Any entrepreneur considers his business venture as a child which is taken care on a 24/7 basis aiming to grow it strong, healthy, effective and even causing friends’ envy. What defines the difference between successfully grown or badly behaving “children” and a costly, unsuccessful venture? How to develop it uniquely well in your own way?
The moment of truth is that all businesses are different in their nature, resources consumption and utilisation pattern, and nature of internal and external relationships and therefore, cannot be treated similarly.
The talents and personality of that “child”, i.e. organisational archetype must be clearly defined and set for success. Organisational Anatomy (2016) differentiates businesses from the core resources consumption and utilisation pattern viewpoint and distinguishes five types of organisations – producers, knowledge-dependent, location-dependent and state-affiliated organisations.
Producers physically transform inbound materials and thus, adding value to a product – cars, chips or hoodies. They are dependent on more than just the quality of inbound resources and their professional expertise in terms of adding value or reshaping the inbound materials, but also dependent on the market, their ability to provide appropriate sales and after-sales care. It is impossible to run a factory if the supply of the core material is not guaranteed and secured for times ahead. Producers must possess appropriate facilities as well as reliable, affordable and advanced equipment. Before building a start-up, funds must be invested in production with any return to be made at a future point.
Knowledge-dependent companies rely on internally generated knowledge and driven by the need to take care of increasing organisational expertise and thus, attract customers, like media producers, clinics, consultants, banks and educational entities. Would you be using a bank which cannot manage your money effectively without hassle? Or would you pay for a course which gives no knowledge for your money?
The key asset of the location-dependent businesses is a location itself and potential customer demand which is brought by it – resorts, shops, coffee shops, transport companies, and service providers. Being located a hundred meters away from shopping or walking route will cost a profit and good customer flow. Thinking about transport or telecommunications companies or broadband providers as kinds of producers, we are wrong. They are directly dependent on assigned areas in which they can conduct their business. Take it from them and they are gone.
The ability to motivate people’s willingness to become donors defines the core of the donor-dependent organisations, i.e. charities, voluntary funds, and religious organisations. These organisations attract donors by using the emotional attachment or human willingness to sacrifice something towards a good goal or purpose to ensure their survival. Their main concern is to maximise resources through development of their ability to maintain strong and long-lasting relations with donors and thus, securing donations on a long-term basis.
The rationality behind the type of venture defines its skeleton – structure, internal systems, imprinted capacities, functional flexibility – and not wasting time and money on non-core activities and features.
Developing companies in an effective way and in the line with the goals sharply increase chances for success and performance superiority. Otherwise, this is like raising a child to be an athlete by giving music lessons. Also, a company which is developed rationally has higher capitalisation value and so, return on investments.
Those who have gained an experience of starting business know well how much effort, time, money and expectations were burned for nothing leaving sad holes in the limited budget. Building a new company or reshaping young business rationally is always easier rather than looking for expensive remedies for a suffering venture with pathologies later.