Identifying MEOs is a Key Leadership Quality
A massive energy outlay, or MEO, is a major “bet-the-company” initiative that has an attendant expenditure of human energy and measurable allocations of resources. A MEO consists of a dedicated set of actions taken by startups or established companies that lead to the realization of more, similar goals in the future. Sometimes MEOs are focused and are often multithreaded. Ultimately, a MEO is a major stepping stone that moves the company through similar – often smaller – MEOs on the path going forward.
However, identifying a MEO, shaping it in the company’s favor, and measuring it are tricky.
For startups, resources are constricted. A MEO is disruptive and demanding because it requires company executives and staff involvement. They, in turn, will involve a larger swath of employees, advisors, board members, outside subject matter experts, and others. It’s hard to predict the duration of a MEO, but it’s easier to define the results. MEOs such as initiating an intellectual property (IP) rights lawsuit against a competitor, lobbying the government for favorable tax treatment, acquiring another company, or scaling a new product can be new, untried or more intricate than comparable projects.
The first challenge for startup and established company CEOs is recognizing a MEO. If its pursued, the larger challenge is assembling the right team, and developing an execution plan, timeline, budget and metrics so it’s absolutely actualized. A MEO may originate in a Board meeting where, for example, a member might suggest that it’s the right time for the company to do a Series B funding round because of favorable financial and economic environment. Other examples include decamping from an investment by a Chinese company due to a change in trade policies, or the two-fold MEO of hiring new engineering leadership and pivoting the company. Check-backs with MEO originators, and incorporating their tweaks, are important CEO tasks that have to be factored into the timeline.
Once it is identified, a MEO is easier to execute. An unearthed competitive threat, technology that is patentable, widespread friction in the reseller/distribution channel, the need for new messaging or product positioning, or other MEOs sometimes originate from sources outside or deep inside the company.
Advisors are often called into early-stage startups, emerging and later-stage companies to help realize one or more “projects”. Increasingly, advisors – especially former corporate executives – are being asked to help identify MEOs and work on them. Advisor involvement extend the company’s resources, making it easier to accomplish MEOs and measure the expenditures related to realizing them. Advisors also bring fresh perspectives as well as market-tested ways to accomplishing them.
In the past, businesses have used the term ‘BHAG’ to describe a “big hairy audacious goal.” MEOs are more than a goal and more than a BHAG. A BHAG is valuable concept for focusing a large group, retaining their attention as a motivator, but they usually involve significant revenue goals. A good example of a BHAGs is hitting $100 million or $10 billion in sales. Sometimes it’s an outsized hiring goal, such as hiring a much larger group of product managers and engineers in a tight time period in the beginning of a new fiscal year.
One dramatic type of MEO is litigation or law suit. For a startup, a MEO may involve intellectual property rights, or a lawsuit for unfair competitive practices. Startup Boards, investors, advisors and CEOs make every effort to avoid litigation because of the likely “distraction” to executives and litigation economics (i.e., cost outlays of initiating and maintaining the suit versus reserving cash for operating expenses).
Another example of a MEO is raising the first institutional – venture capital (VC) – round of financing. In order to realize a VC-backed Series A, the company typically must show both capital efficiency through prior seed round(s) and evidence of minimally $1 million or more in annual recurring revenues or “ARR”. In order to achieve $1m ARR, the company must achieve $83,333 or more in monthly recurring revenues or “MRR”. Attuning the company culture to ARR and MRR is part of the MEO, but the Series A MEO has many more elements.
To achieve this MEO, a B2B software startup company must have:
A CEO in place
Technology assets
A sales or business development executive
A finance leader
An independent director for the Board of Directors, or at least candidates for the seat
Advisors or a board of advisors
Patent(s) and trademark(s) filed
At least one partnership – preferably reseller – in place, and
Other company elements
In addition to the above requirements, the company needs a presentation, executive summary of the business plan as meeting-prep material, financials including a multi-year (3 or 5 year) pro forma P&L, D&O insurance, and key employees in place with proper paperwork (such as NDAs and non-competes), etc.
MEOs are important in that they show how a company and its CEO tackles major initiatives. Over the course of the life of a company there may be just one MEO or many of them. Identifying the MEO and subsequently assembling the team, plan, timeframe, budget and metrics for measuring results. Having these key elements in place leads to a higher probably of success for each MEO that arises during the company’s lifetime.