Jean Roberts

Don’t ignore clear and factual signs that your business is not healthy, or your product is missing the mark.

If your business or organisation is picking up clear and factual signs that all is not well, then you have urgent and important work to do! Firstly, let’s address the difference and relationship between the Art and Science of business – and this analysis applies equally to commercial and social enterprises.

The ‘Art’ of Business is the doing of business

It is necessary to objectively assess how – and how well – you are doing business.

This requires a separation of (a) the way you operate as a business, from (b) the product or service you offer through your business:

• it is highly likely that your way of doing business is determined by a combination of the personality, knowledge, confidence, strengths, abilities and ‘comfort zone’ of key decision-makers in your business, and
• it is also highly likely that your product or service is something that your key decision-makers know exceedingly well or are inspired to know exceedingly well, and that satisfies or challenges their abilities to create and improve market/community and customer/client acceptance and loyalty.

Most importantly, establish one or more feedback loops to enable you to assess and measure the effectiveness and efficiency of your business methods and systems, and the market/acceptance acceptance of your product or service.

Tools to improve your comfort, confidence and competency in the Art of Business:

1. Know, understand and appreciate the difference and relationship between these six core financial principles, and apply them wisely in all business decisions

Cost: when you consider cost, you are considering the cash value of whatever your business has parted with or is liable to part with when committing to an expenditure for a tangible or intangible item, product or service,
Opportunity cost: when you consider opportunity cost, you are considering the value of a course of action which you could have taken but didn’t… due to the unavailability of resources (including your own time); wrong choice; or inability to appreciate, understand or accept the potential value of the opportunity,
Price: when you consider price, you are consider the amount of money which you – or a customer or client – is willing to exchange for an item, product or service,
Value: when you consider value, you are consider the benefit to the buyer or user of an item, product or service which you – or they – have accessed or purchased,
Added value: when you consider added value, you are considering a value that proves to be greater than expected, and involves no additional cost to the buyer or user – or to yourself,
Return on investment: when you consider return on investment, you are considering the value that directly results from the investment of any kind of resource, which may be tangible (able to be quantified, for example 20%), or intangible (leading to an opportunity that would not have been possible if you had not made the particular investment).
When you work strategically, you see that some of your costs are – or have the potential to be – an investment. Be prepared to be surprised and delighted at the variety of return on investment.

2.Track the use and application of inputs to ensure measurable outcomes

Inputs can include new or different ideas, opportunities, challenges, income, collaborators, suppliers, resources, premises. When these are added to the operation of your business, they should enable you to create, continue, improve or enhance the methods and systems through which you operate, manage and monitor your business.

Measurable outcomes are your planned improvements – which must contribute to:

• increasing sales,
• decreasing costs, and/or
• increasing market-share.

3.The difference and relationship between evidence and proof as a basis for problem-solving

Evidence identifies situations or circumstances upon which to base proof, or to establish truth or falsehood. Evidence provides a basis for testing truth, validity or quality. Evidence can best be described as ‘symptoms or a problem’, and most problems are identified firstly through symptoms.

Proof is the analysis of evidence in order to establish the truth, validity or quality. Proof provides the basis for action. Proof can best be described as the ‘cause of a problem’, and when you address the cause, you’ll automatically remedy or remove related symptoms.

But know and be confident that this process begins with evidence – it doesn’t stop at evidence!

4.Keep track of your tangible and intangible resources

• tangible resources are things you can see, touch and count, and
• intangible resources are what and who you know, your ability to conceptualise and analyse, your willingness to protect and defend what you have created, and your ability to apply your skill and knowledge in order to:
  • increase sales,
  • decrease costs, and/or
  • increase market-share.

The ‘Science’ of Business is the understanding of business

It is necessary to understand and appreciate the practical implications of what your business is doing – and how and how well it is doing.

If you understand your business, you will be able to monitor and measure progress, plan improvements or expansion, remedy deficiencies, and effectively manage your personal and business resources.

Understanding your business involves adequate and appropriate methods and systems to ensure sound research, planning, implementation and evaluation of decisions, and most importantly monitoring and measuring progress.

Understanding your product or service involves identification of the features and benefits of your product or service to such a depth and extent that you will be able to promote and sell your product or service appropriately to any audience or market. As your product or service earns an established customer base, you face the challenge:

• to offer an existing product or service into a new market, or
• to offer a new product or service into an existing market, or
• the more difficult challenge of offering a new product or service into a new market.

