Sunday, January 31, 2010

The Heart, Brain and Body of a Business

Arguably, a company is a living organism. I have struggled over the years to imagine just what form that organism should take. This analogy is to the human form... leaving aside the 'soul' for the future.

There have been champions of many management systems that ultimately could not support human life. Let's for the moment put these systems aside. We can leave systems of management for another post.

Now for the company as a human form... taking the heart as the life sustaining organ that it is. I believe that the heart of a company is in fact the customer! The health of the customer, and the way s/he is cared for by the company, dictates the quality of life for the rest of the business. Without the heart and the care taken to optimize it, customers don't place regular orders; they chose alternate service sources; they seek new equipment suppliers.

The heart is the pump of the company... but what does it pump? Many people measure the company's blood pressure and heart rate by looking at the revenue and profits... or the balance sheet with assets, debt and ownership. I really think that cash flow is the critical element (not that the others are unimportant) and therefore, it is like the blood flow of the organism. Measuring cash flow, and the impact on it by the decisions of a company is critical to good health... as in the human, rate and pressures tell a lot about the condition of the company.

I think of the Executive Management of the company as the brain of the company. In the human, the brain has several parts that control the way the body and its organs function. The company is similar, in that it has the left/right tendencies like marketing, finance, sales, accounting, human resources, legal, and engineering... they all have their spot in the skull (corporate offices). The right side is the creative and soft side, while the left seems to stick to the numbers. As the executive components strategically direct the company... the organs (departments) allow the business to operate efficiently.

The legs of the business seem to be the the engineering/manufacturing departments... research, development, and sustaining engineering... along with manufacturing gain strength from hard work. They can support the business as long as they are kept in good condition. As the heart of the company, the customers, allow orders to flow, the manufacturing departments become more efficient.

The arms of the corporate organism are the sales and service organizations... hunters and gatherers, depending on the market dynamic are capable of making all the difference to the company... as they have through their evolution in the human body. While examples of evolutionary development are the apposed thumb for holding things, there are also developments like prosthesis for when damage has been done to an appendage... or organ transplant in other cases. One could speculate as to what a lobotomy would constitute in this analogy.

The organism's senses (sight, hearing, smell, touch and taste) are the marketing teams... market analysis allows the company to develop it's strengths into a cohesive, strong body. It can, with good senses, give direction and support to all aspects of the corporation. The brain that has good senses (and sense) is far more capable of understanding what the heart is needing for not only sustenance, but for vigorous growth.

The spine and nervous systems are made up of the various processes that are implemented to make the parts work together. Process management and the quality components that are built in are like the ISO of the body form. It is critical that the nervous system be capable of sensing all aspects of it's life. If there is damage to the process system it can cause catastrophic impact on any or even all life support.

When one uses the human form as the example, we can see many things that can cause the weakening or death of the corporation. Excesses are often the culprit. A lack of exercise; disease in one department; balance... all need to be carefully monitored by the brain. But it is still the heart that needs to be taken care of... and each organ or part of the body needs to be in good shape to accomplish this main goal.

Conditioning of a company is easier to me, when I equate it to a human body. We seem to think of a company as an inert blob... as a result we don't take care of it. We don't give it caring support. We don't worry about it's health, as long as it is paying our bills. What of the corporation that smokes, is obese, drinks excessively, and is on life support...

Tuesday, January 26, 2010

Don't Forget the Market in Marketing Products...

Misunderstanding the continuing market potential of mature products can be the cause of excessive or wasted investment in product cycle development. I have noticed companies relying on what has worked in the past, failing to look at forward potential. The causes are many, but I see these as critical faults:
  • companies often fail to do the necessary customer education and merchandising work to extend the life cycle of a product or technology.
  • business units miss the transition to new technologies that could fit their underlying market advantages... installed base, sales and service expertise, early adopter relationships and so on.
  • corporations don't fund regular market, technology, regulatory, patent, and competitive studies in order assure strategic stability of legacy products for their divisions
Frankly, I think that some companies allow their heritage of strong engineering or accounting departments to overcome the need for market intelligence. Marketing function(s) (remembering please, that marketing is not a one dimensional function) are an insurance policy for the board of directors and executive management to utilize to ensure the future is protected. Market studies; bench-marking technologies and performance data; utilizing focus groups to see the future as well as product issues; thorough analysis of competition at conventions by tech and market experts are all examples of keeping an eye on where the market is/is going.

It can be a costly error for corporate leaders to rely on the mechanics of business (accounting and engineering) to drive the future. The automobile and steel companies are not the only examples of this myopia. On the other hand, some automobile and steel companies have also used uncanny market savvy to maximize their potential by looking to green product horizontal development for their recent successes.

My point is, don't forget the market in marketing.