The Fundamentals of Business Mastery

The Fundamentals of Business Mastery

The Fundamentals of Business Mastery Jonathan Poland

Overview

Business comes down to just two areas: investments and deliverables. Leaders make investments in people, products that are delivered to the marketplace. With success comes profit and growth. Success is created by mastering the fundamentals, allocating resources at increased scale, and adjusting to market changes. To do that means having the ability and commitment to improve offerings across iterations, increase efficiency and maximize budget, and more importantly, reach and serve more customers. The idea is to make investments across the following areas, so that you can create and extract more value from the business endeavor.

Strategy

The integrated set of actions an organization takes to achieve its goals; the art and science of allocating resources. Identifying the right trends and making the right moves to capitalize on them is critical to success. Do you have a competitive advantage? Check the following strategic metrics against your industry or sector to see whether or not you have a competitive advantage.

  • Sell a product or a service that is a basic necessity
  • Be the first capture a lot of market share
  • Operate in a large industry with little competition
  • Sell a unique product that doesn’t change much
  • Offer a unique service that’s difficult to replicate
  • Be the low cost producer and/or seller of basic necessities

Innovation

Defined as creativity plus delivery, innovation could mean creating entirely new industries or simply iterating new advancements on an existing model. It can also be vital to funding new investments, attracting great talent, and acquiring great assets. How?

  • Make innovation a key focus area in your business;
  • Invest in initiatives with enough resources to win;
  • Differentiate and improve value propositions as the market changes;
  • Launch quickly and effectively, scale in the right markets.

Operations

How goods are delivered to market. Successful companies build repeatable models around core offerings, focusing on attaining full potential. Improve the return on OpEx investments by identifying the ones that offer the highest value potential, optimizing resource implementation, and generate greater predictability. How?

  • Set automated policies and procedures
  • Manage people to ensure they’re meeting customer needs across interaction touch points.

Test. Adjust. Optimize.

Create new processes and procedures, test one different activity at a time or many depending on current level of consistent KPIs, adjust to the feedback in comments from employees and customers as well as financial KPIs, and finally optimize for scale and outperformance.

Organization

Despite the rise of technology and automation, business is still about people; and how an organization is structured is vital to culture and differentiation.

Skill transfer, talent management, culture change, and capability building are all equally important ingredients in executing. Turning foresight into key social, demographic, regulatory, and digital trends, can shape an explicit workforce strategy while improving productivity and efficiency.

Make the organization a better place to work by aligning the ecosystem to deliver on company objectives, and remain flexible to the needs of your talent, especially as the culture and society as a whole evolves over time. How?

  • Create flexible talent strategy to meet stringent business needs
  • Create talent systems and workforce culture for long-term organizational health
  • Develop leaders to deliver and sustain performance to drive growth
  • Learn, understand and strengthen workforce dynamics, incorporating compensation, training, employee engagement, diversity, and regulatory compliance
  • Turn the HR function into a business partner, driving strategic people initiatives while improving the cost, quality and speed of recruiting, training, and administration

Technology

Technology is now at the core of every successful business and should support business goals, not constrain them. Being able to effectively sort through crowded tech-based solutions to create lasting results.

Keeping pace with new and emerging technology can be difficult for even the most tech-savvy leaders, so start by focusing on strategic needs to determine the right apps and capabilities necessary to hit financial targets. Then, find, select, and implement the best technology you can afford to enable the right digital rollout, customer value adds, and sales, marketing, and operating processes. The good news is that there is a plethora of solutions to choose from, many equal weighted.

Technology, when utilized correctly, helps companies transform themselves and grow their business. If you’re embarking on major growth initiatives, identify the optimal solutions, aligned with business outcomes, and then develop an implementation plan — and execute.

Narrative

The blending of sales and marketing. Without revenue (aka sales), a business dies. To produce sales, marketing is necessary to disqualify non-buyers via prospecting and/or induce buying via a lead generation funnel. Each should work hand in hand to create the company’s brand narrative, which makes the entire process easier.

Global marketing spend exceeds $1.3 trillion a year, which is nearly 2.5% of GDP. In fact, marketing budgets have risen faster than top line sales for decades. Analysts report that 15–20% of that spending could be released through better ROI, allowing companies to return it directly to the bottom line. Businesses face a variety challenges today, including growth expectations, cut-throat competition, increased customer demands, and the social media revolution. Most businesses need to spend money to compete and many are not doing so.

How? Test. Adjust. Optimize.

  • Create new campaigns
  • Test multiple different activities per each product or service
  • Adjust to the feedback in comments and financial KPIs
  • Optimize for scale and outperformance.

Finance

Business is about capital. Leaders compete on the field of capital allocation. Finance allows them to determine appropriate metrics, define value aspirations, and then design and implement strategies to maximize the deployment of resources.

Every company wants to create strong and sustainable value for its owners. That requires making intelligent trade-offs — between pursuing growth and focusing on margins, between reinvestment and profit sharing, and in how to allocate capital and other resources across the business.

How strong is your competitive advantage?

Check the following financial metrics against your industry or sector to see whether or not you have a competitive advantage.

  • High Margins
  • Low R&D Costs
  • Consistent Profits
  • Accumulation of cash
  • Inventory rising with revenue
  • Low to No Debt
  • Retained Earnings Growth
  • Book Value (Equity) Growth

Risk

We live in a world of increased complexity and regulation and protecting against adversities and potential business disruptions is a must. We help members to do just that while still generating exceptional returns.

Competitive advantages can spring from intellectual property, whether protected by law or secret sauce (i.e. Coca-cola), this can help brand the business as it puts a stamp of exclusivity on it. Of course, legal protection doesn’t mean what you do is relevant or necessary to the market. Many companies have trademarks, copyrights, and patents even at the small business level, which never amount to competitive advantage.

The bottom line is failure to foresee and manage risk is not smart business. From tech security to legal compliance to financial risk, here are the key impact areas:

  • Digital, the infrastructure and architecture helps rationalize data and use it as a key strategic asset;
  • Operational, fail to manage non-financial risks and suffer impacts which can be even more serious financially than typical-financial risks. Manage these risks with company-wide tactical solutions;
  • Regulatory, new laws and regulation can cut across every industry and are becoming more detailed, extraterritorial, and the consequences of non-compliance more severe;
  • Workforce, growth changes company culture — fail to adjust with scale and face higher switching costs and profit stagnation.
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