Last week I found myself struggling to write some marketing material. I cleared my mental blockage by taking a step back and looking at my notes from my time at business school. I realised that I was struggling to write copy because I was unsure of the message I wanted to get across. Marketing messages are in turn build on top of STP – Segmentation, Targeting and Positioning. I was clear on the segmentation of the market, and who we were targeting, but I couldn’t complete the template positioning statement in my notes. Once I realised what the problem was, I could communicate it to colleagues, and it proved quite easy to solve – the message flowed naturally from the positioning, and the copy almost wrote itself from the message.
I have a “toolkit” consisting of over 100 pages of models (including checklists and templates) that I have built up from experience, reading and crucially from my education during the Saltire Fellowship. I use elements of this toolkit regularly in my work – and I find there are three principle ways in which my collection is useful…
I find sometimes that sitting and looking at a problem doesn’t necessarily help to solve it – as in the example I opened this post with. Here models can be help to find an alternative way of looking at the problem that makes it much clearer what action is needed.
In another recent example, I was puzzling over the performance of a set of individual businesses within a group that was struggling to manage cash flow – let alone provide sufficient cash to allow the
businesses to grow. Just looking at the management accounts (which were focussed on profit and loss) didn’t lead to any obvious conclusions about which of the lines of business might deserve more
focus and which should be dropped. However, when I turned to some of the ratios from the Dupont Model I quickly gained a completely different perspective. All the lines of business were marginally profitable, but one was tying up nearly all of the assets of the organisation. By sacrificing that line of business, assets were released to give a secure pool of working capital to sustain and grow the others.
When two people have a common understanding of a model, communicating ideas becomes much easier because the language of the model provides a framework on which to hang the content. Sometimes this isn’t even a conscious choice. For example, when we describe turnover, profit (and loss), or retained earnings we are abbreviating relatively complicated ideas with language taken from the standard model for accounting.
I find that big problems like characterising markets are too hard to think about or discuss without splitting them up into manageable parts, which can be accomplished with models such as Porters 5 Forces or the 5 C’s (Customers, Competitors, Complementors, Context, Company).
Finding the Gaps
Invariably some aspects of business are more fun and more rewarding to think about than others, but this can be a trap that leads to missing important points.
For example, when preparing a business plan I find it much more rewarding to write about the strengths of the company and the opportunities in front of it than I do writing about more negative matters. However, investors reading the plan will be looking for the gaps, and if I fail to write about the weaknesses of the company, or the threats it faces, then the plan will look hopelessly
naive. I also miss the opportunity to present how weaknesses and threats will be addressed. Using the SWOT analysis method (Strengths, Weaknesses, Opportunities, Threats) is a great way of making sure the less fun but equally important parts of a story aren’t missed.
Templates that provide a structure for planning documents and presentations also help to make sure that all the appropriate topics are covered, and checklists provide a means of understanding what needs to be done and how much progress is being made.
Models are there to stimulate thought and discussion– not as an alternative!
I get the impression that some of the people I work meet have a negative view of pre-defined models, checklists and templates because in the past they have seen unrealistic expectations set around them. At the extreme, they can be perceived as being a complete waste of time while a company should actually just get on and do something!
Unfortunately when models are used thoughtlessly, slavishly, or as an alternative to thought or action, they do just waste time.
However, when used appropriately and thoughtfully as an aid to thinking, communication, and avoiding gaps I believe that they can be extremely useful.
There are many excellent books on business that introduce relevant models, but for free information there are great Wikipedia pages for some of the models mentioned here, each with links to many other interesting pages…