Liquidity-control (LC) companies are not concerned with how rapidly they grow, but instead want to produce significant liquidity for the owners while allowing them to maintain control over decision-making. Elisa and Mark fit this profile as owners of their watch business.
These are broad types, and companies can find a space in between. But, as they move from one part of the triangle to another, they are making trade-offs among the three main goals.
Each of these core types brings its own advantages and risks to be managed. And we know of highly successful companies that follow each path. The key is for the owners of a company to be aligned on what goals they want to pursue, recognizing that there are trade-offs among them. It is also important to revisit these trade-offs as things change, either external factors like the economy and industry consolidation, or internal factors like a shift in ownership or senior management. What worked brilliantly in one environment can be a disaster in another.
We have found that aligning on the priorities of the company is extremely helpful. But to make it real, these broad goals have to be translated into specific ways of measuring performance.