There are multiple factors that directly influence the health and wealth of any given business venture. These factors may be diverse and different depending on the nature of the business. The Critical Success Factor, however, is common to virtually all business ventures.
The Critical Success Factor: Earn a Profit Solving Customer Problems Better than the Competition. It is do, or die. A venture dies for one of three reasons: 1] It didn't earn a profit; 2] It didn't solve its customer's problems; 3] It wasn't better than the competitive alternatives.
Earn a Profit Solving Customer Problems Better than the Competition ... The Critical Success Factor for all business ventures.
Critical ... having the potential to become disastrous
Success ... attains prosperity
Factor ... a circumstance that contributes to an outcome
* Earn ... Teamwork! A business employs a team of people working together to continually and profitably solve customer problems better than competing alternatives. Healthy, growing ventures follow a clear business model. An educated, experienced, collaborative, communicative team with key core competencies is paramount to success.
* Profit ... The monetary value captured by a business is appropriately called earnings. After all expenses are accounted, earnings become profit. Profit is a reward for doing a good job solving customer problems. A key source of growth funding for a business venture is earned profit. While the profit reward is "financial", the reward can and should have other elements, too. In a healthy venture culture it can actually be "fun" going to work and being part of the team, and their may well be some "fame" that results from delivering valued solutions to customers.
* Solving ... Solutions to customer problems are typically combinations of products, services, process, and methods. However, the world keeps changing as do customers and competitors. Solving customer problems, new and old, is a continuing process for sustaining a healthy venture.
* Customer ... Customers are the primary source of revenue for a business venture. Some business ventures may have only a few key customers, others may have many. A group of customers that share similar traits comprise a market segment. Many business ventures may serve multiple and varied market segments. A business venture exists to serve its customers.
* Problems ... Customer needs, wants, desires, and situations that can be adequately addressed and resolved in a reasonable time and expense are good opportunities for a business venture.
* Better ... Continually improving value is critical to sustaining a competitive advantage. Scientists and engineers often think about innovative solutions in terms of the fit, form, function, features, and performance. The entrepreneur thinks in terms of the benefits customers will receive. Value is measured by comparing the benefits to the price. Value can be increased by delivering better benefits to customers, by lowering the price, or both. Customers decide what offers the better value. In the long run, the products, services, processes, and methods that deliver a better value win the business. In short: Value = Benefits / Price
* Competition ... There are (almost) always competing solutions and ventures from other sources that are directly comparable to our solution. This competition includes indirect alternatives, substitutes, and replacements that could serve customer requirements. Best to assume we have competition, even if we don't yet know who or what. Competition is not always a bad thing ... competitors can help validate and build new markets, and sometimes competitors can become collaborative partners.
Accounting Advertising Advisor Analysis Apps Attitude Balance Sheet Barriers to Entry Beachhead Benefits Better Books Bottom Up / Top Down Brain Brainstorming Brainwriting Budget Business Flow Business Model Cash Flow Change Commercialization Communications Competition Competitive Advantage Concept Consultant Corporate Entrepreneurship CQs Creativity Critical Success Factor Crucial Questions Crucial Success Factors Culture Customer Decisions Deploy Design Develop Differentiation DXpedition Earn EBITDA Education Effectiveness Elevator Pitch Engineering Enterprise Entrepreneur Entrepreneurship Environment Evolution Executive Summary Exercise Expenses Expertise Failure Feasibility Finance Financial Objectives Flags Flowchart Focus Funding Fuzzy-to-Firm GizmoGadget Glossary Goals Habits Healthy Venture Hiring HOTI Chart Hypothesis Ideas Ideation Impact Income Statement Industry Industry Research Innovate-A-thon Innovation Innovator Intellectual Property Internet Intrapreneurship Invention Inventory Investor Iteration Knowledge Launch Leadership Lean Startup Learning Legal Luck Machines Management Manpower Market Research Marketing Marketing Brochure Material Media Media Relations Mentor Methods Mindmap Mindset Mission Mistakes Money Motivation Myths Name News Release Niche Market Non-Profit Objectives Operating Agreement Operations Opportunity Passion Patents People Pivot Planning Positioning PR Presentations Price Problems Process Flow Product Development Productivity Profit Progress Promotion Prototype Publicity Questions Refine Research Resources Return on Investment Reward Roadmap Rules_of_Some Sales SCAMPER SCORE Scorecard Skills Slides Solution Development Solutions SPLUCK Start-up Stimulation Strategies Strategy Structure Success SWOTT Tactics Tagline Target Market Team Teamwork Technology Readiness Levels Terminology Terms Test Thinking Tips Tools Transformation TRL Validation Value Venture Venture Capital Venture Creation Venture Plan Viability Vision Work Worth Writing
At the core, every successful business venture looks like this. Of course, large complex organizations can look much more complicated than this basic diagram. But fundamentally, all successful business ventures consist of these key elements and have these critical paths of communications.