Tools to improve your comfort, confidence and competency in the Science of Business:

1.The reality of business life-cycles

An established business should be able, through retrospection, to identify several ‘life cycles’ in its history – points at which a new growth and development strategy has been introduced whilst maintaining an existing growth path, until such time as they either become unified, or the existing growth and development path has been phased out in favour of the new growth and development strategy.

Any business is wise to work within a theoretical framework:

• a theory is defined as a system of rules, procedures and assumptions used to produce a result,
• a framework is defined as a structure or frame supporting or containing something, and
• a theoretical framework is therefore a structure or frame supporting or containing a system of rules, procedures and assumptions.

The benefit of working to a theoretical framework is the ability to change, adjust or alter the rules, procedures or assumptions within the structure or frame that supports or contains them.

2.There is both breadth and depth in learning and knowledge related to your product or service

• breadth is best described as different uses and applications of your product or service, or changes in the context within which any user or buyer will expect to experience a value and benefit to their life or lifestyle because of your product or service;
• depth is best described as possibilities for improvement in, or expansion or transference of, the use and application of your product or service – this will involve you in further researching and developing or building progressive versions of your product or service: it may also lead to the addition of new and different items in your range of available products and services.

Facing an opportunity, need or challenge is a great catalyst for accepting that what and who you already know is either inadequate or inappropriate if your intention is to take up the opportunity, address the need, or respond to the challenge. Given a specific context, it is then possible to address either the depth or breadth of additional learning and knowledge needed to do so.

3.Deal with each problem or difficulty as soon as you are aware of it

This can be as simple as identifying the effects or symptoms and then locating the cause – or as complex as needing to make a public or market acknowledgement, or talking through options with your financial advisor.

4.Ensure effective and efficient feedback

Let’s take the example of a quality system – which, simply put, is a series of actions designed to ensure consistency in approach, process and output.

Feedback is the evidence you are able to gather as a result of measurement or assessment. It contributes evidence that may indicate the need to remedy a deviation, or introduce an improvement. Feedback can be facilitated by surveying or sourcing opinions, assessing levels of satisfaction, sourcing responses to new or intended initiatives, or assessing the needs and interests of customers/clients, employees, volunteers or suppliers.

The extent to which you integrate feedback into your methods of planning and improvement is the extent to which you will have control over these core functions.

Jean’s A-Z of Critical Success Factors

A critical success factor is a key factor which, if not functioning or operating to the desired level of quality, effectiveness and performance, may place your key decision-makers or your business at risk. When formally identified and positioned, Critical Success Factors can be monitored to ensure successful business outcomes, and form the basis for risk management and continuous quality improvement. Check through this list, and mark those for your early attention.

Jean’s A-Z of Critical Success Factors are offered in alphabetical order – they are all of equal value and importance in ensuring that your business is healthy, and your product or service is hitting the mark:

a) 1-year business plan
b) business methods and systems
c) cashflow management
d) debt avoidance or management strategy
e) decision-making, particularly complex or contentious decisions
f) external advisors – financial, accounting, legal, marketing, product, innovation, etc
g) financial viability
h) government support, subsidies, advice, mentors, courses, etc
i) innovative approach
j) investment strategy
k) legislative, statutory and contractual duties and obligations
l) marketing strategy
m) objective monitoring systems
n) operational functions appropriate to the achievement of your vision
o) premises and facilities
p) product or service reliability and improvement
q) project management tools
r) quality system, quality improvement, and continuous quality improvement
s) risk register and risk management system
t) sales strategy
u) self-respect, and self-support system and strategies
v) setting priorities for employing staff – including employ (full, part-time or casual), contract (hiring a person for a specific purpose for a specific period), outsource (invite quotes from suppliers for whom the activity or competency is their core business), using a temp (this person is employed by the Personnel Service, therefore all on-costs are covered but included in the hourly rate) – and most importantly, choosing the right time to employ
w) supplier relationships
x) task and time management
y) technical and business confidence, competence and development
z) using IT/technology as a ‘tool’, a ‘means to an end’ – as separate and different to IT/technology as your product/component/service

Greater details on the tools listed are provided in:

• One Man Show – the smallest of small business (Jean Roberts, 2008)
• Managing Governance in Nonprofit Organisations in Australia (Jean Roberts, 2004)