Episode #2: Structure First
Welcome to the second episode of The Strategy Corner. In this episode I share with you a strategy exercise every owner and executive team should go through if they want to grow and or create a profitable business and it’s called, Structure First.
Structure First is a tool I utilize in my business strategy sessions with my clients. It is a tool that comes from EOS (Entrepreneur Operating System). Thinking about the structure first allows the owner and leadership team to expand their ideas and begin to brainstorm about what the right structure of the business would need to look like to achieve the growth and development they are looking to create. With this strategy we strategically leave employee names out of the equation and just focus on structure to ensure we are forward thinking and dreaming, thus not holding ourselves back from that creative process. Come along with me as we talk Structure First, LET’S TAKE ACTION!
Hello and welcome to episode number two of the Strategy Corner where our goal is to get you to take action. I’m your host, Michelle Zink, the owner of Intentional Solutions Corp. Today, we’re going to talk about a strategy exercise every owner and executive team should go through if they want to grow and or create a profitable business.
The exercise is called structure first, people second. Before we jump in, I want to share with you something I forgot to share in my first episode and that is I am an EOS implementer.
EOS stands for operating, excuse me … Entrepreneur Operating System and it’s a highly successful, simple, practical approach and operating system which focuses on vision, data, processes, traction, issues, and people.
I utilize this system when I work with my clients on business strategy. This week, I got a blog post from them that was titled shopping for shoes and I will include the link in my show notes for you to read in its entirety.
This was the inspiration for today. I plan on sharing more about EOS and future episodes, but for now, I’m going to start off by sharing excerpts from the blog. I’m going to read exactly from the blog two paragraphs.
Number one, it says, I feel it’s always best to have a strategy when shoe shopping. Usually I have an outfit without the proper shoe and I’m out to fit that slot in my shoe closet. Having a plan going into the shoe store keeps me laser focused on the task at hand.
If I’m looking for a Navy shoe, that’s all I focus on. If I don’t see black shoes or those cute orange shoes in the back, I only see Navy. As you know, Wickman has proven EOS its structure first, people second.
You must define the structure shoe closet before finding the right people, shoes and like finding the right shoe to fit in the right slot in our closet. It’s all about finding the right people for each role in your business.
With that being said, we’re going to begin by talking about structure and then in the next episode, people. The tool that EOS utilizes to figure out the right structure for the organization is the accountability chart and you all know it as the organizational chart.
It’s a little different from the organizational chart because it focuses on functions, not job titles. A few function examples would be finance, operations, sales. It also doesn’t list people until they have the right structure to support the growth they’re envisioning.
With an accountability chart, you’d have listed the function first throughout the whole organization. You’d build out the actual chart with functions first, then you would go back and put the people in. Whereas a lot of times in organizational charts, we think about who do we have and we fit them into a particular function or job title.
In this situation, we actually come from it from a different perspective. One that allows you to be unemotional, it helps you decide where you want to go and what structure would actually support that.
That’s what we’re going to dig into and talk about today. When do you begin to think about structure, you need to first step back and think about the future and where the company is going.
For example, you need to start thinking about what sales and profit margins do we want in a year looking forward. When I work with clients, we actually look at three years and 10 years as well, but in this example, you’re just going to think about the next year.
What sales and profit margins do you want in a year? Then, what are the top three to seven projects you want to accomplish in a year that will move your company forward in order to accomplish these sales goals and profit margins.
When you know where you want to go, you’re able to then get more detailed and figure out from a perspective of the particular functions you need within the organization.
In my meetings with my clients, we get more detailed and we talk on a higher level about specifically where the organization’s going, but for right now, this one year perspective is a great place to start.
After we determine where we want to go, we think about the structure. How is your organization set up right now? To begin, do you have a organizational chart set up already?
If you do, that’s great because you can actually pull that out and we can start looking at that together. If no, that’s okay as well. You can draw one out showing currently what it is.
