What business are you in?

While technology and products keep developing and renewing, we continuously need to adapt to the new realities as well. At the same time we must continue to pay attention to improving our present operations. We often see that while something new is being introduced and while the new product or service is not yet fully worked out, tested and functional, the “old” product or service is suddenly dropped. While the answer to address such a situation is often found in working harder, working harder alone does not solve the problem. We also need to work smarter. We need to continue paying attention to our present operations, while adjusting and anticipating to the new realities of the future. This is in fact a principle that we should apply not only in doing business but also in our personal lives. While we may have a vision of what our future will look like and work hard day and night to build that dream house for example, we may overlook spending our days in a way that is enriching our family and social lives. Instead we have no time to maintain and further develop the relationship with our spouse and we are not available to spend quality time with our children and be there for them when they need us most. Just like our customers, by the time our new product or service is available, they may have left.

While anticipating the future, we need to define what business we are actually in. We have to ask ourselves what is our business in terms of what  our customers need and not in terms of the product or service that we offer. While products come and go, basic needs of different customers stay around. Moving our thinking from a specific product to the purpose of that product, expands our horizon, for example from “we print newspapers” to “we provide the latest news”.

When you think “What business am I in?”, ask yourself:

  • What are our principle products or services?
  • What are some possible substitutes for these?
  • Why do customers buy these products or services?
  • What are the principle benefits they expect from these purchases?

Once you have clarified customers’ needs, you can think about how you have shaped or will shape the organization to meet these needs. To do this corporate profiling, you need to study the interaction of a number of key factors or business elements, through which you provide your product or service to the customer. Let us look into some of these key business factors.

Core goals are broad notions of the future direction, the fundamental accomplishments the organization wants to achieve. Asking yourself what it is what your company or organization is to do, will lead you to your core goals, which define the reason why you exist as a company – your mission or purpose.

Core values are what the organization stands for, finds important, subscribes value to. Values are what is really important in an organization and is reflected in the behaviour of people working there. However, if workers observe that management is saying one thing and doing another, they will become cynical and value statements become meaningless.

Strategy is the approach used to achieve the mission of the organization. Ask: “How are we going to accomplish our core goals?”There are many different strategies and each company must follow its own. However there are a few things we want to focus on while defining our strategy: (1) eEfficiency, (2) pProduct innovation, and (3) cCustomer relations.

Which of these three strategic approaches does your company now emphasize? You need to choose a primary strategy without neglecting the other two.

Business processes are interconnected activities that enable you to reach your goals. They include inputs (materials, capital, people), outputs (products & services) and feed back (required to continuously improve things).

Structure determines how people relate to each other and to the work flow and includes the following elements: departments, levels of supervision, job design, span of control, delegation of authority, physical lay-out. Structure determines whether a company can be fast and flexible or not, which is very important indeed in ever more competitive environments. The company which is able to produce and sell a new product first often takes the biggest market share.

Systems are the procedures, formal and informal, that make the organization function. They support the structure and include accountability, data/information system, feedback, recognition/performance assessment and training.

People and skills refer to the types of professions and skills that must be possessed by the people in the organization to be able to achieve its goals. Core skills are unique to each company and you must make your own list of operational competencies. Making sure that people in the organization possess these competencies includes recruiting & hiring, training & development, coaching & evaluation, career planning.

Culture refers to the norms of an organization, the way things are done.

Now you are in business!

Reference: “Mission Possible” by Ken Blanchard and Terry Waghorn.