Business Success: Mission, Strategy and ToolsBy Alejandro Tejeda | Fri, 09/02/2022 - 11:00
"All happy families are alike and all unhappy families have different reasons for being so.” This sentence is the beginning of the book Anna Karenina, but if we are talking about business, strategy and technology, what does an idea from Leo Tolstoy, written in 1877, have to do with it?
For me, there are philosophical doctrines that permeate management ideas. In this case, we are making an analogy in which we talk about the importance of a happy family but taking a company as a family. I invite you all to search the internet for all the most important and successful companies and you will realize that they all have the same thing in common: they have a clear mission and from there they derive their strategy and then their tools and tactics.
The goal of a company is not to make a profit. Rather, profit is a necessity and without it, they cannot survive. The goal depends on the company and that can even be a bit romantic. Here are a few examples:
● Autodesk: "Create software tools that allow people to experience their ideas before turning them into reality."
● Google: "To organize the world's information and make it useful and accessible to everyone."
● Facebook: "Giving people the power to share and make the world more open and connected."
● Spotify: "Giving people access to all the music they want, at any time — in a completely legal and accessible way."
● Slack: "Making the world simple, more enjoyable and more productive".
● Amazon: "We strive to offer our customers the lowest possible prices, the best selection available, and the greatest convenience."
Now that we know where a company has to start from to be successful, it's time to define how to get there ... and that's strategy. The core of the strategy is "what" (the mission) and "to whom" (the script). If you add "how," "when," and "where," you are making the plan or program and defining the tactics.
In the following, I will describe what for me are the determining factors that define the planning that will lead to business success and I will complement these with some tools that can provide support in correctly structuring these factors and some recommendations in this regard:
● What are we going to solve? The mission: It is, as I mentioned previously, the objective for which the company is created, which must be focused on solving something for someone and is always action-oriented.
● Who are we going to solve it for? Market/customers. They are the ones who will generate our income. If we are going to solve something, it must be because there is someone who requires that solution, otherwise there is no point in our mission. To do this, it is necessary to review the market and our potential customers, to prepare our marketing plan and start generating leads, registering them in our CRM tool and closing the sales thanks to the punctual follow-up that the tool organizes for us. Once the sale is generated, it is necessary to also have that process and invoicing considered in an ERP, otherwise it would be very difficult to know the most important sales indicators and we would not have data to make decisions.
● How are we going to solve it? Product/Service. The company has to be creative to generate a disruptive and different solution. This doesn't necessarily mean making a product that doesn't exist in the market but there can be many ways to differentiate ourselves, which can be by being more efficient and reducing costs, providing more eye-catching, better service, etc. The important thing is to find a way to be the best solution for our market through the product.
● How are we going to build our product or service? This is related to what makes up the product and either the human or material resources needed. They are as follows:
- Cost of sale. From the process of generating the prospect until it becomes a customer and the inputs contained in our product or service.
- Inventories. This is the cost of having the product stored in a physical space. Even if it is software and does not seem necessary to consider, there is a need to check if there is a cost for servers or other similar tools.
- Production. The process of creating the product or service. It is also necessary to measure it with software, such as ERP or MRP, to be clear about what is being invested in and what the cost of that production is, so as to know if it is generating a profit or not, after making the sale. With this, decisions can be made to reduce costs and increase profits.
- Personalized service. This can be considered from service during the sale or after the sale. It is ideal to have satisfaction surveys to quantify a factor that would seem to be unmeasurable. For this, there are computer tools and systems that help to carry out and automate the management of customer perception and, with this information, to be able to make decisions.
- Taxes. It is always necessary to have the factor of payment to the government well controlled, to avoid incorrect tax expenses and to save as much as possible in this aspect. ERP systems are also the best option for this.
● Timely accounting of revenues and expenditures. Management and handling of receivables from customers and suppliers. The simple basic premise is that it is best to pay later and collect earlier but it is necessary to be clear about when the outflow and recovery of money will be made with an ERP system, otherwise there is a risk of a lack of cash flow that may even affect the ability to pay working capital.
● Internal communication between areas. These are internal processes within the company. They are best managed and communicated through a transactional system that links all areas of the operation. Again, an ERP is recommended.
● Result: Profit and mission fulfillment. At the end of having all the income and expenses recorded, as well as customer satisfaction information, we can measure it with balanced scorecards that our administrative system gives us and in real time to make decisions in a timely manner. If you create reports manually, the information arrives out of date and it is possible that this margin of time in decision-making is the difference between generating profits or not and, therefore, survival.