Many of my consulting projects focus on “taking business to the next level.” This is an inane bit of business jargon that ironically does a great job of representing the work I do. My job is to help owners and managers progress in such a way that they never use pithy phrases like that to describe their business goals again!
Company makeovers have become a mainstay of my consulting business, but not all makeovers are created equal. Out of necessity I have developed my own lingo to describe what stage a company is running at. While this isn’t a score card (hmm, maybe it could be?), it has become a great tool for keeping management focused on the goals and tasks that matter most right now.
Below are the four basic business levels I measure. If you can afford a consultant, then chances are you are solidly in the Beta phase. Most companies have accomplished at least some 1.0 traits and maybe even dabbled in 2.0. In any case, it is vital that we circle back and pick up the missing elements.
Beta – Proof of Concept
This is where the accidental entrepreneurs often find themselves. These are the folks with a great idea, in the right place, at the right time:
- The product or service shows promise, and someone is already willing to pay for it.
- There are at least key persons in place.
- The basic processes are in place to sell, deliver, and fund the product or service.
1.0 – Business Fundamentals: P&L, Pricing, Work Flow
Being in business a long time does not equate to a full grasp of the fundamentals. Let’s face it, if it were that easy everyone could do it. Sometimes companies excel at one of these traits but more often all three need attention:
- Having a well-thought out P&L means we can evaluate results, spot trends, and at least tolerate some structure and discipline. It is an indicator that we embrace the relative importance of revenue to cost of goods sold to overhead. – that the mechanics of profit are clearly understood.
- Proper pricing indicates that the business has evaluated its market: customers, competition, and its own value proposition.
- Work flow includes at least some sort of an organization chart, some defined processes with clear process owners, and methodologies for problem resolution (if not actual avoidance).
2.0 – Intentional outcomes: Budgeting, Planning, Strategy
If companies were able to achieve intentional outcomes, I guess business advisors would become extinct. This is advanced stuff and it often pushes owners and managers out of their comfort zones. However, the attractiveness of 3.0 traits makes the effort worthwhile:
- Budgets are necessary and often cathartic tools for enlightened business operators. They free up brain power for more important tasks such as strategizing. Budgets also allow us to quantify progress towards goals.
- Planning is an elusive trait as it is often confused with reacting. The two sometimes look the same, but good planning improves your options when it comes time to react. Mature companies create plans knowing full well that the plan will need to change. Like budgets, they are a choice that actually allows more possibilities to be considered.
- Strategy is the intentional effort to be unique or at least different. Few companies truly take the time or spend the effort or capital to develop a worthwhile strategy, but then not many actually get this far in their business progress.
3.0 – Institutional Success: Full Control Over Business Trajectory
This is where everyone wants to be: In control of their fate, able to take advantage of ideas, innovations, and market trends, able to turn the ship of business in any direction without losing speed. This means that introducing a new product, adopting a change in procedure, or on-boarding new personnel are everyday occurrences or at least easy to accomplish – given how well management, the team, and resources are aligned.
- Consistent execution is the norm. When something doesn’t work, much effort is given to understanding why and applying training, support, or retooling to avoid the problem in the future.
- There’s a process for process change. Whenever the need arises, the team can introduce a change in process or procedure with little delay and total compliance. This may require coordination across multiple departments and disciplines, but success is a given.
- Executives have the time and inclination to focus on strategic options rather than day to day business. Financial independence is status quo. Risk management is consistent.
These business levels become very important when we are reviewing the lists of needs, wants, and must-haves for the firm. Sometimes and owner’s must-have item is a 2.0 or 3.0 level skill and we haven’t mastered 1.0 yet. It is not usually difficult to explain how the progress builds to make the must-have achievable, because the true value in defining business progress levels is to prioritize the to-do list. For instance, there is no point in adding a new line of business when no one knows what the current lines are contributing! And even solid 2.0 companies need to go back and tweak 1.0 skills from time to time. 3.0 companies KNOW that they need to continually improve their 1.0 and 2.0 skills. That’s the beauty of being a 3.0 company.
To be honest, most owners I work with start out believing that they have achieved 1.0 levels and need to work on 3.0 (no one likes 2.0, but these items are mission-critical). Reality is that sometimes 1.0 has eluded businesses that are otherwise rather mature. The good news is that mastering one level means you can fully focus on the next, and isn’t that the whole point?
Tom Stimson, MBA, CTS, is president of Stimson Group LLC, a Dallas-based management consulting firm specializing in strategy, process improvement, and market research for the Audiovisual Industry. Tom is a Past-President of InfoComm International and a current member of InfoComm’s Adjunct Faculty.