Rationalize Your Business in Less Than a Day

Human behind magnifying glass

In history, you can find a common thread linking all successful enterprises. The greatest achievements of humankind can be traced to our unique ability to rationalize a current situation, then create a plan that achieves desired future outcomes that are different, according to how we think they should be. The act of “planning,” then, is a fundamental human behavior that makes us so successful. It’s in our DNA.

On the other hand, when we achieve even modest success, especially in business situations, we can get a little too comfortable, and not plan. In fact, some businesses take planning seriously only when it’s necessary for survival. This is especially true for growth planning. Neglecting growth plans can have consequences that are often irreversible, especially in today’s shifting business model environment. Waiting even one year to plan for growth may be too late, unless the business gets very, very lucky.

Growth planning is a specific type of planning that requires a re-focus on customers. To ensure repeated success, leadership teams can jumpstart their growth planning efforts – and sustain them – by periodically re-addressing the three fundamental, recurring questions of the strategic growth domain:

  1. Where should we grow?
  2. What do we need to fix in our supporting value chain to support that growth?
  3. How should we manage our resources from here forward (what do we need to give up to support #1 – #2 above)?

I call it Rationalizing the Business. It forms the solid foundation of any growth plan quickly, and puts the excitement back into a leadership team’s planning by forcing tough, cerebral conversations. In essence, it re-visits what made the business great in the first place. And…it is repeatable.

Inarguably, Rationalizing the Business begins with question #1:  Where should we grow? The answer will involve quickly analyzing and, if necessary, refreshing leadership’s competitive positioning statements. To begin the process, leadership teams focus on the following areas of inquiry for each customer segment (or source of revenue):

  1. Name the “Customer Segment”:  Can you name a clear customer, or set of homogeneous customers, current or future, who are driving that source of revenue? What are the psychographic and demographic behaviors that bind this group? Is their churn increasing or decreasing? Are they becoming less frequent buyers, or price driven? How big is this group, and what volume do they represent? (Marketing folks will quickly recognize this step as a “customer segmentation.”)
  2. The Customer’s Problem:  What is that segment having a problem with? Why are they frustrated? What job (or outcome) are they trying to achieve? How are their environments or industries pressuring them and changing their businesses? Does it makes sense to split them into even more distinct segments, given their unique problem sets?
  3. Who is our Competitor? Who else can satisfy the customer’s need, or solve their problems? Can the customers do it themselves, in-house?
  4. Our Unique Advantage:  What unique combination of people, process, technology or information do we have that our competitors don’t have in addressing that specific problem? What can we do that our competitors will not or cannot do, either because it’s too hard for them…or too expensive? 
  5. The Offer:  What is our offer to the customer to solve their problem…the thing they pay for? What are we really selling them? Is there a clear benefit attached to the offer?  Does it need a refresh in packaging, technology, price or delivery method in order to align with problems they are having today and in the future? How does our offer stack up against the competition, if we can even name the competition?

Of course, when you combine the answers to the above questions, you have your basic customer value proposition(s), along with notional blueprints for marketing and sales, value chain investments, and product developments. For most leadership teams that I deal with, this takes only a few hours; however, in short order, we have already challenged the team’s business growth assumptions with customer-centric questions. We have also created the solid foundation of our customer-driven growth plan.

Rationalizing the Business forces an outside-in focus, which is the root of sustainable competitive advantage and value chain behavior. Many times, leadership teams with whom I work find that their competitive positioning statements have eroded over time, and new statements must be drafted and researched. In fact, I would call these ever-briefer windows of competitive advantage a trend, necessitating that leadership teams gather, at least annually, for a dedicated half-day. If not, the business is at risk of decelerated, or unsustainable, growth.   

Rationalizing the Business is a quick way to get the leadership team re-focused. More importantly, it is a customer-centric planning process. It is repeatable and relatively simple, exposing gaps in research or current understanding. Fundamentally, it forces the leadership team to build or reinvent a business model quickly around customers they want to win with; almost everything else in their value chains is waste, which can be – and should be – eliminated.

What is forcing your customers to change the way they do things? How often does your leadership team convene to formally address that question?

By Michael Levy, Growth Practice Manager, GENEDGE

Strategic Business Management