“Business has only two basic functions-marketing and innovation.” — Peter Drucker
How do you figure out what your organization or business is really about?
It’s one thing to know it intuitively. It’s another to be able to share it or have meaningful dialogue.
This is extremely important in an economy that’s contracting.
Why Does the Business Exist?
Obviously, it’s important when the economy is expanding too, but when the economy is contracting, it forces you to take a really good look at why the business exists.
Why do people fund you? What’s the value? What’s the intrinsic value of what you do versus what’s the market value? Have you found the right efficiencies or does it cost you a $5 to produce that item that nobody will pay you more than $1 for?
Here are the tests I use to quickly know what a team, organization, or business is really about:
Tests for Organizational Clarity
Here are the simple questions I use to test business clarity:
- Vision / Mission: What’s the one-liner vision and mission?
- Customers: Who’s the customer?
- Problems: What domains or problems does it focus on?
- Business Case: What’s the internal and external business case?
- Measures of Success: What’s the measures of success?
- Catalog / Products / Services: What’s the product line / deliverables / results?
- Rhythm of Results: What’s the product cycle or rhythm of results?
- Cost: What’s the minimum you need each month to stay in business?
If you know these, it tells you a lot.
Here’s a quick rundown on how you can use this.
Mission
Mission is who you are and vision is where you want to go. An important attribute in the mission, is some unique value or differentiator. If everybody knows the vision and mission, they can run to the same finish line.
For me, I like one-liner visions and missions that you can spit out in the hall without a cue card.
Customers
In a large shop like Microsoft, knowing your customers makes a big difference. For me, while I server a lot of customers, my main focus is developers.
While it’s partly a chicken and egg deal, knowing your customers helps you clarify which domains or problems you tackle.
When in doubt, ask your customers!
Problems You Solve
Owning important problems is key. I think you can measure the value of an org, by measuring the value of the problems it solves.
Business Case
Business cases are powerful because they justify existence and investment. I think looking through two lenses helps — what do your customers see as the business case? (why you versus some other group or service or product) … and what does your company see as the business case? (In other words, what’s the unique value to keep this group around and invest in it?)
One important piece of a business case is knowing how big is the pie and what’s your slice.
Measures of Success
Measuring success is important. Everybody wants to do a good job and know what it is. Knowing what gets measured tells you what’s valued.
Catalog of Products / Services
Knowing the deliverables in the form of a catalog or product line tells a lot about an org or team. I like to think in terms of portfolios of results. When I talk to teams about what they do, finding out what they deliver really cuts to the chase.
Rhythm of Success
The rhythm of results is important. This tells you a lot about the cadence, work styles, value of time, … etc.
Cost
How much do you need to make to stay in business? Or, as Drucker would put it, how much profitability do you need to stay in business?
You can use this insight to balance your costs and to stay within the bounds of your budget.
There’s obviously a lot more you can know about an organization or team, but I’m finding these are fast keys to cut to the chase and get to what counts.
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I do wonder what my business is all about, my Funstering mission. I think maybe frittering away the moments that make up a dull day. (In an off-hand way.) Hopefully I will figure it out soon. Adding to the planet’s song archives perhaps.
I’ve been thinking about reworking my business website to speak more directly to my customer base (small business). I feel pretty good about everything else, but I believe that honing in on a customer demographic is a great way to better understand your own mission and to reach the right clientele.
I’ve not given much thought to organizational clarity, since I started on my self improvement site. I’ve been pretty much going with the flow of things. Nevertheless, at some point in time, I am intending to narrow down to see what value created product or program I can offer.
Thanks for putting the questions here!! It’s a good guide to get me started in the thinking process.
Hi J.D.
This is a very important topic, we must have clarity in what we do. In our jouney to reach our dreams, in our businesses, in our life. Having clarity is what is going to have us stay on path and know which path to take.
Thank you,
Giovanna Garcia
Imperfect Action is better than No Action
Hi JD
I must admit that I really battle with some of these areas – especially things like a mission statement or value proposition.
Any ideas as to why that may be?
(I can only put it down to a type of fear or insecurity)Perhaps I simply haven’t struck on the purpose that feels most right for me…
Can you explain “rhythem of results” a little more? I don’t quite get the concept.
Thank you
Juliet
” Problems: What domains or problems does it focus on?” is the one I am investing the most of my thinking. Being in consulting biz for awhile I can see the type of services that are under demand is changing dramatically. Recession created new problems. It requires to review my services portfolio and act accordingly.
@ Jannie
Maybe it’s deliver more Funshine to the world?
@ Melissa
I think it’s about values. You get what you project. I used to think it was more about demographics, but now I think demographics are just a handle for values.
@ Evelyn
I think you have a lot of unique value you can use to differentiate. If you haven’t read Blue Ocean, I recommend it as a structured thinking approach for finding your differentiation.
@ Giovanna
I agree. I’m a fan of clarity. As much as I like to explore, I also like when I can set my eyes on the prize. It does help stay the path.
@ Juliet
I think it’s just a matter of examples. If it helps, check out my About page. I used a vision and mission for this blog to help me at least get a strawman (which I need to revisit.)
It’s OK to have a “good enough” purpose for now and you’re free to change your mind. Maybe writing it down will help you tease it out more.
The rhythm of results is your cycles of release or frequency. For example, how often do you post? How often do you ship your product? when do you release new products? … etc. It’s whatever flows out of your systems.
@ Alik
Just thinking in terms of a portfolio is a great start. It gives you a baseline and you can make the call on where you need to start investing, stop investing … etc. Consulting is a good place to be in today’s landscape for the short-burst gaps.
Oh J.D. Thanks for being so kind to my weird comments here. You are a shining star in the blogosphere.
I find that the mission statement is really the foundation of a business. The other factors are essential too, but know who you are will determine every other step. I bet most people can explain the mission statement of most of the Fortune 500 companies in one sentence.
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