A board is a board. Whether it is in a big business or in a small business, there seem to be some common features of a board.
While we can emphasise the differences (size, scale, scope, resources, experience, stakeholders), I would like to emphasise what they have (or rather don’t have) in common.
Go into almost any board, big or small, and you are welcomed by the same, nonchalant glare that says, “What do you know about my business?” or, “What right have you got to be here telling us how to run our business?”
A few questions later and you have not only upset everyone in the room but there is now a risk of being physically ejected. Asking basic, straightforward, but highly relevant questions is what does it. But one is safe if one can also help them close the gap in their understanding (and help them become more profitable!).
My top questions are:
- What do you sell/do?
- Why should people bother to buy from you when they can buy from the competition?
- What makes you different from the rest?
- Who/what are your target customers/markets and what problem do you solve?
- List your targets in order of priority.
Most business boards struggle, I mean really struggle, to answer these questions adequately.
Most get stumped at number one. Nine times out of 10 the answer to, “#1. What do you sell/do?” is wrong. The answer is nearly always about product or maybe about distribution process. But it is the wrong answer.
If your answer is about product or about distribution process then you are suffering from a severe case of myopia, thinking that what you do is all about YOU and what YOU do… You are looking through the wrong end of the telescope and as a result you have a totally distorted view of the world.
I understand why people get product-focused, but it really is a self-indulgent and distorted view of the world. You need to be thinking about how the customer sees you.
Customers don’t buy your product for what it is but for what it does for them. People don’t buy drills but holes, they don’t buy accountants but peace of mind, and so forth. So, if you think about your product for its own features then you are missing the point. You need to think about your product in terms of:
- The benefits the product/service gives consumers, the problem/hurt it solves.
- Why those people should buy your product/service.
- Why/how it is different from/better than the rest.
- What the groups of consumers are (and their specific requirement).
- The order in which we prioritise these target groups
Yes, this is a rather marketing-focused way of looking at things but poor marketing means poor sales means poor profits, so it makes sense to get the marketing sorted out properly. I regret to say that most businesses are not on top of the marketing fundamentals and as a result they make a lot of hard work for themselves.
In fact I will go further. The obsession with financial metrics is hugely misguided. You measure results (which is fine) but you fail to move forward using financial metrics to grow the business. Bean counting is great but it has to be relevant to the future: to the key decisions, actions and results you seek. A marketing mindset will enable you to chase and achieve those sales most effectively.
Rarely do boards understand the basic levers that make a business work: marketing creates sales, operations deliver the product/service and delight the customer… creating financial performance that gets measured. But first you have to get those sales. And to get those sales you need to understand what you are selling, and to whom, and why they might buy from you rather than from the competition