Isis Consulting

Strategy Jewels - Kawasaki on Business Evangelists

2007-02-24T17:29:42-06:00

Guy Kawasaki's Point is IF YOU CREATE AND SUPPLY SOMETHING "GREAT" - THE EVANGELISTS NATURALLY COME TO GET WHAT IS GREAT
John Clayton Caris

Business Segmentation - What & Why?

2007-02-05T22:32:06-06:00

In a previous post entitled Two Critical Needs I defined the twin needs of business leaders today as strengthening current operations and preparing for transforming to a new pattern of business aligned with emerging business environments. I emphasized these needs are inter-related and both are critical - With the strengthening coming first.

Now the question is - How do you begin satisfying these needs? - What techniques and tools do you use? We believe the best answers are first, a special type of business segmentation and second, a special type of accounting system that allows you to put your business segmention directly into your Chart of Accounts. Thereby, you can measure both the financial operating performance of each of your business segments and also the overall company.

Let's outline first the Isis Consulting approach to Business Segmentation.

Conventional segmentation focuses upon Market Segmentation. That is one dimension of the Isis Consulting type of segmentation. We call it the Market/Customer dimension of Business Segmentation.
Market/Customer segments are displayed along the vertical axis of the two dimensional Business Segmentation Matrix we use. Each Market/Customer segment is a specific type of market channel and customer the company serves.

The other dimension of Isis segmentation focuses on products and services the company creates and produces. We call it the Product/Service dimension of Business Segmentation. Its segments are displayed along the horizontal axis of the two dimensional Isis Business Segmentation Matrix. Each Product/Service segment is a specific type of product and/or service the company offers.

Business Segments are defined as areas on the matrix - Areas where one or more types of Product/Service segments are offered to one or more types of Market/Customer segments. In some cases only one Product/Service segment is offered to one Market/Customer segment. This is the simplest type of Business Segment. In other cases one Product/Service segment is offered to several Market/Customer segments. This is like a gasoline station selling one grade of gas to many different customers. In still other cases several Product/Service segments are offered to one Market/Customer segment. This is like a super market selling many things to one person.

Now let's outline second the Isis Consulting approach to Segmented Accounting Systems.

Conventional accounting systems have a Chart of Accounts where each type of financial account for Asset, Liability and Equity items has a unique account number that defines that account for the overall company. Financial Statements - Income Statement, Balance Sheet and Cash Flow Statement - are generated from the quantities entered into the accounts of the Chart of Accounts. But recall, the amounts entered are for the overall company - So the financial statements report only the performance of the overall company. You have no visiblity into the financial performance of specific segments.

Why? For two reasons. The Business Segments were not defined and their specific financial quantities were not properly coded and the amounts entered into a segmented Chart of Accounts.

The Isis approach to Segmented Accounting Systems uses an accounting system that first, can be segmented and second, each Chart of Accounts item number is made longer to include codes for the Business Segment. The accounting data put into the system must be entered into the proper segmented items. If so, then we can generate separate financial statements for each Business Segment and also for the consolidated company.

These Business Segment financial statements are powerful tools to analyse the operating dynamics within the company and begin the process to audit operating performance. This analysis and audit are the base for learning - using additional Isis tools I will not detail here - what specific decisons and actions are needed in which specific Business Segments to strengthen current operations and thereby strengthen the overall company.

The point is that Isis Business Segmentation is the essential beginning point for both strengthening current operations and then studying the strategic issues for preparing to transform specific Business Segments.

John Clayton Caris

Two Critical Needs

2007-01-28T21:48:00-06:00

Business owners and leaders now have two critical needs:

1) To Strengthen Current Operations -
during today's period of chaotic business and financial environments, unprecedented competition, decreasing profit margins and accelerating change; and

2) To Prepare for Transformation to the pattern of Living System Nodal Network Business Operations -
that is required to successfully align with the emerging world business environment.

These two needs are intertwined, but this may not be obvious. In fact, the problems driving Critical Need 1 (To strengthen your current operations) are generated by the emerging transformation of Critical Need 2 (Transformation to the new pattern of leadership, organization and operations).

The only effective solution for Need 1 is to strengthen your current operations in a unique way that naturally prepares you to successfully make the transformation to Living System Business that Need 2 calls for. The best way to approach this work is through a special type of Business Analysis and Strategic Audit that is based upon Business Segmentation.

Many business leaders are experiencing the mix of problems I outlined. They readily agree that they need to strengthen their current operations. But many do not see or understand that Need 2 - To dramatically transform their life and work - is indeed a critical need, or that it has anything to do with Need 1. It is and it does.

Almost all conventional methods to solve the current problems - That are growing worse - use actions locked in the current linear mindset and actions for leadership, organization, operations and entrepreneurship. They do not see the emergence of Living System Business as the qualitatively different pattern for leaders that is indeed the proper path for BOTH 1) Solving your current operations problems and 2) Properly aligning your future with the emerging business environment. It is imperative that you know what to look for, how to see it and how to act on it.

Our special expertise is working with enlightened business leaders and their organizations to achieve results simultaneously for both critical needs in unique ways always customized for each human team and their business.

Charles Dickens wrote at the beginning of his great novel, A Tale of Two Cities,

                  It was the best of times,
                  It was the worst of times,
                  ....

Our experience is that his words apply exactly to our time of current and the emerging business situations. For those leaders and their companies who are properly dealing with the current problems while properly preparing for continuing transformation, it can become the best of times for them (Think Google). On the other hand, the daily news is full of reports of leaders and companies who are not dealing properly with either their current or future needs in the proper way aligned with the coming pattern of world business (Think Ford Motor). For them it is becoming the worst of times.

John Clayton Caris

Purpose of Isis Consulting Blog

2007-01-11T21:17:20-06:00

Paul Graham wrote, "In business there is nothing more valuable than a technical advantage your competitors do not understand". His insight, in our judgment, applies to creating the competitive advantage for your business in terms of a strategic foundation whose uniqueness is a mystery to those who may try to compete with you.

The Purpose of Isis Consulting is to create such unique strategic competitive advantage - Then develop and deliver high value-high profit client customized implementations of it through Living System human relationships, organizations, operations and systems that are difficult for others to understand, copy or compete with.

Isis Consulting services involve new Living System Network business technology for thinking and practice in strategy, organization, branding/marketing/sales, operations, resources and systems that are a discontinuous leap beyond those of conventional linear system business thought and practice.