MSU Extension

Ask anyone who is lost if they know where they are and a common reply is, “Yes, right here.” While a quick retort, recognizing the location and conditions is essential to finding the proper course. Unlike well-worn or marked paths, the correct course is far from being easy to navigate. However, knowing you are “right here” is a great place to start. Quite similarly, organizations need to take an unbiased assessment of their internal performance and capabilities.

Alignment of purpose with activities can be measured by developing a correct perception of customer satisfaction. Are new customers being attracted as well as being serviced? Do existing customers think they have adequate service levels? And moreover, how can the board of directors and management of an organization assure that they are using unbiased evidence factors for the formation of these conclusions?

Along with customer satisfaction, does the organization have a competitive advantage in the market place that is superior to similar service/product providers? How is this demonstrated? Investigating productivity may help to answer these questions.

Understanding internal management processes and how resources are allocated to meet customer needs gives an indication both to the effectiveness and efficiency of the organization to effectively deliver its products or services. Is organizational governance fine-tuned to mesh with management? Using resources outside the organization to assist the board and management to assess its ability to meet the needs of the marketplace can enhance capabilities. Outside unbiased consulting can drill down to better quantify capabilities and identify the ways that values are being created for customers – issues like quality, services and knowledge. The organizational core competencies should provide unique abilities in the marketplace. How well these are communicated and delivered inside and outside the organization should lead to business success. No organization exists in its own vacuum and must be constantly cognizant of important external trends.

The influences of the outside world factor greatly into any organization and shapes both what it can and should do. Technological changes, the state of the economy and the regulatory environment all enhance or detract on an organization’s ability to meet the changing needs of customers. Understanding these trends and their importance enables a nimble organization to prepare and adjust resources. Will the trend have a positive or negative impact? What might cause this conclusion? Completing this internal and external analysis helps develop a list of issues critical for the organization.

The list, although potentially endless, should be limited to no more than five to ensure sufficient focus. Determining the level of change that is needed is dependent on the strength of the organization evidenced above. A strong organization operating in an environment filled with opportunities should act aggressively and communicate its competitive advantage. If an organization is in a strong position (such as adequate capital, good customer base, efficient delivery system, etc.) exists in a business environment with negative trends (such as technology changes, increasing competition, etc.), an approach of using those strengths to diversify to focus resources on other opportunities should be investigated.

An organization with few competitive advantages (such as high production costs, inefficient delivery systems, limited capital, etc.) operating in an environment of numerous opportunities should encourage management to turnaround asset utilization to exploit resources so as to meet opportunities. Whereas a defensive position is essential if both advantages and opportunities are few. The level of change needed together with recognition of critical issues allows the organization to develop strategies for continued existence and potential profits. Most importantly, the core of strategic planning is agreement on the alignment of resources to maximize performance. Knowing the state of the organization and the environment in which it operates is the first step to finding the path to prosperity.

Michigan State University Extension, in partnership with the provides business guidance for new and emerging Michigan businesses.