Amid the numerous stories of business success by singular focus, the truth for most companies is that balance is the principle that enables them to be successful in both the long term and the short run. Successful businesses typically hold certain dichotomies in balance. For most firms, short term success and long term survival require balance in several key areas including:
- Product or service line
- Stability and creativity
- Customer base
- Cash flow
- Employee characteristics
- Data insight and intuition
Product or Service Line — The companies that arise and thrive around a single idea or product typically do so by creating something that is radically disruptive and instantly appealing to an identifiable market. Yet even these companies must continue to improve upon what they have in order to retain market dominance. If they do not, their business dies when a competitor beats them at their own game with a better new iteration of the product that meets a different market desire. Examples include smartphones, gaming platforms, or design and printing technologies.
Stability and Creativity — Many companies that have withstood the changes in product demands and expectations over time have done some by building a balance between stability and creativity. The stable, reliable, tried-and-true evergreen product or service offering that consistently delivers a sales and revenue threshold is balanced by creative new products or even innovative product or service ideas. The balanced offering retains loyal customers while also winning new customers.
Customer Base — Products and services that appeal to a single customer type are risky. Markets are fickle. If the company loses the support of that customer type, it is out of business. It is for this reason that firms typically create products and services that appeal to several customer types or segments or that retailers typically sell a range of products and services that appeal to several customer types or segments. A broader customer base mitigates business risk.
Cash Flow – Expenditures in any business must be balanced. No company can sink all of its cash into development of a new product or service. There must also be sufficient cash to cover ongoing operating costs. Few sustainable businesses borrow more than the business is earning to develop a radical innovation because if they read the market incorrectly, the business is gone and they are left with a significant debt to repay. Yet, on the other hand, the company must invest something in product or service development in order to remain viable in the marketplace. The key is building balance in the firm’s cash flow.
Employee Characteristics – No responsible business owner hires a team of people who are all alike – same education, same background, same interests, same strengths and weaknesses, same personality traits. Companies accomplish goals and produce and deliver marketable products and services precisely because they combine the talents, strengths and personalities of several different types of people who can challenge, inspire and complement one another.
Data insight and intuition – The need for balance in this area has emerged fairly recently as technologies have made available vast amounts of business and customer data. For decades, product and service development has trusted data but relied heavily upon intuition to decide what to build next and how to configure it. Recently, “big data” has connected with the “scientific method” most of us were taught at some point in our education – if you study and analyze the data correctly, you will know what to do. As a result, intuition has been largely pushed aside.
There is a fatal flaw in this shift. Sales data and customer data can only tell us what has already happened – whether two years ago or two hours ago. The data cannot tell us what someone will do next. In particular, it cannot tell us what customers want next or are willing to buy next. Some will say that if we have enough data covering enough customer purchases we can build a trajectory that will predict with some degree of accuracy what they will buy next. This is true, however, only to a point.
Steve Jobs was right when he pointed out that customers cannot tell us what they want. They cannot envision what does not yet exist. They can only tell us that they want what they already have, but faster, smarter, cheaper. We cannot create the product or service that will become the next big thing by meeting unexpressed customer need until we merge data analysis with creative intuition to produce something that is new in ways the customer can express and in ways the customer cannot envision.
Building balance in business is the key to corporate survival and business sustainability. In these six aspects, as well as others, firms must consciously and repeatedly strive to create the balance within the firm that will ensure their survival. You will likely identify other areas in which balance is required in your firm. The six areas outlined here seem consistent across most types of companies.
If achieving optimal balance in your firm, your product or service line, your financial operations, your staffing, and your product development capabilities or if you need help merging data analysis with intuition, Trilogy Partners can help you create balance and build a stronger and more sustainable future for your firm.
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