Thoughts on Excellence Free E-Newsletter Series
Volume 9, Issue No. 2
By Dan Coughlin
Every day I thank my lucky stars that I had no business background because if I had I may never have learned as much.
When I started my management consulting business in 1998 I had no business experience and no business network. My background was in academic settings. I worked at colleges and high schools as a coach and teacher. My goal when I set out on my own was to work with other people so they would achieve great performances. The people who responded the most to me were business people. Consequently I focused most of my efforts on improving their performance and results.
Because I knew nothing about the business world and no one in it I was open to learning from everyone in every type of business. Along the way I’ve sat in the boardrooms of some of the world’s largest companies and breakout rooms in some of the world’s smallest companies. I’ve observed, coached, facilitated, and taught business executives and managers in over 30 industries. Throughout it all I’ve entered every situation as a student to see what I can learn from whoever is in the room.
The One Primary Question
As I moved along I kept wondering what it is that every company regardless of size or industry has in common with every other one. What I found is that there are seven basic business basics. The key to business success is to keep mastering each of those basics as well as you can regardless of what is happening around you. Here are the seven basic basics of every business. I’ve found that these seven basics also apply to every not-for-profit organization as well.
Why does your organization exist?
Every for-profit business has two purposes: one, to make a profit, and, two, to create and deliver certain types of value to certain types of customers.
Every not-for-profit organization has two purposes: one, to fulfill its particular mission, and, two, to generate enough funding and volunteer efforts to be able to continue to fulfill its mission.
There is a lot of talk these days about how organizations have to develop new business models in order to succeed in the post-recession economy. That is true. Organizations have to adjust to the changing times. However, I encourage you to be very careful about changing the purpose of your organization. Changing your purpose in the hopes of riding a new popular wave is probably the best step you can take to ruining your organization. Waves change, fads come in and go out, and you may very well find yourself riding high one day and crushing your organization the next day.
My long-time mentor, Dr. Alan Weiss, gave me a great definition of values: ‘Values are beliefs that determine behavior.’ I’ve used that every day since then. You can’t fake your values. If you’re ever wondering what the real values are in your organization, look at the behavior of the people who work there.
What values do you want guiding the behaviors in your organization?
- Determine the values that you want guiding behaviors in your organization.
- Hire people who demonstrate those values in addition to having the technical skills needed in your organization.
- Let go of people, regardless of how talented they are, who demonstrate that they are not willing to adopt the values you want in your organization.
- Provide positive consequences when you see the values you want, and negative consequences when you see the opposite of those values.
Content is what people need to know in your organization. Peter Drucker didn’t call modern employees ‘knowledge workers’ for nothing.
What do the people in your organization need to know very well?
That’s no small question. That is what separates one organization from another. The very best companies in the world in every industry have really mastered the understanding of the content they need to know. And they continue to master their understanding of that content. Their knowledge of that content is the basis of the value that they create for customers.
Knowing specific content and creating relevant value for potential customers is a critically important step in building a successful organization. But it’s a step that has to lead to another step, which is the delivery of that value.
Knowing how to and then actually making a great pizza is pointless if you are not able to deliver that value to customers. Having the greatest ideas and creating the greatest customer value in your industry is pointless if you have not mastered the ability to deliver that value to customers.
Delivery includes speed, accuracy, customer relations, problem-solving, and so much more.
How can your organization improve the delivery of value to customers?
The world has come a long way since Henry Ford first said, ‘You can have the Model T in any color you want as long as it’s black.’ The way you package the value you deliver means a lot, a whole lot. Good packaging cannot overcome poor value, but poor packaging can keep good value from ever being considered.
Look at the products and services you buy. Look at the places where you buy them. Look at the websites where you look at those products and services. Now tell me that packaging doesn’t matter. One of my favorite places to watch a film is at the Great Escape Theater in Fenton, Missouri, which is near where I live. Why do I love it so much? They have great big soft leather reclining chairs for every customer. You can watch a film on a folding chair, but the ambience created by a leather reclining chair makes all the difference in the packaging of the experience.
How can your organization improve the packaging in which it delivers and promotes its products and services?
Your brand exists outside of your organization and inside the minds of your customers and potential customers. Your brand is the value that your customers think they receive when they buy from you and your prospective customers think they will receive if they do buy from you.
What can your organization do to strengthen the brand that you want to be known for?
While you will never completely control your brand, you can influence what other people think about when they think about your organization. The absolute key to branding is to be thought of as the very best in the world in a specific performance category. What is the world you want to compete within and what performance category do you want to compete within? Once you decide that, then focus on being number one in that world for that performance category.
The economics of the marketplace definitely are partially outside of your control. However, much of your economic success depends largely on the decisions you make. When it comes to economics, there are four questions to consider:
- Do your desired customers believe that what your organization has to sell will be of value to them?
- Are your desired customers willing to pay what you are asking for your products and services?
- Do your desired customers have the money to pay for your products and services?
- How can you improve your current cash flow situation?
The Great Recession over the past few years certainly affected the answer to those questions. Even if a customer believed in the value of your products and services and was willing to pay what you were asking, he or she may not have had the money to make the purchase.
That scenario is what creates confusion. If you haven’t generated the business results you wanted over the past two years, is it that what you were selling was not of value to others, was it that your packaging was poorly done, was it that customers didn’t want to pay what you were asking, or did they simply not have the money to pay what you were asking?
Sorting out the answers to those questions is easier said than done. You have to determine if you should improve your products and services, sell something else, adjust the price, improve your packaging, or just be patient. Again, easier said than done.
My primary advice to you is to keep honing your purpose, values, content, delivery, and packaging. As you do so keep asking yourself if you are building the brand that you want to have and if customers feel that the value you are delivering is relevant to their wants and needs. If those two things are not happening, then you may want to make some adjustments.
If you are delivering the value that customers and prospects want and need, then be patient. Economies go up and down. You want to make sure that you are always ready to create and deliver great value. If you do that consistently, customers will find you in the best and in the worst of times.
The other critically important economic aspect is your current cash flow situation. For too many years too many companies thought cash flow equaled projected sales. That is a major mistake. Projected sales is a fancy term for ‘what we hope will happen.’ ‘Manufactured cash flow’ occurs when companies exchange projected sales for lines of credit or bank loans. The cash is there, but it’s not really cash flow. It’s loan flow. When the projected sales don’t go as projected and the lines of credit aren’t paid back, the lines of credit eventually stop being given. Then a company has debt and no positive cash flowing at all. In a nutshell I think that’s what happened in 2008 and 2009.
Consequently, you have to focus with discipline every day on improving your current cash flow situation. That is true in good times and in bad economic times. Constantly ask yourself if you are making wise investments in improving your company. Ask yourself if you really need to make a certain purchase several times before you do it. Once the money is gone, it’s gone forever. Will that investment be a good one for your company?
So there they are. The seven most basic basics of every business.
…and the next time we meet know that my goal is to learn from you.
Book Review of How to Hire A-Players by Eric Herrenkohl
Recently I read a very practical and useful book on talent management called How to Hire A-Players: Finding the Top People for Your Team, Even if You Don’t Have a Recruiting Department by Eric Herrenkohl. Here is my review of How to Hire A-Players and my conversation with Eric.
Republishing ArticlesMy newsletters, Thoughts on Excellence, have been republished in approximately 40 trade magazines, on-line publications, and internal publications for businesses, universities, and not-for-profit organizations over the past 20+ years. If you would like to republish all or part of my monthly articles, please send me an e-mail at email@example.com with the name of the article you want in the subject heading. I will send you the article in a word document.