Why your business should look like my pit bull

I posted a little while ago about the pit bull we adopted after hurricane Katrina.  When I look at him he sometimes seems homely and sometimes handsome, but I always think of him as “my beautiful boy” because he is truly beautiful on the inside.  (That’s him in harness, pulling me, in the picture.)

Which brings me, again, to process.  It doesn’t matter whether you are making and selling ball bearings or iphone apps (that is, what your business looks like on the outside), the beauty of your business is in its processes (or what it looks like from the inside).  By “beauty” I mean: effectiveness, profitability, and long-term viability.

There used to be a phenomenon known as the “wheel of retailing”.  If you aren’t familiar with the term, here’s its definition from Answers.com: a retail marketing process whereby original low-price discounters upgrade their services and gradually increase prices. As they evolve into full-line department stores, a competitive opportunity develops for new low-price discounters to develop, and the process continues with the next generation. I suspect that it is less of a phenomenon today than it used to be since people now realize that a dollar made by Wal-Mart is worth the same as a dollar made by Neiman-Marcus.  But to the extent that it continues to exist, it will leave corporate corpses in its wake just as it always has.  The reason is simple: the processes that worked so beautifully for the low end of the market will not work for the high end.

The lesson: even if you aren’t in retailing, think long and hard about changing your business model (for reasons other than necessity) or moving into new markets.  The beautiful profits that you enjoy now, the smoothness of the processes you have running, will come to a screeching halt—at least for a while—as you learn what the right processes are to install in your new business.  If the firm can make the change at all without a new management team.

Ralph

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