The DNA of business

The DNA of business

The only purpose of a business is to find and retain a customer.

Peter Drucker.

Businesses and business models come in all sizes, shapes and forms. However, at their core all businesses have the same six basic building blocks that drive their success.

Every business can be defined by considering the six basics of its DNA.

  1. Its strategy, by which we mean where it’s going (vision and objectives), where it plays (its target markets), the obstacles to its successfully reaching its objectives, its value proposition and its skills & capabilities.
  2. How it attracts potential customers (leads), which is defined by the offer it makes to each market it targets and the channels through which it communicates this offer.
  3. How it converts potential customers into paying customers.
  4. How it delivers on its promise to the customer.
  5. How it collects cash (it’s business model). And
  6. How it maximises the value of each customer, by which we mean how it retains, upsells, cross sells and gets referrals from its customers.

Everything else supports these six key decisions.

  • Systems ensure consistent output from each,
  • People work the systems,
  • Assets improve the productivity of the people,
  • HR recruits, provides training frameworks, compensation systems and performance management standards for the people,
  • Finance provides systems and money to buy the assets and supplies, pay the people and report
  • Measures and metrics provide information on how the systems are performing
  • Innovation tests and improves on the basics (and the supports)

Once you understand your business or anybody else’s business through the core six, you have insight into its competitive strength, its profitability and the key ways to improve performance.

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