Assessing the State of Your Business: Pt. 1

As a matter of introduction and understanding my background, it's important to point out that for about five years, I was employed by a... think tank (?) of sorts called the THEE Online Project. (THEE stands for the Taxonomy of Human Elements in Endeavour.) It is tempting to compare the Taxonomy, in some ways, to a "theory of everything" because of its comprehensive nature, but it is important to note that it is not theoretical at all, but rather observational (hence the term applied, Taxonomy) and it is designed for practical, real-world use. That's why it is useful here.

For the purposes of this blog, we'll skip a discussion of the long taxonomic pathway by which we arrive at the spiral pictured here and simply discuss the meaning and usefulness of the spiral itself.

The purpose of this spiral is to illustrate how a business evolves, both in profitibality and as an entity existing in and interacting with the larger society around it.

Moving Through the Spiral

Warren Kinston, the man who discovered and developed the Taxonomy, explains the spiral in detail here. I'll just give a summary.

At Stage One, your business is operating profitably. It is "in the black." While it's not a part of the spiral, this certainly implies that there is a state of being before Stage One. This is where startups exist, and presumably the businesses that exist currently as the ideas inside someone's mind. Or, one assumes, businesses that are not profitable could exist prior to Stage One. However, I would imagine larger companies that have had a particularly bad quarter, or year, might not be profitable but could still exist at later stages--at least for a time.

Nevertheless, assuming your business is profitable, this means you are, at the very least, at Stage One.

Is this enough? Perhaps for some, owning a business that affords them to make a living is all they ever dreamed of.

But as the framework points out, the driver that pushes businesses to move to the next stage is competition. If you own the only Italian restaurant in a small city, there is really no need to move to Stage 2 (Fighting Competitors). That is, until someone notices the lack of competition and decides to open a second Italian restaurant... then what do you do? You engage them, find room in the market for both, push them out of the market, or die.

Stage 2: Fighting Competitors

It is a battle you're in at this stage of the game. That's easy enough to accept. But the question obviously becomes: How do I win?

Now this is important, so I'm not going to leave anything out. You've got to play both offense and defense:

• Keep a close eye on your competitors and understand that they are watching you as closely

• Do SWOT analyses and exploit your findings

• Dig into untapped or underrepresented niches

• Develop customer loyalty at the expense of competitors

• Develop loyalty with suppliers and vendors

To quote some rather surprising language from the taxonomy, though certainly true:

"Even if your company does not break unwritten or legal rules of decency and fair play, there are others who will, including giant firms who know they can get away with it."

As with anything dealing with power and attempts at domination, there are potential pitfalls. Look out for arrogance, corruption, prioritizing control over creativity, illegal activity, dishonesty, etc.

Stage 3: Promotion

This essentially means approaching your product or service like a cause. You've got to truly believe in what you're selling and back it up with quality.

Become your own advocate. Invest capital, time and energy into promoting your business. This is the heart of advertising appropriately, and what most think of when they hear the word "marketing."

Here's where your business:

• Get into the hearts and minds of potential customers and figure out how to speak to them in their language

• Find the medium your potential customers are plugged into and ideally time the message

• Focus on branding, becoming recognizable and being consistent

• Measure effectiveness

• Organize your marketing campaigns in such a way that closing sales is as logistically friction-less as possible

This is where you attract customers. But what about keeping them? So what's next?

Stage 4: Reciprocity

Up until this point, it's been all about the business: Make money, crush competitors, acquire new customers. Up until this point, the business model may have likely been about finding ways to extract as much from customers as possible. Here's where you give back.

In a sense, you've been providing value to your customers since day one--or else you wouldn't have been profitable in the first place. But now you take it up a notch and start viewing yourself and your customers as a community.

Start taking customer needs and preferences seriously. Use fairness in marketing, sales, customers service and conflicts. Look to the wider industry and do what you can to raise standards overall.

Prelude to the final three stages

If a lot of this seems vague, it's because it has to be. All businesses, markets and industries are unique and require a unique approach. But I'm willing to bet you relate to something you've read here, which leads me to ask:

At what stage is your business now?

Let's talk.

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