To create value and fulfill its promise an organization needs three well defined layers. Let’s explore, why all three are necessary to make sustained profits for the organization?
Organizations that are built to last have three well defined layers. The top layer is the Strategic layer that clearly defines the direction of the company. This layer comprises of the company’s Mission, Vision, Long-Term Goals and Short–Term Goals. Although this layer is largely predictive, it should be grounded with a clear strategy and plan on how the company would achieve its objectives and manifest its Vision.
The second layer is the Business Model that defines how the business should be built. This layer consist of two broad sections. The first section is the Marketing section where the organization commits and delivers value through its products and services. The second section is the Operations section where the organization generates value. Although the organization takes accountability to generate value, it could outsource part or all of the production and services to a vendor. Here the company is focused on building a brand and fulfilling its brand promise. There are many moving parts in a business model and every activity done by the organization becomes a part of the jigsaw puzzle called the Business Model. Any excessive activities done by the members of organization that does not form a part of the business model design can lead to inefficiencies and additional cost that eventually put a strain on the profit. Also, a Business Model if not well designed could ultimately result in the decline of the organization.
The third layer is the Implementation Layer or the Execution Layer, where process, culture and management style drive efficiencies and achieve intended results. In this layer, the human resources and their competence play an important role in utilizing the structure provided by an effective business model. Leaders and managers play a pivotal role in utilizing the full potential of all the resources and structure at their command and create value far higher than the inputs measured as Return on Investment (ROI).
If the business were compared to a Formula 1 race then the game plan would be the Strategic Layer, the car would be the Business Model and the driver’s competence and approach would be the execution layer. When all the three layers are in sync and optimized the organization is sure to get the checkered flag in every race.