It seems like a pretty simple question, but I can guarantee you that if you ask your leadership team and your employees ‘What business are we in?’, you will get all sorts of different answers, including ‘I don’t know’. And most will think that’s okay because they believe it doesn’t make much difference. But it does.
Active Knowledge Question:
Are you in business to produce, deliver or fulfil?
Six Questions
Meeting customer needs is the only business to be in.
Here is a challenge, ask your leadership team members and other key people in your organisation to answer the following six questions as succinctly as possible:
- What does our business do?
- What is it that our business is really good at, that is, better than anyone else?
- Why do our customers keep coming back?
- Who are our customers? Describe them in detail.
- What does our brand represent?
- For what purpose does our business exist?
Their answers will reveal an enormous amount about your team and business. Not only the alignment across your team but also how they will think about strategy, growth and competitiveness. And be careful not to blend all the responses together by thinking that even though you received lots of different responses, you can understand what each is saying, and none of them is really that different.
Consider what each individual response says about their possible views and thinking on strategy, growth and competitiveness?
Let’s look at each question and delve into what they can reveal:
- What does our business do? – Does your team respond to this question in language that reflects they appreciate the real value and benefit you deliver to your customers? Or do they answer in a transactional or mechanical way, for example, we sell XYZ products? This is an important distinction as a team that recognises customer value can deliver on that value.
- What is it that our business is really good at, that is, better than anyone else? – If your team can clearly identify what you truly excel at as a business, then it reflects they have a good understanding of capability and can leverage those strengths to compete. If no one really knows what you excel at, if they provide a list or something which everyone in the industry is or has to be good at, then you know that they don’t believe you excel at anything.
- Why do our customers keep coming back? – A really solid understanding of why customers keep coming back reflects a focus on the customer and value delivered. Weak and non-committal language again reflects a lack of focus.
- Who are our customers? – Succinctly describing the profile and demographics of your customer base is a reflection of clarity of your target market and the commencement of being able to develop an effective customer persona that provides insight into needs and value. It also supports an understanding of how changing agents in the marketplace may impact need and value. Again, a long list of prospective customers with ill-defined attributes reflects a lack of focus.
- What does our brand represent? – The attributes of your brand should clearly align with customer value and areas of excellence in your business.
- For what purpose does our business exist? – Often, this question is poorly answered. Either a mission or vision statement is supplied or simply an answer of revenue and profit. The concept of purpose and its importance is discussed below. At this time, simply note the alignment across your leadership team.
Often the responses fall into two broad categories. Those who think of the business in terms of:
- Output: what I would call ‘transactional or mechanical’, those who see the activity of producing as core identity and function of the business.
- Need: what I would call ‘customer value’, those who see the business as meeting the defined needs of a specific customer group.
The Business Of Meeting Needs
Businesses exist to meet the needs of their customers, and if they do that well, then they make a profit.
But businesses should not see themselves as existing to make a profit. Profit is an outcome, not a catalyst, and to be competitive, you want everyone’s focus on what produces that competitiveness and the profit that will flow from it.
Meeting a customer’s needs better than anyone else is what underpins competitiveness. So how you express that activity becomes vital. For example, if you say ‘we manufacture pens’, the focus is on what you do, not who do it for or why they would buy your product. But if you were to say, ‘we are in the business of enabling people to communicate their feelings and thoughts’, you have captured need and can more clearly understand why someone would buy your product.
Businesses compete around the value they are able to deliver against a customer’s need. And any language used in the business should remind and refocus everyone on that need, the value you deliver and how you have chosen to outcompete all others.
The strategy that you develop, investment in and opportunities for growth and simply the ability to compete all become a function of how the question of ‘what does our business do’? is answered.
Needs Define Your Future
Your entire business exists to meet customer needs today, tomorrow and into the future. Your customers are today and tomorrow’s lifeblood and the compass for future direction.
And understanding who your customers are and what their needs are commences with the way you identify purpose.
Purpose is the cornerstone and reference point for the existence of your business. Real competitive strength lies in that purpose, and everything else builds upon it. Purpose reveals opportunities, ensures alignment and a compounding of effort. If correctly crafted, purpose is also the window through which endless opportunities for growth may be discovered.
Purpose is born in the creation of a business, the seeding of the original idea that launched that business. Yet it is often forgotten as the founder’s influence wanes or discounted as new leadership is appointed. And as everyone’s attention shifts to see profit as a purpose for existence.
Purpose is founded in meeting customer needs, and the question ‘what does our business do’?, should be answered through the lens of purpose.
Such clarity brings a competitive strength as everyone’s attention is to the customer need that the business is competing to fulfil, and how that need is and may evolve in the future, providing a roadmap to growth and opportunity.
A Relentless Focus
In a business where a relentless customer focus has been developed and is being sustained, you will likely see:
- A sense of purpose that is clearly connected to the specific needs of customers.
- A motive to compete overriding a profit-first motive.
- That customer need is the focal point of the business and all activity.
- Metrics measure the effectiveness of delivering customer value.
- Rewards are based upon contribution to purpose.
- Decisions are made and assessed by their impact on customer value.
- Growth opportunities are assessed against alignment with purpose.
- Profit performance is measured against that required for sustainability, reinvestment in future customer value, working capital requirements, and capital cost, including dividends – not against maximisation.
A relentless focus on the customer provides the cornerstone for the enduring success of a business. It ensures the business never loses sight of its customers’ needs and what the business must do to remain competitive. It also delivers a continual path for growth, with new opportunities always emerging.
As well it ensures the business is not distracted and chases various possibilities for growth and profit but rather keeps it anchored and compounding on its strengths.
A relentless customer focus is the making of great businesses.
The simple question of ‘What business are we in?”, provides a clear measure of focus, direction and alignment, which are the indicators of likely performance.
An entirely new level of performance.
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All the best in the success of your business,
Richard Shrapnel
