There are many ways we describe a business in an attempt to reflect where its focus may be – for-profit, not-for-profit, triple bottom line, public, private – and so the list may continue. But for a business that wishes to excel, to bring its greatest potential to the forefront, there is only one path, and that is to create a ‘for-people’ business.
Active Knowledge Question:
Profit, TBL, not-for profit; is there a way you think of your business? And how does that support the performance of your business?
A ‘For-People’ Business?
A for-people business is one that first recognises that it exists within a community of diverse people, all of whom can have a direct impact on its success and survival.
There are customers, ‘employees’ and members of the community in which it operates. Note: I have not included shareholders as I consider them one in the same as the business – more on this aspect shortly.
In today’s marketplace, when we think of ‘employees’ we must include everyone who works within and with a business no matter what the underlying contractual arrangement may be. It is likely a wide and diverse community with many different backgrounds, cultures, needs and working relationships.
The second, and more important, condition of being a for-people business is an acceptance that its reason for existence, is to meet the needs of a defined community – its customers.
It does not exist to profiteer from its customers but rather to meet their needs, and if the business does this well, great profits are one of the outcomes. Shareholders are beneficiaries of a business that competes well and meets the needs of its customers better than anyone else.
A ‘for-people’ business is one that believes it exists to compete in meeting the needs of its customers and profit will be an outcome of how well it does that.
What Does It Mean To Be A ‘For-People’ Business?
Most people would say that businesses exist to profit, but that’s like saying an athlete exists to win medals. Athletes train to compete in their chosen sport, and if that do that well, winning medals is just one of the outcomes. Athletes that chase medals typically don’t win many. Businesses exist to compete in meeting the needs of their customers in their chosen marketplaces, and if they do that well then profit is one of the outcomes.
A ‘for-people’ business understands that there is a competitive engine at its core that determines the floor and ceiling to its success. If the business is competitively fit with a strong competitive engine, it will continually lift the ceiling to its success, and more profits will be earned.
Part of the workings of the competitive engine is an understanding of the relationships that exist between a business and the community of people within which it exists and growing the strength of those relationships in the right manner. There are three sets of relationships that are vital – customer, ‘employees’ and the wider community.
Customers
Are you in business to profiteer from your customers or are you in business to meet their needs better than anyone else? Only one of these choices – customer or profit – can be first.
A ‘customer first’ focus requires placing the customer and their needs at the centre of your business, and everything else then orientates to this view.
A focus on your customers requires that they come first in all of your actions and decisions. Your entire business exists to meet their needs today and into the future. They are today’s lifeblood and the compass for future direction. Failing to place them first is to allow yourself to be defeated in your chosen marketplace.
The ability of a business to achieve a true customer focus is often stymied by a profit-first motive and associated cost reduction initiatives that are developed to deliver budgeted profit outcomes.
A true customer focus, once developed, provides a competitive platform through which the business is able to continually deliver greater value, therefore, outcompeting others in their market. While also continually finding new opportunities for growth to expand their business and the relationship they have developed with their customers.
‘Employees’
What do you think drives the competitiveness of your business? Leaders often think of their competitive strength in a tangible context – store location, plant, products, platforms, IP, channels, legal rights etc. These are assets that can be readily owned, controlled, valued and sold. But they are not the source of competitive strength in your business and their value is superficial at best.
Someone founded the business, found the perfect store location, designed and created the plant, the platform, built the community, and so on, all of which allows your business to compete effectively.
Without the human element in creating, sustaining, and evolving your business’s competitiveness, there would be no business.
A business is nothing more than the sum of all the people who work within and with it. Its competitive success is derived from the combined strength of its people. Engage with them well, and your business will be successful. But fail to build trust and engagement, and your business will never achieve its potential.
The Community
There exists a symbiotic relationship between businesses and the communities in which they exist. This relationship is far more fundamental, and vital, to the well-being of the business and the community than the CSR type programs that are often exists.
A business that is well run and managed provides fulfilling employment to the community in which it exists. That community – being well remunerated and provided with vocations that meet their needs as humans – in turn, are able to support those businesses to grow and become more successful. Not just by buying their goods and services but applying their combined talents and efforts to maximum effect in making that business competitive.
But introduce profit-first as a motive, and then wages are seen as a cost to be reduced, and self-interest, short-termism, and politics are suddenly prime, and the connection between the business and community is broken.
What About Shareholders?
Most business leaders believe that their prime responsibility is to the shareholders of their business and their task is to maximise profit and therefore, market value. But their focus on trying to maximise profit is often misplaced as a focus on profit typically results in actions that in fact sap the competitive strength out of their business and reduces performance and potential profits that may otherwise be earned.
A shareholder’s interests are aligned with that of a business. A focus on the relationships with customers, ‘employees’ and their wider community, lifts the full potential of the business to the forefront and maximises its impact with all the flow-on benefits.
But place profit-first as the centre of attention and all these relationships suddenly come into conflict with that focus and degrade along with performance and profit.
Great enduring businesses are made when people come first, recognising:
- Everything orientates itself to customer needs and delivering the greatest value possible. For today and tomorrow.
- Your business comprises everyone working within and with it. Competitiveness requires trust and engagement – engagement of the human potential in your business through purpose, habits, motive, relationships and character-first.
- Strategically, a symbiotic relationship does exist between the business and the community within which it operates and is the cornerstone of the long-term success of any business.
Consider reorientating your view of your business to one which is a for-people business, and use its competitive engine to strengthen these relationships, and the performance of your business will lift to a level you never thought possible.
An entirely new level of performance.
Want to become a part of the Entrepreneurs+ Community and learn how to make your business competitively fit? Join now.
All the best in the success of your business,
Richard Shrapnel
