A three-legged stool is required to build an excellent company. If one leg is weak or missing, excellence is weak or missing.
This three-legged stool provides the platform on which an excellent company must be built. If any one of the three legs is missing or defective, the entire operation suffers, perhaps fatally.
The three legs are:
- Market Knowledge
- Financial Control
- Collaborative Management-Employee Relationships
Let’s dive a little deeper into each of these legs.
Any business needs an edge against their competition. If you don’t know your market, you aren’t running a business, you are gambling.
The best source of market knowledge comes from your having worked in the field in the past. If you’ve previously been there, you have a leg up on other startups, and are on a par with companies already in that market.
Here are some questions to ask:
- Who needs your product or service? Make a list of potential customers, then find out who makes the decision to buy and ask them about their needs.
- Who is your competition? What are their product features and how can you meet the customers’ needs better than they do?
Whether you are manufacturing, adding value to a product or selling a service, you need to know your costs and how your product is sold, distributed and serviced. You need to know the same things about your competition so that you know how to set your prices, discounts and commissions.
All of this is part of knowing your market. Of course, if your name is Bill Hewlett, Steve Jobs or Bill Gates, you can invent a new market, but few of us have their phenomenal insights or opportunities.
The best way to learn about your market is to have worked in that market in the past.
Keep track of your finances. A good bookkeeping system is essential.
If you aren’t an accountant or at least a bookkeeper, hire a professional to set one up for you at the very beginning. It will keep you out of trouble later on. Running a business is tough enough without having to deal with tax problems.
It will also let you know your costs so that you can set your prices at a level where you can make a profit.
Staying on top of your financial information can be routine if you start doing so at the beginning. If not, finances can be your worst nightmare.
Collaborative Management-Employee Relationships
This comes under the heading of general good management and supervisory skills, and can make a huge difference in achieving the excellence you seek. Your employees will contribute far more to the company’s success if they know that you value their participation in planning, problem solving and maintaining company excellence.
A simple question: “What do you think about X?” can work wonders in keeping an employee committed to your company’s success.
A collaborative management style is promoted in courses taught by the American Management Association, and is actively sought after by many enlightened management teams in many excellent companies.
It is difficult for me to imagine how a company can achieve true excellence without it.
You can look at these three legs as the primary assets of the company:
- Your market knowledge leads you to your products and to your customers.
- Your financial controls provide the monetary measurements that enable wise application of your money and guide your price setting.
- Your collaborative management style enhances your supervisory and management style and motivates your most important asset — your employees.
In future posts, I will provide tips and techniques for building an excellent company, based on the three-legged platform described here.