have you ever had one of those realisations that is so obvious, it’s in plain sight, but is still hidden to you?
One such realisation happened early in my business career.
It was around the early noughties, and I was in our boardroom with a bunch of consultants who were charging us several thousand by the hour. Great gig if you can get it.
We had retained Mckinsey & Co (American worldwide management consulting firm) to help us with our core strategy. They were grilling us on our business, market, competitors, etc. After a while, I noticed every question they asked or presented back was in groups of three.
I am a systems person; that is, I see connections in things, and this was definitely a pattern.
Questions like:
“In your market, name your top three competitors.”
“Do you consider them to be ‘large, medium or small?”
“What are your top three challenges?”
“What is the market’s top three challenges?”
You get the drift.
It actually made me a bit cynical, so I started to question their methodology. I added a new fourth category, like “very small,” or four competitors, four challenges…
The lead consultant, Sabine, just ignored what I was adding and carried on with the questions, and then asked to chat during the break.
Now you have to understand the context – I was a Senior Executive, early thirties, having exited my previous business. Still, more importantly, I was their client.
What I discovered from her during that break opened my mind. It was so obvious; this “three” couldn’t be a thing, could it?
Sabine explained the MECE principle and the Power of Three. This was core training at McKinsey on how to organise your thoughts.
MECE stands for Mutual Exclusive and Collectively Exhaustive.
She explained that life is simple when organised like this because the information is easily collected and analysed.
When you “MECE apply” it to a problem, you break that problem into subproblems (usually three). These are mutually exclusive (they don’t overlap) and comprehensively exhaustive (they cover all possibilities).
Why Three? People have a limited scope for new learning. It takes a minimum of three items to provide a pattern, and three seems to be one of the easiest ways to provide a framework for hanging new ideas on to.
We’re even introduced to it at a very young age:
The Three Little Pigs… Three Blind Mice… Goldilocks and the Three Bears…
It’s everywhere!
In films: The Good, The Bad and The Ugly.
In Instructions: Stop Look and Listen.
In Advertising: Just Do It, finger lickin’ good, I’m Lovin’ It.
In Science: Newton’s Three Laws of Motion.
In famous speeches: “Never was so much owed by so many to so few.”
Even recently, we are very aware of –
“Stay Home, Protect the NHS and Save Lives” and “Hands, Face, Space.”
In business, it is all around us. You will have heard concepts like ‘Market, Message, Media’, ‘Mission, Vision, Values’. Simple, memorable, and instructional.
Today I’m going to introduce you to our own foundational one for small businesses.
Following our rule of three will increase your business’s likelihood of providing the lifestyle you want.
Without it, you will end up stuck on the business hamster wheel, running harder and faster but not moving any further forwards.
The trinity for a small business owner is this: Why, What and How.
1). WHY are we doing what we are doing (purpose)?
2). WHAT does the business need to do to achieve this (financial)?
3). HOW will we deliver the result (activity)?
Everything else in a small business is just the noise that will get in the way of YOU achieving your goal.
So, let’s elaborate.
In your ideal world, what drawings will you want to take from your business?
As a family, we have a rolling ten-year ideal life plan. We have a wall in our family room split into ten areas, currently 2021 to 2031, and in each area, we place photos and pictures of things we want to do, have, and become. We then allocate a budget to each aspect.
The budget is split into money we need for the current year (money now) and money for future years (money future). This gives us a total annual drawings target. We now have our WHY, and it’s budgeted for.
Next is to reverse engineer the business to see WHAT it will need to do to make our target. But we are not looking for a revenue figure. Instead, we are looking for what number of our products or services we need to sell to hit that revenue figure.
We need something tangible, not an ethereal number that has no meaning. Remember the rule of three…we need to sell X number of Y product/service at Z price.
Achieving this will meet our revenue target and be able to pay our drawings to reach our WHY.
Every time our family has done this exercise, we have been surprised that the numbers are not as big as we thought they needed to be.
Finally, we need to understand HOW we are going to achieve this. What activities does the business need to do to reach those numbers? What actions need to happen to take a cold prospect and turn them into a client and deliver the product/service and the quantity.
But the real key to the third step is to allocate ALL those activities into your diaries. Your diary acts as a perfect alert for your business; if the diary slot is full, then we are on track. If that slot is empty, we need to address it and understand why it is open.
As an example, in our business, I know if we do four Discovery Calls per week, we will reach our target of clients, which will get our annual drawings, which will deliver our WHY 🙂
Everything boils down to this simple number thanks to our three steps.
This is easy but not simple and will take a bit of time; blood, sweat, tears, planning, doing, and reviewing. But I can promise you that having a really focused mind on what you should be doing every minute of every day will get the results for your ideal life.
It’s as easy as A, B, C.
BW,
Martin
Martin Norbury
Investor | Business Mentor at Advocate | Author of I don’t work Fridays
