In business, success is more than just having a great product or service – plenty of your competitors can make that claim. Real success comes from clearly understanding what you do well, what you can improve, and what, perhaps, you should stop doing altogether. Enter the business diagnostic – a powerful tool to help you uncover those insights. And more.
In this post, we'll explore the importance of business diagnostics and how they can benefit your business, focusing on clarity of purpose, creating a vision, and devising strategies and action plans to help you achieve your objectives.
Understanding the basics: what is a business diagnostic?
There's no single definition of, or approach to undertaking, a business diagnostic. In our language:
A business diagnostic is a tool that gives a business clarity about how it's positioned to meet its growth objectives.
It's a little like taking a complete medical - one that's designed to take a "whole of body" approach and draw out information about you to help you make informed decisions about what changes you might make in your life to improve the shape you're in physically.
As a practical business diagnostic example, ours here at GrowthCatalyst focuses on all the elements of a business that set it up for sustainable long-term growth. It takes a Q & A approach and includes questions covering a range of business issues, starting with bigger picture items (vision, strategy and business plans and their alignment to business purpose) and moving through people-related matters, client-focused issues, marketing and financial outcomes.
There are, of course, different approaches...this one works well for our clients.
Clarity of purpose: focusing on your business's why
At the heart of every successful business lies a clear sense of purpose – a compelling reason for existence beyond making a profit. But in the hustle and bustle of day-to-day operations, it's easy to lose sight of that purpose and instead focus on reducing the noise of deadlines, budgets, and competition. This is where a business diagnostic can be invaluable.
By taking a step back and examining your business through an objective, diagnostic lens, you can gain clarity on your purpose and ensure that it's reflected in everything that happens in the business and in every decision made.
Creating a vision: painting a picture of success
While your purpose is your “north star”, the next thing you must be clear on is your vision – the compelling image of what success looks like in the context of that purpose. This is where a business diagnostic really shines because it helps you paint a realistic picture of where your business stands today. And therefore, it gives you a starting point for planning what you need to do to achieve your vision.
That said, a diagnostic might also indicate that your vision is unclear – or worse, that you don’t even have one.
Devising strategies and action plans: charting a course toward success
A business diagnostic is also an invaluable tool to help you devise strategies and action plans to bring your vision to life. The insights you gain from a diagnostic should confirm what you’re doing well and should expand on (or at the very least continue to do) and areas that could be improved. With that information, you can readily develop targeted strategies and action plans.
Leveraging data-driven insights means you can develop action plans that are both more realistic and achievable than you might without the benefit of those insights. It means you can guide your business toward its objectives with greater confidence and clarity.
How to maximise the benefits of a business diagnostic
Running a comprehensive diagnostic involves an investment of time and money. As with any investment, it’s important you get what you want from it.
Here are some tips on how to maximise the benefits.
Avoid pre-conceived conclusions - in other words, don't run a business diagnostic purely to "prove" something you already believe to be the case.
Let’s take employee turnover as an example…you may believe that relatively high turnover is related to salary.
An independent diagnostic might tell you, though, that people are leaving because they don't understand how their role contributes to the longer-term success of the business...in other words, they don’t “get” your business purpose. Where's the business heading? You could be surprised to learn that addressing these key concerns might lead to more engaged employees who are less likely to leave.
Involve the right people in the process - this isn’t just an exercise for you as a business owner and your most senior people.
You can (and really should) also include other "influencers" in the business - those who aren't in leadership roles but to whom their peers look for guidance and support. If you don't know the views of this group, the diagnostic is a great way to find out. Finally, it's good to involve both longer-serving employees and new hires for diversity of opinion.
For example, we recently had a business owner ask to include the most junior admin person in responding to the diagnostic questions. Why? Because they see and hear everything!
Ask the right questions in the right way - there are so many questions you could ask, but it’s important to be clear on what you should ask. Start by being clear on why you’re undertaking your diagnostic. That will determine the issues to explore and the questions to ask.
