Having a strong sense of order and hierarchy, most of my MBA students –both in France and China– love to have some ranking on “How well do you get business?” A Mohs scale of sorts if you will. My answer is usually as such:
Stage 1. You’re thinking Product.
This is the usual starting point for engineers, PhDs, supply chain managers or a junior marketer. It’s OK, it’s the beginning of a journey where you focus on what stems directly from production, inventory, and quality control.
This part of the journey is starting with the tip of the iceberg. The tip that is in your care as an operational manager.
Stage 2. You connect Product and Problem.
Further down your career you better grasp business and start to see what connects you to the market, which is the underlying problem that your product solve. This is also where 90% startups fall short, being stuck at stage 1.
Or you’re a designer (which is quite a paradox for junior designers themselves, to understand that they’ve been trained better than marketers to understand customers, and as such what is ‘business’).
Stage 3. You connect Problem and Added Value.
This the key quality of people in a leadership position doing their job. Building added value for the market is the pivotal element of any performing –and as such sustainable– business. Thinking that way allows you to, not to just deliver a solution to a market problem, but also to outmaneuver ever-present competitors.
As such, ask any business “Who are your competitors?” and if they answer “We don’t have any.” then you know they’re not there (and their market is probably a low hanging fruit for the competitors they’re not equipped to see).
Stage 4. You align Problem, Added Value, And Product.
You might start building a problem when launching your company, then moving up from there and pivoting your business in a critical market problem, or you’re a visionary designing unprecedented added-value… However you do it, you’re managing to keep in check the three pillars of any solid business model.
Stage 5. You develop a personal business FOCUS
Lastly, past the alignment from Stage 4 you also understand that you can’t maintain top performances on all part of your business model. This is what Blue Ocean Strategy and other (complex) theories try to lay out.
If you’re Steve Jobs or Jeff Bezos, it’s easy because you’re borderline autistic in term of business focus (part of the package of being a charismatic and authoritative leader). For the rest us, this comes from experience and finding your personal focus. Rarely will a CEO trained as a mechanical engineer will develop a market-driven focus, she’ll be more often process-driven (Zeiss) or in some cases future-driven (Apple).
But focus also stems from companies the DNA of companies created fifty years ago. When you survive that long on a market, you tend to breed a specific culture. And when the going gets tough these companies also tend to forget who they are: General Motors cannot reinvent itself as L’Oréal would. Forgetting that, usually led to cargo cult initiatives where every three years every major company on the planet embrace a trend and go crazy on lean management, open innovation, or lately, design thinking.
There is no rule
Giving a universal scale on “How well do you get business?” is obviously a terrible thing to do. There is unmistakable hubris at play if you comply and do so -oh, well. But essentially it’s a convenient shortcut in trying to share how there is no insanely complex magic at play when it comes down to thinking about business.
The only core mistake you’d make is to think exclusively about the product. You might decide to focus on it, only when you understood first the full extent of your strategy.
I’m not going to lie; there is a junior-to-senior element in this discussion. Most of the time people in the industry crawl from stage 1 to 4, or 5, only after fifteen or twenty years in the industry. It makes sense, you educate and grow your vision of business in real life. It’s also a testimony on how bad (say ‘conventional’ if you prefer) are typical MBA or business training.
When having a two to three days training with executives in MBA, we very consistently accelerate that process and many have straight-up epiphanies. But no matter what, they will need time boxing with their new-found perspective in real life. Being comfortable with FOCUS takes time. Always.
You also can be at stage 5 from day one. Sadly, I more frequently meet people in executive committees stuck at 1.
Pricing always tells the truth
Finally, I’m obviously laying down this “5 Stages” logic very peremptorily, and I honestly don’t want to make a too long post at this stage. Just as a conclusion let me share an extra nugget…
When in doubt on “At what stage is company X?” always consider pricing.
Companies such as Apple or Tesla that are future-driven, neither sell their product. They sell their ecosystem or the ecosystemic problem their solve. They are clearly future-driven and wouldn’t care less for anything else. For Apple ask how many songs, videos, apps and games, and you might just understand their premium pricing. Processor speed or quality of screen as just an accessory to that. But Leica or Zeiss, although premium brands as well, don’t price the future they build for the market. They price product performance. Nike or Patagonia, on another hand, sell lifestyle…
There is no right or wrong there, only your focus.
If there’s no focus, then just try to maintain a margin on your cost of your goods sold, apply 4P marketing mix logic and enjoy while it lasts… You’re just a low hanging fruit for any competitor.