As much as I tout the importance of having a unique business strategy, if you tell me that your company is unique I am ready to help you fix that.
All businesses (even yours) are fairly simple. You have a product or service that drives revenue, costs associated with delivering said product or service, and costs associated with selling, financing, and just ‘keeping the lights on.’ Most purported attempts to have a unique business model are the result of not fully grasping the basics.
- A business that evolved from an owner-operator to employees taking on responsibilities without any coordinated plan or, a business with a bunch of family members (or too many partners) in key jobs with unclear management structure
- A business with a key client that is probably more than one-third of the firm’s revenue, but with some sort of hidden obligation or “deal” that keeps the seller from expanding to similar clients
- A business feels that it is too busy to work on things that it knows or at least senses are important
Unique rarely means “difficult to copy” or “clever beyond words” though sometimes it does mean that the firm is failing to recognize its potential differentiators. More often it implies that no one would else would choose this model on purpose. “Unique” tells me that something needs to be fixed, and broken companies are just not that uncommon. It also indicates that the owner is probably out of touch with peers or colleagues in the industry.
Being different is an asset, but too often it is used as an excuse to avoid business fundamentals. When I study a “unique” company, the first thing I see is creative accounting. Not creative in that anything illegal is going on; rather, the bookkeeper has no idea what kind of business this is (because the owner doesn’t know either): Revenue is improperly segmented, cost of goods sold are non-existent, and too many expenses are treated as exceptions. Being able to see the numbers and connect them to business progress is a fundamental need.
The second attribute of unique companies is a broken or non-existent organization chart. Even a firm with five employees needs to clarify chain of command and responsibilities. I recently worked with a company whose HR/Payroll Director couldn’t get employees to fill out required paperwork without the Owner intervening. (Psst: don’t piss off the HR person!). Org charts are difficult for many companies because it requires facing the facts about longtime employees in the wrong position.
The third broken fundamental is an undefined compensation plan: Salaries that are all over the map and commissions based on something unhealthy. Given that payroll accounts for as much as 50% of a company’s expenses, why wouldn’t this be a priority? Being unique is a poor excuse for lack of applied skills.
The most telling trait of the allegedly different is that they aren’t different at all. In fact, the company has not changed in years, permanent growth is elusive, and every project takes extraordinary effort because…well,…a unique company does everything they do as if it was the first time. Every project is the same: a surprise.
Real business is boring, but boring businesses make money. The goal is to have a highly differentiated Strategy (with a capital S), but before a company can effectively execute an interesting plan, it has to have a very uninteresting business fundamentals.
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.