When we look at businesses holistically, there are four distinct dimensions that account for every decision and action.
The four dimensions are:
Though they’re distinct dimensions, they’re heavily interrelated. Your financial picture will often guide your operational decisions, and your operational decisions will often have to be checked against your financial picture. Your strategic initiatives will influence your marketing decisions, and your marketing activities will often reveal new strategic opportunities that you wouldn’t have otherwise seen. More examples would be easy to come by, but we don’t need to list every interdependency to get a feel for how it works.
Viewing business this way isn’t anything new. We already have well-established positions that track these dimensions. Chief Executive Officers (CEOs) handle strategy and development, Chief Operations Officers (COOs) handle operations, Chief Marketing Officers (CMOs) cover marketing, and Chief Financial Officers (CFOs) take care of the finances. What’s important to consider is that all of these positions are either senior executive level or high middle management in traditional businesses – the reason they’re so high up is that their functions and perspectives are so critical.
What many people fail to consider is that the four positions listed above are necessary for any business, even if one person is wearing all of the hats. Not only are they necessary, but they can’t not be done: they’re either done well or done poorly.
Throughout this piece, I’ll use CEO, COO, CMO, and CFO to illustrate which hat or domain is at play. Bigger businesses may have people dedicated to these positions, but if you’re in a microbusiness, you should read this as you with a different hat on.
Let’s handle each dimension in turn.
Strategy and Development
Whom does your business serve? What are its core competencies and how will you leverage them? What are your business’s goals for the year? What is your business’s vision and mission? What offers are you going to develop this year? How are you going to position, differentiate, and develop your brand?
Questions like these all fall within the dimensions of strategy. It serves as the foundation and hub for all of the other dimensions, and having a weak strategy core often causes many businesses to put the cart before the horse.
For instance, I’ve run across quite a few businesses that can’t tie their marketing activities to any strategy besides selling something to make money. We also sense weak strategy at play when we see someone create something that has no real connection to their core business foundation.
One of the reasons we don’t understand strategy is that it can be complex and nuanced. Strategy is also pretty hard to sell, so people often intentionally pass on offers that have strategy as a foundation. Nonetheless, rarely does a business succeed with tactics and techniques alone.
How will we execute the plan? Who should work on which project? Which of these projects should we work on this week? Where are we with our new infrastructure migration? Is everyone trained to do the critical tasks of our business?
The dimension of operations is the realm of execution and productivity. In short, it covers getting stuff done.
Many businesses have a decent sense of strategy and struggle with operations. That CEO’s vision just never seems to manifest. Or perhaps the marketing plan becomes just another document that wasted more resources to develop than it was worth. The perennial problem here is one that creatives understand all too well – our imaginative reach always exceeds our operational grasp.
On the other hand, some businesses shine in operations and struggle in the other dimensions. What tends to occur in these businesses is a lot of overworking and pushing and very little actual progress being made when it comes to the three ends of business. Another symptom here is the constantly shifting new initiative that forces everyone to be in a continual state of overwhelm; it’s common for business teams to have their priorities shift to a new project before the last one is done just because a decision was made to go in a different direction.
Short-range planning often falls within the operational dimension as well. In a well-run business, the CEO and COO are jointly creating the mid- and long-term plans in consultation with the CMO and CFO because every perspective is needed to make a solid plan. Short-range planning falls within the operations domain because much of the strategic direction and the financial parameters have already been set from the longer-range plans; the COO has the unenviable responsibility of making a lot happen with too little. (Yes, this happens in organizations at every scale and size.)
What separates a lot of good businesses from great ones is their execution. Businesses that get the right stuff done grow faster and more consistently than businesses that struggle with execution.
There’s a reason that so many of the gurus in business are marketers or salespeople: good marketing equals more money. We all know that cash-flow is the pulse of any business, and marketing is what gets you cash-flow.
At least, that’s the story we buy.
This particular dimension is the one that often brings the quickest results in a business. Converting bad promotional materials to much better ones generally brings more customers and leads into a business, thereby building enough financial margin that a business can make other choices. A successful promotion of current products and services can happen in days, whereas returning to strategy, research, and development might take months, and the revenue that comes in in the short term can solve this problem nicely.
