People are always coming up with new ways to define the essential ingredients of a great business. Hundreds of books have been written on the topic. However, I have observed that one or more of the following three critical skills or talents are at the root of every great business.
- The ability to create new products or services (innovation)
- The ability to develop valuable relationships (marketing and sales)
- The ability to deliver on promises made to customers (systems and processes)
Everyone loves new products and services. It’s human nature. If you create the right new product or service, a buzz develops in the marketplace and customer demand grows rapidly—profit margin and sales are usually high.
Years ago, I had a business that manufactured framed art. We created gorgeous silk-screened designs on glass and mirror for the home décor market. National retailers like J.C. Penny’s and Target Stores couldn’t keep our products on their shelves. The phone rang off the hook from all over the country; we had to manufacture twenty-four hours a day to keep up. It’s a great feeling—like being a rock star! (I think).
What is innovation? It can be a new invention, technology, process, or business concept. However, it is most often a significant variation or improvement to something that already exists. Innovation is the skill of developing the new “best solution”—from the customer’s point of view.
Innovation adds new product features or benefits not previously available. It makes products better, faster, cheaper, smaller, stronger, more efficient, and so on. Innovative business systems can produce distinctive sales, marketing or advertising methods, an improved distribution or delivery process, creative pricing or terms, more convenience, lower risk, a better guarantee, or “killer customer care.”
The talent to envision and develop things in new ways—that customers love—can be the basis of a good business. However, innovation requires risk and sometimes customers aren’t impressed, or the competition swoops in and knocks off your amazing idea. You also need the second great talent.
Many small businesses flourish because the owner is a natural at building relationships. He is a person with vision, has a strong will to get his idea to market, is sometimes daring, and usually very likable or even charismatic. He just seems to make things happen. He is a “rainmaker.”
When I operated my framed-art business, I was in my twenties and very inexperienced. At trade shows, buyers would tell us that our products were better than our competition. So why did competitors have ten times more sales than we did? Well, innovative products drove our business, not marketing and sales. We weren’t effective at building relationships; we lacked industry influence and clout!
Business author Peter Drucker stated, “A business has two purposes: marketing and innovation.” However, this statement implies that the business will deliver on its promise, which makes system building, or execution, the third great talent.
Business execution is the ability to profitably give customers what they want and expect every single time. When you write a brochure or give a sales presentation, you always speak of your company—its products and services—in glowing terms. However, to make the dream come true for your customer is another matter altogether—many owners and managers struggle to do it well.
Execution is all about creating good business systems and processes that deliver a consistent and desirable result, routinely meeting and exceeding customer expectations. As your company matures and grows, the systematic improvement of business processes is the secret to long-term success.
In my framed-art business, the marketplace was very competitive. Our manufacturing processes and costs were calculated in pennies. The business had to run smoothly and efficiently for us to be profitable—not an easy task.
One day, I read a book by Charles Jay Coonradt, The Game of Work. We created business systems that were like games—and we kept score. Productivity soared. This was my first experience with systems thinking. The principles I learned over thirty years ago are just as valuable today.
Now, I am a bit fanatical about the topic of business systems and processes. You should be too!
The Most Important Talent
So, which talent is the most important? Innovation will get you motivated and provide opportunities for high profit-margins and growth. Relationship building will ensure that your business continually attracts new customers. Systemization and execution will enable you to retain customers and generate a healthy financial return.
Conclusion: If you want to become a great company, find a way to do all three! Each skill can be learned, but it’s not likely that the relationship builder is also a systems person. Hire those who complement your strengths. As you acquire partners or managers, be sure to get an innovator, a relationship builder, and a Systems Thinker. Your organization will become remarkable!