v Cost (management of cash flow, making use of lean ‘made on demand’ resources, debit/ credit control)
v Innovation (cultural context, knowledge & skills, ethos, risk-taking)
v Execution (operation management, quality control , speed, effectiveness, performance targets)
v Relationships (suppliers, customers, stakeholders)
v Channels (marketing & operations, accessibility, logistics, speed
v Brand (image & promotion, brand values, authenticity, employee involvement (internal engagement), reputation)
Clear tactics are required in order to improve these factors in order to take educated risks based on probabilities not possibilities. A common misconception is in order to improve business value we should focus on cutting costs, but instead the focus should be on improving quality, efficiency & effectiveness as lower costs will be a positive repercussion of this, as well as generating higher customer revenue as this leads to better delivery within the long term. On the other side to this, it is also a misapprehension that merely growing your business by 10% will not necessarily increase profits by 10% thus the decision expansion must be considered carefully and realistic in terms of the overall company aims and value.
ü Cutting Cost- Squeezing suppliers (have them on demand, negotiate prices), use resources more efficiently, invest in new technology for efficiency, improve speed.
ü Improving Innovation- New means of guessing the future, utilizing market research, investing in greater skill sets (buy in from external sources)
ü Quality- Invest in operations, quality control tools & processes, improve consistency.
ü Support- Work more closely with customers & meet requirements for information, responsiveness & value for money (improved communication networks)
ü Availability- Identify opportunities to sell services & products, create distribution arrangements
ü Reputation- Build image through external engagement, learn initiatives & citizenship.
If you are too short of resources in order to implement your model, it is crucial to form strategic alliances with perhaps other businesses(‘share’ option), with suppliers (‘borrow’ option/ ‘vertical integration’ by buying in a supplier chain) or with external investors through sacrificing a stake of the company (‘buy/sell’ option).
Business Model
An organization is a community dedicated to the maintenance and development of a value creating system, which is at once both a socio-system (people) and a techno-system (technical processes), split into the follow sub-divisions:
Operations: Delivery of value proposition.
Finance: Funding & financial management of the business.
H R (Human Resources): Management of people factors.
Marketing: Communication, sales & promotion.
Business is based around sustaining strong relationships due to the fact that innovation requires a strong sense of collaboration & trust. As a manager it is important to sometimes think as a psychologist in order to gain an understanding and empathise with how other people around you work and think. This involves and objectiveness in order to take a step back and observe the bigger picture without falling into the trap of micro-management.
Within a set of employees it’s vital to find sense of balance within people and their motivations whether these be intrinsic (passion, desire) or extrinsic (tangible rewards). The aim is to create a positive disposition amongst your staff, understanding that this can be shifted negatively very easily due to the fragility of people.
Culture
The company culture dictates the organizational structure (in relation to decision making systems, dress code, how employees relate to one another, levels of socialising, boundaries of behaviour, formality vs. informality). If behaviours of employees is negative this self enforces a negative culture therefore positive work practices are imperative in order to deliver the business value successfully and create a ‘safe space’ where people can take risks and feel they can be innovative & creative.
There are multiple structures that can an organisation can take:
v Hierarchical structure- Traditional business model of clearly defined rankings. Can slow down decision making process as information has to be in a sense ‘passed up’ the channels. Also runs the risk of causing disconnection from the top to the bottom (particularly with the CEO and the customer & the shop floor).
v Flat structure- Although ‘top’ is closer to the ‘bottom’, same problems can occur as in a hierarchical structure (can be worse as there are fewer slots to fill within senior management thus reducing competiveness as employees lower down on the scale accept the inevitability of their fixed position.)
v Really flat (no defined authoritive figure) - only works in very small teams of individuals delivering specific projects. Based on having strong respect with those you’re working with.
v Spider plant/ network (increasingly popular model in modern businesses)- segregation into smaller business units (semi-autonomous) which causes reductions in bureaucracy and increases flexibility & collaboration as team members can be rotated easily if necessary as well reducing the potential dictatorial atmosphere that can occur within more traditional hierarchical structure.
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