Though we often talk about increased revenue when we speak of marketing, it’s also just as true that effective marketing ensures that a business’s resources are leveraged in the best way possible, thus making it a great way to keep money in your business as well as to make more. Many businesses work hard at crafting a wonderful offer, only to have a weak marketing campaign offset the return they might have gotten from their efforts. Spending a quarter developing an offer only to make a month’s worth of revenue is a much less effective use of resources than is spending a quarter developing an offer and making a quarter’s revenue from it.
While effective marketing is a challenge for most businesses, it’s especially challenging for creative microbusinesses. For a variety of reasons, creative people have a hard time coming to grips with marketing and self-promotion. The Field of Dreams is itself a dream – just because you build it doesn’t mean they’ll come. You have to go to them and build it there to have any hope of selling your wares – check out Pam’s wonderful post on Your 2011 Marketing Plan In a Nutshell.
How much revenue did you make last month? Of that, how much was profit? What are your overheads? How much do you need to make in the next quarter to increase your revenue by 10%? How much of your revenue do you need to save for taxes?
Most of us can’t answer those questions off the top of our heads. Many of us can’t answer them at all because a) we haven’t been doing our own accounting, and b) we don’t understand the terms at play. These questions – and the perspective they represent – fall in the dimension of finances.
What’s striking is that the more grounded you get in your financial reality, the more clarity you have about what your business has done and can do. Many people are continually scared because they have no idea what they made last month and this month, nor do they have any idea what’s coming in in the future. This makes every day feel like a hustle, and every win, a temporary stalling of the inevitable crash of not having enough money to pay the bills.
A challenge with this particular dimension is understanding what level of granularity you need for effective decision-making. Most people don’t need to have a daily sales report, but a monthly sales report may not give you enough time to react or plan. Additionally, a gross sales report may not show you which income stream is the breadwinner and which is the lead weight you need to drop. Since each business is put together a little differently, the insights that you can get from the financial dimension need to be tailored to meet the way your business works.
It’s absolutely true that you can get lost in the financial data and questions in your business. What’s also true is that you’re absolutely lost without them.
The Job Has to be Done – But Not Necessarily by You
I mentioned above that each of these dimensions both must be addressed and are impossible not to address, but that doesn’t mean that you have to do each and every dimension all by yourself.
For instance, if the idea of doing your own bookkeeping gives you the hives, there are plenty of professionals who do just that. If you need some operational help, perhaps hiring a new employee or assistant is the way to go. There’s a coach, consultant, or advisor who can help you with the dimensions individually or holistically.
As your business grows, you might decide to hire dedicated people to handle those responsibilities. I suggest that you hire people to help with the areas you’re weakest in first so you’ll avoid duplicating your own strengths and get someone who will be fired up about the dimension that you’d rather not deal with.
All that said, bringing on more people is simply not an option for many early stage businesses, which means that, in the meantime, you have to cover your bases in each of these dimensions until you do have the capabilities to get some help. The upside here is that since your business is in an early stage, it’s not as complex as a more mature business and thus the management of it all is a lot easier.
After all, if you have only one offer, you don’t need to have a report that compares the profitability of each revenue stream. You may not have enough going on that would support either an operations manager or an assistant, so hiring one even if you had the capability to do so wouldn’t make sense anyway. The management demands of your business are small enough that you can handle it until it outgrows what you can manage.
In other words, don’t hire people just because other businesses or the cool kids do. Many bigger businesses and cool kids make bad decisions on this front and have enough revenue to cover it – those same decisions would eat you alive. I once had a client who, because her past revenues and reserves were so high, didn’t realize that the cost of all of her employees and assistants was resulting in a total business loss for a few quarters. It’s only after we had some CFO discussions that this fact became apparent to her. How many months could your business operate with a $2k net loss and make it?
Call Them What You Like – Just Make Sure the Functions Are Covered
These four dimensions and their respective functions are a component of just about any organization. With a few contextual modifications, we could draw these same lines for nonprofits, government agencies, military organizations, religious organizations, and so on. The framework is universal; the application of it is specific.
You might not like the names of each dimension. That’s fine – name it something that resonates with you. As long as the function is being covered, you’re golden.
I’ll end this piece with a few questions:
- Which of these four dimensions are you the strongest in?
- Which of these four dimensions are you the weakest in?
- How could you alter your business so that you’re operating more in your strength areas?
- What could you change in your business so that your weaknesses aren’t hampering your business’s growth?
In case you’re wondering, yes, this is a component of the work I do with my clients. I also use this same framework as a foundation for the Unconventional Guide to Freelancing if you’d like to see more.