Who Needs to Know the Business of Your Business?

This won’t come as a surprise to anyone who hasn’t been asleep at the wheel lately, but we don’t work in the same business world as 20, 10, or even five years ago. Things move so fast these days that much of what we learned about how to lead an organization no longer applies. It used to be that having skilled employees who excelled at their jobs was enough to win. Not anymore.

Winning in business now requires pushing decision making and accountability to the front lines as much as possible. In order to do that, employees have to understand all the elements of the business at a level appropriate to their roles. For example, employees need to know about customers, sales cycles, competitors, and market differentiation. They need to know how to think about where the company’s next big threat will come from. They need to understand margins and operating efficiencies. In short, they need to know about the core drivers of the business – what makes it a success, and why. Yet, when I work with leadership teams, I find that many can’t pinpoint the key drivers of their businesses for themselves, much less their employees.

Most leadership teams can tell you their top three to five core financial measures. But they don’t know sales cycles. They can’t identify their top customers. They don’t know the margins for their products or product lines, etc., etc. And if the leaders don’t know these things, employees certainly won’t. These days, everyone is running so fast to keep up that nobody takes the time to pause and figure these things out. Leaders are busy, but they’re not busy doing the right things. Instead of focusing on what they should be doing to win, they’re constantly putting out fires and answering questions. As a result, they get caught in a cycle of “busyness” rather than teaching people about the business.

The Knowledge Must Flow

Some questions about the business, such as “Who are our customers?”, are not hard to answer. Others require drilling down to the next level of detail. For example:

• Customers. Who are our most profitable customers and why? What does it cost to acquire and keep these clients? What does it cost to deliver our product or service to them?  What else can we deliver to them?  What are their most pressing business issues?
• Product lines. Which product lines currently make the most money? Which ones are losing money or breaking even? Which ones will be making the most money in a year or two? What can we do to make our products or services more efficient, more effective, and more differentiated from others?
• Cost structure. What are the biggest costs in our business and what drives them? What can we do to lower them?
• Operating efficiency. What technologies, machines or processes are most important in our business? How does it impact us when they’re not running? What opportunities do we have to minimize costs?

Today’s companies have to be nimble and flexible to win. This requires pushing decisions as close to the customer interaction point as possible. But people can’t make good decisions when knowledge sits only at the top. They have to understand the business of the business, and leadership has to educate them about it. Otherwise, they will continually push decisions upward, making the organization cumbersome and slow to respond.

One of the best ways to teach employees about the business is during weekly or monthly “all-hands” meetings. At each staff meeting, carve out some time to talk about your business, and especially your customers. What are we good at?  Who are our core customers? What do we do for them? Why do they buy from us? Educate people about basic financials such as margins and costs.

When leaders don’t share this information, employees can’t make cost-effective decisions. Don’t limit your business of the business communications to monthly meetings. Talk about them constantly, so employees are constantly talking about them as well. Share information about customers. Post information on the wall. Make sure people are always thinking about how you serve customers, how that relates to their individual jobs, and how they can do it better.

Teaching employees the business of the business is a lot like hiring. It requires a lot of up-front effort, and when done right it saves time and money in the long run. The more senior your role in the organization, the more important it is to be doing the right things. As a leader, few things are more “right” than teaching people the business of the business.

Call to action: Identify one business of the business topic and commit to teaching employees about it at your next all-hands meeting.

image credit: datatechitp.com

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Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking. Follow Holly @HollyGGreen