The "alphabetical" communication channels are external, between the key business venture teams and customers:
A] The Research & Development Team communicating with customers to determine what customer problems, needs, wants, and desire the venture should address
B] The Marketing Team communicating with customers to promote current venture solutions, product, services, and processes that solve current customer problems, and obtain feedback from customers relating to the performance of the venture in solving their problems
C] The Sales Team obtaining and processing orders from customers, and customer relationship management
D] The Operations Team building and delivering solutions, products, and services to fill customer orders
E] The Finance/Accounting Team collecting payment for the value delivered to customers by the products, services, and processes provided by the venture
F] The Venture Management Team soliciting feedback and inputs regarding the relationship between the customers and the venture
The "numbered" communication channels in Figure 5 are internal, the information being shared between departments in a business venture.
1] Marketing and Innovation Development Departments share information about customer problems, needs, wants, and desires, and the benefits, fit, form, function, and features of new products, services, and processes being created in the organization.
2] The Marketing and Sales Departments coordinate information about the benefits, fit, form, function, and features of currently available solutions, products, services, and process that match customer requirements, including the price of the offerings.
3] The Sales Department communicates information about customer orders to the Finance/Accounting Department such that the customer is properly billed when the solutions, products, and services are delivered.
4] The Sales Department communicates information about customer orders to the Operations Department such that the appropriate products and services are delivered to the customer.
5] The Operations Department communicates information about product and service delivery to the customer so the Finance/Accounting Department can accurately bill the customer.
6] The Research & Development Department (often called the Engineering Department) provides the Operations Department with bills of material and assembly instructions for creating the solutions, products, and services being sold to customers.
For 20+ years, I taught in a University of Arizona entrepreneurship program. This Innovation Impact Mindmap started on the whiteboard in my office, a graphic schematic of the course syllabus.
A syllabus is sequential, but innovation and entrepreneurship usually is not. They bounce around a bit, from here to there and round again.
The whiteboard version was fairly simple, but useful. Students and colleagues took pictures of it for reference. So, I thought, why not elaborate it just a little bit?
[OK, OK, so maybe a little bit more than just a little bit!]
I've added elements that I thought would be most useful, but certainly not all apply to every new venture! The "main highway" is the mission statement, highlighted in yellow.
Think of this Mindmap as a checklist of the elements you might want to visit as you travel around on your new venture adventure!
- Companies must constantly innovate ... without innovation they tend to do what they've always done and run the risk of getting stale and becoming competitively disadvantaged.
- For a company to thrive, it must tap the individual initiative of its team members ... this must be a major area of focus.
- On any initiative being pursued, team-member buy-in is absolutely essential for success.
- If a company want its people to be intrapreneurial in their thinking, they must be kept well informed about the company's processes and visions, and the impact of these processes and visions on profit.
- Leaders must give team members everything they need to be self-motivated and take the initiative to succeed.
- Companies must reward the creativity of their people.
- If a team member owns an initiative, he or she should be accountable for all aspects of its success.
- Companies must encourage resourcefulness and out-of-the-box thinking.
- All thought leaders must be constantly focused on customer needs and now to satisfy and exceed them.
- Leaders and managers must work to maximize team-member involvement in all key initiatives to tap the collective intellect of the team.