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Seven Principles for Business
By John Mehrmann
Document the definitions for your business, organization, or your role in the organization. If you can document it, you can share it. With defined and aligned goals and purpose, individuals with an organization are empowered for personal success. The following seven principles may seem simple and obvious, as they should. However, would your definitions be aligned with everyone else in your organization or your customers?
1. Value
Business exists because it serves a purpose. That seems a little obvious doesn't it? The purpose is to serve customers, because your customers are the source of your revenue. It does not matter if you are manufacturing, producing, supplying, providing a service or support role. Every organization, position, job and career exists to meet the needs of it's customers or clients. Your value is the product or service that you provide to your customers.
Define your value, "what you do".
2. Customers
With a very clear understanding of "what you do", it should be very easy to name your customers. These are the people that you do it for, the people and organizations who have endorsed your products or services by electing to invest in them by a purchase, agreement or contract. Your current customers are your shareholders, because they have already invested in your product or services. It is very important to understand how your current customers perceive your value.
Name your customers and try to recognize how they measure your value.
3. Differentiation
Every business operates in a competitive landscape. All customers and organizations have a limited budget and must carefully select the goods and services that best meet their needs. Products and services may be chosen by style, quality, reliability, proximity, familiarity or relationship. Cars, restaurants, clothing, beauty salons, contractors and vendors are excellent examples of competitive landscapes. Once you truly understand your current customers and the reasons that they invested in your value, then you should be able to identify your competitive advantage.
List your competitive advantages and how your customers differentiate your products or services today.
4. Strategy
Understanding your current customers and product differentiation is important to maintain the current business. However, the environment and culture in which your current business exists is subject to change. It is necessary to monitor changes in the environment, competition and customer demands. Forecast anticipated opportunities and design shared strategic goals that are communicated within the organization. It is very important that existing roles and new program development are aligned with the shared strategic goals, even as the day-to-day tactical plans are modified for the current environment. Goals should support existing customers as well as the desired target customers.
Define three strategic goals that support the current business and the desired future target competitive advantage.
5. Organization
Business organization is based on structure. This includes the structure of the resources, manpower and materials. A structured organization relies on processes for consistent and organized performance, expediting response and improving efficiency. Modular organizations allow for flexibility and adaptability to changing environments, requests or customer needs.
Create a map of the current organization and define the primary resources necessary to achieve your strategic goals.
6. Profit
It is expected that the business exists with the intent to be profitable. However, many individuals within organizations do not fully appreciate the significant impact of their personal roles and decisions in relation to company profit. Speed and efficiency can impact profitability. Discounts, terms, purchases and deductions have significant impact on profitability. Time to market, time to service, number or resources and excess material goods can impact profitability.
Define the individual roles, responsibilities and decision making authority in terms of profitability. Do not only focus on the impact of spending, but also on the impact of customer loyalty and generating revenue. Every action has a reaction. Calculate the positive and negative financial reaction to individual actions.
7. Control
In the words of Benjamin Franklin, "A penny saved is a penny earned." Maintaining measurable controls of processes, resources and programs empowers accurate and decisive decision making processes. Control requires measurement. Measurement can be based on numbers, dollars, dates, percentages or similar METRICS. Controls can not be based on feelings, perceptions or concepts.
Measure, monitor and chart your controls to determine if your current value meets existing customer requirements and is aligned with strategic goals. If you can accurately correlate profit and performance with customer competitive advantage, and align the existing organization with company value, then you have designed a robust personal blueprint for success. If you can do this on paper, not just in your mind, then you can share this blueprint and empower the organization.
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Words of Wisdom
"The long-running successful organizations don't follow the paths of the moment or the latest trends. Their success is rooted in plain old solid and sustained execution of the fundamentals of business."
- Allan Gilmore, Vice Chairman, Ford Motor Company
"Sound strategy starts with having the right goal. And I argue that the only goal that can support a sound strategy is superior profitability. If you don't start with that goal and seek it pretty directly, you will quickly be led to actions that will undermine strategy. If your goal is anything but profitability - if it's to be big, or grow fast, or to become a technology leader - you'll hit problems."
- Michael Porter, professor, Harvard Business School, and author "Competitive Strategy: Techniques for Analyzing Industries and Competitors"
"Individual efforts can be completely successful when diverse courses align toward common strategic goals. However, uncommon courses that have no correlation to shared goals result in diverse creations that are at once celebrated for brilliant ingenuity and then promptly ignored due to a lack of relevance."
- John Mehrmann, Executive Blueprints Inc
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About the Author
John Mehrmann is a freelance author, industry expert and President of Executive Blueprints Inc, an organization dedicated to developing human capital and personal growth.
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