Back To Business Basics
by Gerald Drumwright

Unless we change our direction we are likely to end up where we are headed.
- Ancient Chinese Wisdom

Imagine striding up to home plate in Yankee Stadium for your first at-bat in a major league uniform. The crowd is going wild as you set your feet shoulder width apart, concentrate on keeping your wrists loose, your elbow up and head down. You start a few practice swings when suddenly you hear a whoosh and a thump as the ball hits the catchers mitt. "Strike one!" shouts the umpire. In all the confusion, while concentrating on hitting technique, you forgot the most basic rule: keep your eye on the ball!

Compare my baseball fantasy with running a business these days. We have trade magazines and business newspapers arriving non-stop, seminars, trade shows, business schools, books, and now the internet, with more information than you ever wanted to know just a "click" away. The pace of change in markets, technology, demographics and customer relationships is accelerating. We are so inundated with information that it can create gridlock. When that happens to me, I refocus my attention on business basics. After all, I don't want to be like the squirrel that was so preoccupied searching for his next acorn meal that he forgot about the neighborhood dog until the dog was slobbering on him.

Other than blind luck, which most of us can't count on, successful businesses are built on a good plan which is well-executed. A good plan will tell you where you are going and how you are going to get there.

Now I'm not talking about the kind of plan where you and your accountant spend days filling up Excel worksheets fabricating, rationalizing, and sometimes just plain lying to make the figures come out the way you want. If you dress them up real nice and put black numbers at the bottom your banker might buy you lunch. Not that they aren't useful. Financial projections have a definite place in every business arsenal and very well may be a part of formulating a good plan. However, they are often used as a poor, busywork substitute for the real thing.

I like the way Peter Drucker phrases it in The Effective Executive:

"Courage rather than analysis dictates the truly important rules for identifying priorities;
* Pick the future as against the past;
* Focus on opportunity rather than on problem;
* Choose your own direction - rather than climb on the bandwagon; and
* Aim high, aim for something that will make a difference, rather than for something that is `safe' and easy to do."

Where are you going?

Do you remember this passage from Lewis Carroll's Alice's Adventures in Wonderland?
"Would you tell me, please, which way I ought to go from here?" asked Alice. "That depends a good deal on where you want to get to," said the Cat.
"I don't care where," said Alice.
"Then it doesn't matter which way you go," said the Cat.

Most of us can agree that we ought to know where we are going but when we try to nail it down everything gets fuzzy and confusion sets in. In the macho world of business this all gets a little too "touchy-feely" anyway. The testosterone starts pumping and we anxiously buckle on our swords and charge into the fray.

Why is it good to know where we're going?
* Focus. Lack of focus is the #1 cause of business mediocrity.
* Teamwork. Everyone in an organization should know the plan and his/her part in it.
* Leadership. How can you be an effective leader if you don't have direction?

Actually, I suspect many of our fearless company leaders have an idea about the direction of their companies but it may be a half-formed dream that they keep to themselves. Half-formed because it has not been articulated, reshaped under the harsh light of other opinions and sound business judgement, and annealed in the real world of business. As Warren Buffett has said, "There is something about smart people explaining their ideas to an orangutan that makes their decision-making better."

Alright, so you're convinced that you need to know where you are going but the concept is still fuzzy. That is a fair but difficult point and one that many books and intellectuals have complicated way beyond common sense.

The short and simple answer is a good plan builds on what you do best and concentrates on those who need it most. That doesn't mean what you do second best or third best or just as good as your competitors. What you do best. It doesn't mean those you can sell it to. It means those who need it most. So, how do you identify what you do best and which customers need it most?

Generally, "what you do best" will revolve around one of the following areas:
* your product concept
* the class of customer or user you serve
* the technology at the root of your business
* production capacity or process capability
* sales or marketing method
* distribution method
* access to certain natural resources

Begin to identify customers / prospects who need your product or service the most by pondering the following questions:
* Which customers are heavy profit contributors and which are marginal?
* Which customers do you seem to have great relationships with and which are adversarial?
* What industries do your customers represent and what are the trends in those industries?
* What are we doing that is valuable to our customers and how can we be more valuable than our competitors?
* Are trust, respect, security, longevity, or aggressiveness part of the value equation?
* How do customers / prospects distinguish us from competitors?

A recent magazine article describes a company that hit a growth plateau and couldn't determine the reason until they analyzed their customer base. They categorized customers according to these criteria: high volume, high margin; low volume, high margin; high volume, low margin; and low volume, low margin. Out of 157 customers, 101 were determined to be in undesirable categories. Over a four year period, and with a lot of armpit sweat, they gently pushed away those 101 accounts. In the meantime

revenues rose 45%! While this example seems extreme it points out the importance of knowing what you do best and doing it for those who appreciate it most. If you would like to read the article in its entirety you can find it at: http://www.inc.com/incmagazine/archives/12980571.html

One more time, what is the point?

Allow me to create an analogy to illustrate:
You have a son in his fifth year in college, still classified a junior because he has changed majors so many times.

Point #1: You must know where you are going or you will waste precious time and resources.

He comes to you and says, "Dad, my buddy is in medical school and I think that would be a very rewarding way to make a living so I'm thinking about switching majors to pre-med."

You say, "Son that's an interesting idea but have you forgotten that you've flunked every biology and chemistry course you've ever taken? I don't think med school is a good idea but I do have an alternate suggestion. I `ve always admired your ability to think on your feet, your persuasiveness, and your knack for having the right thing to say for every situation. I think you have great gifts and potential as an orator. Have you thought about law school?"

Point #2: Know what you do best to avoid competition where you may not have an advantage.

Your son follows your suggestion, excelled in law school, and is now on the verge of graduating. He has received an excellent offer from a firm of tax lawyers and a subsistence type offer from a firm of trial lawyers. Because of your son's oratorial gifts, you suggest he cast his lot with the trial lawyers.

Point #3: Match what you do best with those who need it most. When you are providing real value the money will follow.

A note of caution: We've talked about recognizing and building on what we do best but please don't take that to mean that we can afford to stand still in other areas. In today's competitive business climate it is a given that we will continue to improve in all aspects of business.