When you do this, don’t put people in the chart just yet. Just list the functions first. Once you know where you’re starting from, think about what functions you would need in order to bring the increased revenue and complete the additional projects you’re thinking to consider.
Before we do that actually, I want to go back to the organizational chart. If you have one, go ahead and take off the people’s names on the organizational chart. I know a lot of times we develop these organizational charts and we do have individual’s names on them so I just like you to go ahead and take that off so that you can actually look at it from a perspective of either their job title or their function.
Same with when you’re actually creating a organizational chart. If you don’t already have one. Again, just focus on the job title or function and don’t put the people’s names in first. Okay, now let’s get back to what I was talking about.
Once you know where you’re starting from, think about what functions or positions you would need in order to bring the increased revenue and complete the additional projects that you planned on doing in a year.
Things to consider, would you need additional sales people to bring in more revenue or would you need to increase marketing or another area? Do you have the expertise on staff to match the additional projects you want to accomplish over the year?
Really taking a big picture perspective to see what you would actually need, the functions you would need in order to bring in that increased revenue and those additional projects.
You don’t think about who you have just yet, you just want to think about who you would actually need, the functions you would actually need in order to accomplish what you want to.
With this information, you can go back now to your chart. Go back to your accountability chart and see if the current structure supports your one-year goals and objectives.
If yes, then great. If no, then what additional functions do you need? First we determined all the functions we needed in order to bring in increased revenue and to complete those additional projects.
Then we looked at our accountability chart or in your case, your organizational chart to see out of that list, what do we actually already have. Now we’re looking at the list to determine what additional functions we would need to create within the organization.
You have your whole list, you have the ones that match up specifically to the titles and functions you already have, and then you have a separate list that says the additional functions that you would need.
This is where you take those additional functions and you add them to your organizational chart. You decide ahead of time where these functions would actually get placed on the organizational chart so that you can see visually where the company is and where the company needs to go.
Once you have the idea of the structure, you will need to develop to actually meet your sales and projects goals, you can go into the next step of the process which is determining people.
But only once you are clear with the structure. As I mentioned earlier in this episode, we’re talking about structure and my next episode, episode number three, I will be talking about the people component.
I know this sounds like a lot, but if you actually get your executive team and the owner in one room and just start working through this one step at a time, you’re really going to make some traction and actually see where the company is and where it wants to go.
Here, are your call to actions. Number one, if you don’t have a current organizational chart, then develop one using functions, not names or titles. If you currently have one, update it by taking the people off the chart and keeping the titles or functions on.
Number two, bring the owner and executive team together in one room and discuss and determine your one year vision. What revenue and profit margins do you want to have? What three to seven company projects need to happen to support your revenue and profit goals.
Number three, brainstorm the functions you would need in place to accomplish the revenue, profit and project goals, all the functions. Number four, look at your current organizational chart and see which functions, titles you have already.
Number five, determine the additional titles, functions you would need to add to your organizational chart. Number six, determine where they fit on the chart. That’s it. To get this first step going, you just need to do the six steps and then the next podcast we’re going to actually talk about the people component.
Congratulations, you’ve completed the first step and the two step process and just know that this does take time. You might get your owner and executive team together and it might take you two to three times meeting together to actually determine the organizational chart and to do these six steps that I’m talking about, but please, don’t give up because this is very important for the growth and development of every organization.
If you have a chance, if you guys could go to iTunes and subscribe to the Strategy Corner, I’d really appreciate it. Also, you can go to my website, www.intentionalsolutionscorp.com and sign up to get my weekly blog posts which also has a link to the latest podcast.
If you’d like to learn more about EOS and how it can help your business take you to the next level of success, please go to my website, again, www.intentionalsolutionscorp.com and hit schedule complimentary conversation, and I’d really be grateful if any of these things you could do, I would truly appreciate it.
Until next time, remember, action takes you from dreaming to creation, and when we are creating and growing, you are happy and abundant, let’s take action.