Guide to Business Building: A 3-Step Strategic Model
How to Build Your Business: A Three-Step Strategy
Every successful business reaches a performance plateau where the ability to transition to the next higher level of achievement requires new and different resources and new ways of managing those resources.
Businesses owners are sometimes perplexed as to how to meet the challenge of these plateaus. For example, the CEO may want to grow sales by expanding the marketing capability of his company but does not have a marketing background or in-house marketing talent to help guide the change. Or, the owner may wish to strengthen her entire organization, which involves non-traditional activities like training or upgrading the CRM (customer relationship management) capability.
In fact, these owners most likely possess the knowledge of what to do. They have only to think through the process they used to start and grow their business, and then adapt this experience to the new challenges.
It can be helpful in instances such as these to provide a framework for this activity and that is the purpose of this article.
PURPOSE
The purpose of this article is provide business owners/CEOs with a simple, clear template to begin the process of identifying, acquiring, and managing the skills, knowledge, and talent needed to raise their organizations to new plateaus of performance.
A THREE-STEP STRATEGY FOR GROWTH
The following three steps can be used for specific tasks (such as upgrading the marketing function) or for efforts that broadly embrace many of the functional departments of the company:
1. Build Effectiveness
2. Manage for Efficiency
3. Optimize for Total Return
These three steps focus first on doing the right thing (effectiveness), then doing the thing right (efficiency), and finally managing both for optimal performance.
1. Build Effectiveness
The primary focus in this stage is to identify and implement activity that most directly contributes to company growth and performance. This stage recognizes that there will be start-up costs and frustrations. These will be remedied in stage two. In other words, you do not what to become efficient at something that is not going to be effective.
1. Identify in what area(s) a new or improved level of effectiveness is desired.
2. Set corporate objectives for the specific cost/benefit that is expected from the improved level of effectiveness.
3. Set departmental objectives and strategies (e.g. for marketing, sales, or operations) for the areas in which the contribution from the new effectiveness is expected.
4. Use the 4 Cornerstones of Business Model to identify specific action steps:
a. People: select, train, and motivate the right people for the right job.
b. Process: incorporate the new activity into the overall management process including monitoring and reporting on actions and results. Determine the need for new management concepts like the sales funnel.
c. Assets & Resources: think less of traditional, hard assets like plant and equipment and more of the soft assets like databases and software services.
d. Money: assess cash requirements and expectations of return. For long-term ROI, you may have to build your own model e.g. predicting sales from initial lead generation.
5. Execute the plan
6. Monitor and analyze the results, and close the loop by identifying future improvements.
2. Manage For Efficiency
The primary focus of this stage is to refine the newly acquired effectiveness so that it generates desired results with less money, fewer resources, faster, and with less management oversight.
The steps in this stage largely mirror the steps in the prior stage except that they have a different focus through different objectives.
1. Identify in what area(s) efficiency is desired.
2. Set corporate objectives that specify the cost/benefit that is expected from the improved level of efficiency.
3. Set departmental objectives and strategies (e.g. for marketing, sales, or operations) for the areas in which the contribution from the new efficiencies is expected.
4. Use the 4 Cornerstones of Business Model to focus on action steps for:
a. People
b. Process
c. Assets & Resources
d. Money
5. Execute the plan
6. Monitor and analyze the results, and close the loop by identifying future improvements.
3. Optimize for Total Return
The primary focus of this stage is to integrate the building and managing steps into a disciplined system of developing excellence and continuous improvement through these activities:
1. Become a strategy-based company: develop and follow specific written plans that start with objectives, then establish strategies (plans in key result areas), and finally identify tactics (specific actions).
2. Experiment & Test: learn what works and discard what doesn’t.
3. Get out of the comfort zone: expand your opportunities by expanding your horizon.
4. Become a company this is constantly learning
5. Become more analytical (use metrics and fact-based decision-making)
CASE STUDY
A major moving company in the northeast desired to consolidate its various business units under a new brand identity and strengthen its sales and marketing efforts to capture incremental revenue, especially in the upper, more profitable tier of high profile commercial moves.
We started the assignment with a three-stage plan that began with a discovery phase and a timeline. Extensive data gathering, analysis, and internal group conversations led to a new positioning that became the basis of branding and enhancements in marketing, sales, and IT.
Effectiveness Stage
People: we provided marketing and sales expertise, and IT was developed internally. New marketing and sales materials and a new website were developed by outside agencies. Sales personnel were assessed against new objectives and a process of upgrading the sales function began.
Process: many process improvements were installed that included performance monitoring, better internal reporting, and tighter integration of executive departments (CEO, accounting, operations, and sales).
Assets & Resources: in addition to investing in marketing materials, a major investment was made in the CRM system, including new software and data cleansing. (The need to upgrade the CRM system was identified during the discovery phase.)
Money: in total, major investments were made in people, materials, soft assets like software, and a continued commitment to training.
Efficiency Stage
Additional people in sales and marketing were added with a view to improving analytics, fact-based decision-making, and selling effectiveness.
Optimization Stage
The company is just entering this stage. Changes made over the past year helped the company minimize the effect of the slowdown in commercial moving; image enhancements have generated new opportunities for presentations to the targeted top tier corporate accounts; and new sales personnel have closed a higher percentage of leads.
Mission: To help small and mid-size businesses capture the power of big-picture marketing.