In terms of responses, using a multiple-choice format helps with consistency and analysis. That said, enabling free-form comments is great because some people love to “colour outside the lines” and provide additional feedback.
Provide timely feedback - your employees who take the time to take part in the diagnostic will be keen to get at least a preliminary understanding of the findings from the exercise.
It’s important to update the team periodically on how the analysis is unfolding and some of the steps the business is likely to take as a result. Communication is critical because those who've provided their input want to know someone is listening.
Take action - it probably goes without saying, but if you invest your time, effort and money in a diagnostic, then you owe it to yourself and all your stakeholders to act on what you discover.
By no means does that mean you need to act immediately on every single issue. But it does mean you should prioritise your opportunities and build an action plan to ensure high-impact/low-effort initiatives are first cabs off the rank, with others to follow.
Monitor progress - keep track of how things are progressing. Remember, too, that this is not simply an exercise in finding and correcting faults. It’s also about building on your strengths…doing more of those things that work.
Keep an objective eye on how and why business is improving as a result of your efforts and those of the team. Celebrate your successes and act quickly to remediate anything you discover isn’t going according to plan.
Where's the value in outsourcing?
A detailed business diagnostic, executed well, is an invaluable tool. It can help clarify purpose, inspire your vision and inform your strategy, enabling you to better focus on your growth aspirations.
That said, many small and medium-sized business owners break out in a cold sweat at the thought of putting their business under a microscope in such a way. They usually tell us that limited resources, time constraints and competing priorities make it difficult to commit. And for some, it’s the fear of opening their business up to such scrutiny. They see benefits, but it’s all a bit too hard.
Which highlights the value of outsourcing the exercise. Here’s why it works:
Expertise and objectivity - independent, external advisers bring fresh perspectives and specific expertise. You gain insights and recommendations that you might not have otherwise considered. That’s not a criticism, but it’s easy to miss some of the detail when you’re so close to the action. A third party will also be more objective in assessing what the business is doing well and perhaps not so well, free of any bias or preconceived conclusions.
Efficiency and focus - you and your team can get on with your day jobs while the analytical work is done. Sure, you’ll need to commit some time to answering questions and providing data, but that’s not overly time-consuming.
Access to external insights - an external provider will leverage their knowledge of what’s going on in the world of business. That includes ideas around what’s working well for other businesses that you can tailor and implement in yours. It means you can “borrow” the best ideas from your own and other industries without doing the research yourself.
Cost-effectiveness - of course, outsourcing is always an expense. In the long run though, it’s a sensible investment in business improvement. What you’ll discover during the diagnostic process is all sorts of ways to create improved outcomes for your business that will underpin your efforts to achieve your growth aspirations.
Should we do this in our business?
Without a doubt.
But then we would say that wouldn't we?
But it's absolutely true.
Because at some point, you have to ask yourself whether doing what you’ve always done will enable you to achieve your business objectives. If you’re entirely honest with yourself, the answer will be “probably not”.
So whether you’re an early-stage business looking to gain a competitive edge or a bigger business seeking growth opportunities, partnering with a trusted third party can provide the expertise, objectivity and focus you need to achieve your business objectives with confidence and clarity.
Is it time for a "deep dive" into your business?
Is your current success something of a mystery to you?
What are you doing really well that you should do more of?
And what might you improve?
What would your employees say about your business?
A GrowthCatalyst Business Confidence Profiler could be just what you need to keep you on the road to long-term, sustainable and profitable business growth.
Contact us to arrange a face-to-face or virtual conversation.
Alternatively, you can book a time for an initial discussion here.
In other news...
GrowthCatalyst has joined forces with a number of like-minded professionals to form the advisory group Konektis (check us out here). Collectively, the Konektis team provides integrated, multi-disciplinary advice to SMEs to deliver a "one strategy" outcome.
Take the Konektis Pulse Check and receive immediate, actionable ideas to grow your business.