Entrepreneurs of rapidly growing businesses juggle a wide range of tasks, resources, and decisions. One minute they are trying to standardize the responses to inquiries generated by a recent advertising campaign. The next minute they are trying to figure out why the cashflow is tight again and what to do about it. The next they are considering the pros and cons of shifting responsibilities among existing staff members while recruitment continues in an effort to fill the most recent vacancy. “Juggling” is an appropriate word to describe the role of entrepreneurs in growing businesses. They are balancing what seems to be an endless list of tasks and decisions in marketing, management, and finance. It can become overwhelming for even the brightest people.
Behind all of the details of day-to-day operation, there are eighteen basic variables or strategies that define what the business is and where it is headed The words are familiar to entrepreneurs, but when entrepreneurs get lost in the details of day-to-day operations, many forget to refer back to their decisions in the eighteen points of strategy to help them see what is most important.
In marketing, the primary strategic variables are product, place, price, promotion, people and distribution (service). Typically, two of these six define the business. For example, McDonald’s is in the fast food business and is therefore defined by service and product. Those two strategies cue the entrepreneurial leaders of McDonald’s to do a variety of steps in the other four aspects of marketing. Being in the fast food business, they must locate their restaurants (stores) convenient to customers (place). The food selected needs to be easy/quick to prepare so the promise of “fast” food can be kept. They need sufficient information about the eating and buying patterns of people who are in a hurry to select the best menu items. Once the menu items have been selected, the promotional efforts need to make the food sound desirable and easy. McDonald’s and other fast food chains can experiment with types of people and pricing, but, like other businesses, two of the six marketing strategies defined the business (service, product). Another two take their cue from the first two (place, promotion), and the last two strategic variables are open to some experimentation (people, price).
Like marketing, there are six primary management strategies: people, structure, process, reward, task, and market. As with other businesses, the strategic marketing decisions made by McDonald’s help the entrepreneurial owners recognize what is important in management.
Once McDonald’s has selected menu items and promoted them, the individual restaurants (stores) need to deliver on that promise. Having a consistent product is essential to McDonald’s success. Certainly the most important management strategy for McDonald’s is process (procedures). They believe in training, have precise standards, and consistency. You may not personally like a Big Mac, but you do know that a Big Mac purchased in New Jersey will taste like the one you buy in Pennsylvania. The task at hand is also foremost in the minds of McDonald’s employees.
Given these two management strategies, the entrepreneurs of McDonald’s know what their organizational structure needs to be. The stores have a set ratio of cooks to servers to managers. The structure needs to mirror the procedures. McDonald’s also knows to reward consistency. Because McDonald’s is seeking consistency with its procedures, the company does not need to spend a great deal of money recruiting highly innovative employees. They want people who want to learn the McDonald’s way of doing things and will do it the way time and time again. They need good followers. Individual McDonald’s stores can experiment with the types of people hired, incentives (rewards) and approaches that are unique to their location (market). So as with marketing, there are two defining strategies (process, task), two strategies that need to flow from the first two (structure, reward), and two that are open to some experimentation (people, market).
Cash flow, capital, cost control, collection, credit, and capacity are the key financial strategies available to any business. McDonald’s is a cash business. Its customers pay as they receive product so collection is preset. Controls mirror the procedures to reduce waste, loss, and theft. The individual McDonald’s entrepreneur monitors utilization of capacity and cashflow to generate capital or qualify for credit to expand to other locations.
I’ve referred in some detail to the strategies of one business that is familiar to most people. How do McDonald’s strategies affect you and your business? Well, day to day, an owner of a McDonald’s store knows what his/her priorities are: consistent product served fast, good followers using procedures, and controlled costs for retained earnings.
As day-to-day problems arise, the McDonald’s entrepreneurs know which are the most important to resolve by referring to this quick summary of their businesses defining strategies. The juggling task is easier that way.
Entrepreneurs of service firms have the same eighteen strategies available to them, six of which define their businesses. One law firm in the Delaware Valley specializes in serious injury cases. That one decision sets its strategy in market/place, people and product. Its customers (marketplace) and their families will be victims. Their lawyers (people) will need to be fighters who are informed about that part of the law and are comfortable working with seriously injured people. Not every attorney fits this description. The product (service) becomes negotiations and litigation.
That one decision regarding specialization also cues the law firm’s promotional efforts. It needs to get its message across to those who have been seriously injured and/or their relatives. It also cues their pricing policies, probably contingency fees, since injured parties typically have their money tied up in medical bills. The firm’s procedures would reflect the needs of the victim clients and the court procedures for injury cases. The firm would need to know the average duration of its cases to manage its utilization of capacity and control costs since the pricing strategy sets collection. The reader can see from this brief description that the priorities in day-to-day operational matters in such a law firm would/should be quite different from those of a law firm that specializes in real estate matters or custody.
Known as The Growth Strategist®, Aldonna R. Ambler, CMC, CSP helps rapidly growing midsized companies (typically $20 – 200 million/year) realize their goal of Achieving Accelerated Growth With Sustained Profitability® through opportunity/resource analysis, executive coaching, strategic working sessions, and her intermediary role regarding growth financing. Her clients are among the brightest, most ambitious business leaders whose names now appear on published lists of the fastest growing privately held corporations. The recipient of 23 prestigious awards for her success as an entrepreneur and industry leader, Ambler hosts a peer-to-peer Internet radio program, aptly called The Growth Strategist®, which features lively interviews with CEOs of midmarket companies who have successfully executed the growth strategy of the week. She can be reached toll free at 1-888-Aldonna (253-6662), by e-mail at Aldonna@AMBLER.com or online at www.ambler.com.