Enterprise is a complex stuff, composed by many elements, interrelated each other. At a first glance, there are 5 elements to point out:
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Solutions: Products or Services to sell
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Customers: Companies buying Solutions, currently (that is, the Market)
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Competitors: companies offering similar Solutions (fighting for Market share)
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Price: the amount of money the Customers pay for buying each Solution
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Cost: the amount of money the Enterprise pay for selling each Solution
Enterprise should continuously run, renewing all these 5 elements. You should put in place a “Virtuous Circle”, built on the stuff your Enterprise are selling.
Since I am a Martal Artistist (from Vietnam, encompassing principles from ancient Asian wisdom), I use to get hints from those esoteric concepts, in order to figure out how the world is built.
Following, the 3 most interesting applicable rules (useful to all other long lasting projects, too).
Divide et Impera (Infinity built on Circling)
Infinity is not for men, on this world. But it is less far from companies, using the following ones:
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Many products are provided by the Enterprise at the same time
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The product development is like a circle, encompassing 4 phases: Migration, Adaptation, Leadership, Slauchment
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The maturity of each product should be evaluated against its circle. You can split in subsequent phases to reach. The following table is good for mapping Product Maturity vs Cash-Flow:
|
Phase |
Animal |
Target |
|
Migration |
Swallows |
Starting: identifying and segregating problem. Building up solution. Disastrous Cash-Flow |
|
Adaptation |
Dogs |
Warming up completed: the product solve the problem aimed at for all customers needing it. Let’s start scalating Weird Cash-Flow |
|
Leadership |
Pigs |
“Par Condicio”: all the customers are equal (proper economic scalability was undertaken and Break-Eveny point was reached out). Good Cash-Flow |
|
Slouchment |
Cows |
Catabolism: destructive running (continuing to sell but you have to stop. You are damaging your reputation in the market). Excellent Cash-Flow |
Firstly, you have to identify the phase each product your Enterprise provides is fallen into. Ideally, there should be a balancing, having products in each phase.
Please, note: in a qualitative model (System Thinking), the 5 elements are not independent. Only 3 are (e.g. Product, Competitors, Price), the other 2 (e.g. Customers, Cost) are computable from the former ones.
Yin, Yang & Tao: Straightforward, Transitions, Proprioception
By financial point of view, having prosperous Enterprise, it should have sufficient strenght (i.e. right Cash Flow). For making money, “Slauchment” is the only phase should exist, requiring straight forward transition (line direction, Yang), to this from “Migration” one. Unfortunately, for financial people, this is not viable. It is not natural way.
The Enterprises are paid for the quality driven into the Products (Services, Solutions) they provide. So, Enterprise should pay special attention and put care on product building, providing it with all best (or, at least, sufficient to make it sellable) attributes. It is not possible to build up a reliable, effective and efficient product but making it pass round all the 4 phases previously depicted, providing transitions in a circular fashion (round, Yin).
You have to combine Yin & Yang: to go on a line (Yang), combining (Tao) 3 round-house movements (Yin): Customers(Products), Competitors, Discounts. The art of learning the Tao part is named proprioception (‘proprius’: own + ‘capere’: understand). In this scenario, “proprioception” means adapting the achievement of the goal (reaching out “Slauchment”), understanding the current scenario and providing the timely phase transition (turn when it is needed).
Energy Saving (self-renew)
Enterprise could sell more than 1 product. That is, many products could coexist, ideally each one at a different maturity level. This allow to correctly managing Cash-Flow: earning (Leadership) and milking (Slauchment) from some customers, in order to feeding Innovation and Adaption. So, you need to manage it clevery, acting differently in subsequent times and phases:
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before (Innovation, Adaption): collect energy and include it in your product (e.g. understand market needs, identify the problem, design a solution, enhance the product, etc)
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during (Leadership) manage efficiently your active phase (e.g. face competitors, improve post-sales support, etc)
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continuing (Slauchment) get extra from outside one (e.g. customer feedback, extra-standardization, etc)
The overall Cash-Flow should be positive. Products/Services in “Leadership”/”Slauchment” phases should help the development of those in “Innovation”/”Adaptation” phases.