Application of the Business Hierarchy of Needs?

The Business Hierarchy of Needs? can be applied to any organization, business, division, function, project leaders, and individuals. I can confidently make this statement because all elements apply to any team of stakeholders that is trying to add value and deliver it to an internal customer, external customer, or a constituency. The level of detail and sophistication required for application is dependent on the complexity of the company’s strategy, the MIG, annual revenues, and the number of people in the organization. It should be applied to every business, whether it is generating $5M per year in revenues or $5B. If a company wants to be successful, the Business Hierarchy of Needs? is the framework with which they should work. In fact, in some business situations the Business Hierarchy of Needs? is imperative for redesigning the business model.

Business Life Cycle

Every business will see life cycle changes during its existence as shown below.

Each of these business life cycle changes will have unique MIGs and strategies. It is important for a company to analyze its industry, the company itself, and its products to understand the life cycle stage of its business. Think about buggy whips. In the 1800’s it was estimated that there were more than forty buggy whip manufacturers and today there is only one. Similarly, the companies that manufactured typewriters, PDAs, overhead projectors, VCRs, paper roadmaps, and phone booths have had to significantly change their strategies and business models; this process has had to include restructuring, harvest, and re-design. Movement from one stage to another requires a redesign of an organization’s Business Hierarchy of Needs?.

Mergers and Acquisitions

Mergers and acquisitions seldom deliver the value added synergies contemplated in the deal justification. Several studies indicate that as many as 80% of mergers and acquisitions do not create the anticipated incremental value. The ineffective combination of different business strategies, cultures, people, markets, products, and operating systems are the prime contributors to this result. The Business Hierarchy of Needs? provides a framework for creating a synchronized approach to combining the entities and creating one culture, while adding significantly more value.

Carve Outs

Carve Outs create a brand-new entity that will have a Business Hierarchy of Needs? that is different from its former parent organization. It provides the change management framework that gives the new entity the ability to define itself, its value proposition, MIG, supporting strategies, systems, organizational structure, and implementation plan.

Digital Transformation

According to some studies, a staggering 70% of digital transformations fail. This is because digital transformations have the biggest impact on people, process, and technology. If not planned properly, these transformations will hit roadblocks that are difficult to overcome. A digital transformation relies heavily on Level 2 and Level 3. Fortunately, the Business Hierarchy of Needs? provides the recipe of elements that are required to make digital transformation successful.

Restructuring

There are times when even the best-laid plans go awry, and a business must be restructured. This is a strategy that should be driven by a MIG that measures the success of the restructuring effort. All elements of the Business Hierarchy of Needs? apply here. Level 2 plays an oversized role in this type of strategy because people are more affected by the restructuring strategy and are required to significantly change what they do. They need to make tough decisions on how the business will be reshaped.

Inflection Points

An Inflection Point is where a company has outgrown its existing organizational structure and technology backbone and is beginning to see deteriorating business performance, as shown in the next figure.

Sales slow, service levels deteriorate, and financial performance suffers. This usually happens when a company doubles in size and requires a redesign of the business model. The Business Hierarchy of Needs? once again is an extremely useful tool for plotting the future state of the company, positioning it to double again.

Bankruptcy

While restructuring is painful, bankruptcy elevates that pain. The business has failed and is forced to take drastic actions which often include restructuring on a gigantic scale. During the legal battles that often accompany bankruptcy, the business and organization are in limbo. That is the time that the company needs to develop a unique Business Hierarchy of Needs? model for when it emerges from bankruptcy in its new form. Things will have changed drastically, and all stakeholders need to be in alignment and agreement on the company’s new direction.

Entrepreneurs

In my many dealings with entrepreneurs, I have found that they tend to run everything in their head. Unless they came from a corporate background, the Business Hierarchy of Needs? may seem foreign, too complex, and not cut out for the demands of running a small business. Entrepreneurs should think again about that. All the elements of this framework apply, even if only for the purposes of planning the future success of their business. This is especially true at Level 1 where it is important to establish a MIG and create a strategic model using “Where to Play” and “How to Win”. The rest of the elements will become more important as the business grows, so if the business owner keeps those elements in mind, growth will be much easier to manage.

Exit Planning

I have been involved in many exit planning sessions with owners of companies. They usually decide at a moment’s notice that it is time to exit their company. This is happening more frequently because we are seeing the largest transfer of ownership of private companies in US history. The Business Hierarchy of Needs? applies to these businesses, as well, but with a twist. Owners of companies need to have their own personal MIG as a stakeholder that is focused on what they want from an exit. They may want to cash out, have a small liquidity event, stay involved in the business on a part-time basis, or guarantee defined cash flows for the rest of their lives. I hope you can see where each of these MIGs will have a significant impact on the MIG of the company and its strategies. Once I understand an owner’s MIG, it is much easier to build and implement a business strategy that will be tied to their Most Important Goal.

Individuals

You might be thinking that the Business Hierarchy of Needs? is for companies and organizations only. Not the case. As an individual contributor, it works for you, too. You will get noticed in your organization and help make it more successful if you focus your activities on projects and contributions that move the strategic needle forward. As earlier stated, when your contribution makes a difference in a company and visibly helps the company achieve its MIG, people will pay attention. Doing that makes it easier to rearrange the priorities of your peers, acquire funding, and get resources to work with. Do not underestimate the power of showing how what you want to do will measurably impact the performance of a team, an organization, and the business.

As you can see, the Business Hierarchy of Needs? as a tool has many applications to the development of a business strategy and its implementation. If nothing else, it provides a leadership team with the necessary list of considerations for developing and implementing strategy.