DIY leadership development: Learn how the business works
Understand how the business works in terms of business model, key products, and key business processes.
Why?
- Understanding how the business works allows you to map actions to business impact, as well as help communicate this mapping to others.
- Understanding how the business works helps you communicate more effectively with business partners and stakeholders, which means they are more likely to support you as a leader who “gets it”.
Ideas for understanding the business model
Read books about the industry.
For example, when I was at ThoughtWorks, many people recommended Managing the Professional Service Firm. At Spotify, the recommendation was How To Make It in the New Music Business. At Grainger, it might be Supply Chain Science.
Read the financials.
With public companies, it’s relatively easy to find financial statements. For example, ThoughtWorks financials, Spotify financials, and Grainger financials. The issue is typically less finding the financials than it is understanding how to read and understand them. See for example, Financial Intelligence.
Map out the business model.
The Fly Wheel concept from Good to Great is about understanding the reinforcing feedback loops that support the overall business.
The most well-known fly wheel comes from Amazon. Better customer experience leads to more traffic, which attracts more sellers, which increases selection, which improves customer experience. At the same time, this loop creates growth, which enables lower cost structure, which enables lower prices, which also improves customer experience.
Another fly wheel about Spotify Ads. A better Free experience leads to more Free monthly active users (MAU), which attracts more advertisers, which leads to more advertising dollars, which makes labels more willing to allow better features for Free users, which leads to a better Free experience. At the same time, more advertisers enable more ad variety, which leads to a better ad experience, which leads to a better Free experience.
A Business Model Canvas provides a broader perspective by exploring all aspects of a business model: value proposition, customer segments, customer relationships, channels, key partners, key activities, key resources, revenue streams, cost structure.
Business Model Canvas examples:
Subscribe to the competitor/market intel group.
Once companies are of a particular size, there is almost always a channel and/or internal newsletter and/or internal page providing updates on competitor and market intelligence. You might need to look or ask around to find it but as far as I’ve experienced, it’s generally open to anyone to subscribe to.
Ideas for understanding the product(s)
Use the product(s).
When I was at Spotify, everyone was given a Premium account, and most features were released to employees first. In the Ads technology area, you could deliberately downgrade your employee account to receive Ads and try creating your own ad using Ad Studio.
Grainger provides a discount to employees to encourage use of Grainger.com.
Understand the product logic.
Essentially find the answer to this question: How does the product make it possible and/or easier for the customer to do something that satisfies a need they have, including emotional needs?
The answer may be in a product strategy doc, a presentation, or from a conversation with product managers.
Ideas for understanding key business processes
Map the value stream.
Map out the flow of materials, information, and money. That is, how does the work flow, how do people in the process get signaled for what to work on and when, and how does the business get paid.
Sometimes organizations have existing value stream maps that have this information. Often, they don’t.
Map this out yourself and validate it with others (which is also has the benefit of helping you build out your internal network).
Go to the gemba.
Gemba means the place where the value-creating work is happening. This allows you to directly observe the value stream in context.
For example, at Grainger, leaders are encouraged to visit branches and distribution centres.
Even without an official program, most people tend to be open to a visit from someone who is genuinely interested in learning about what they do.
Shadow the front-line (customer support and sales).
Shadowing customer support gives you a better sense of the kinds of problems customers are experiencing. Shadowing sales gives you a better sense of whether and how your products are connecting.
For example, at Grainger there is something called a “ridealong”, originally referring to riding along with an account representative as they visit customer sites but also includes shadowing customer support and inside sales (essentially shadowing phone conversations).
Observe / talk to customers.
Find opportunities to observe and talk directly with customers. For example, observe a user testing session, do a customer site visit, do a temporary rotation in customer support, or help with customer interviews.
See also
Developing domain expertise: get your hands dirty. | Irrational Exuberance (lethain.com)
