The fundamentals of a company

Reading time: 12 min

February 16, 2024

AUTOR
Pascal NAPARTY
CEO and Founder

In a nutshell

The company's reason for being is defined by its vision, its mission

A company designs and delivers products and/or services

The functioning of the company is described by its processes and its organization. At the macroscopic level we distinguish (1) the management process (2) the operational process (3) the support process

The company's resources are (1) the women and men who work there (2) the technologies (machines, tools, software) which equip it

Company performance is measured by quantifiable metrics such as: revenues, costs, margins, number of sales made, production rate, customer satisfaction index, etc.

The climate in the company directly impacts performance

Management plays a key role in facilitating execution and reacting quickly to unforeseen events

Talent and career development is an area of retention

Introduction

There is a lot to be said about what a business is. We all have our own professional experiences, have read or seen documentaries which offer us a more or less emphasized point of view on certain facets of this “big animal”.

From the idea of the entrepreneur who founds his company, through the close collaborations of an ecosystem of partners and customers, to the very large dynamics of multinationals, there are however always the same fundamentals that we must master to better manage execution.

Below we present a summary of :

The theoretical description of the company,
The business plan,
The importance of employees,
The success criteria for successfully managing the business

It may be wise to be accompanied to review all of these subjects if you have not mastered them.

Elements of definition

By definition, a company is a legal entity that designs and delivers products and/or services.

The company's purpose is described by its vision and mission. These two dimensions are important and allow employees, partners and customers to understand the limits of the company's responsibilities but also the course it is following in the development of its business.
Forgetting to define the vision and/or mission exposes the company's ecosystem to potentially developing expectations that are different from the mission and will inevitably lead the company into a position of conflict with its collaborators, partners or even with its customers.

We can also describe a company by a homogeneous work plan that everyone can understand: its processes.

At the macroscopic level, we identify 3 distinct groups of processes:

Management processes, which are linked to the company's strategy. They are governed by senior management who defines the trajectory the company should take. We validate budgets and measure the convergence of key initiatives. Major decisions are made there for the health and balance of the business model.
Operational processes, which are linked to the execution of the company's mission. They represent the heart of the activity. There are many functions to support key processes such as:
- The product research and development process,
- The design process,
- The manufacturing process,
- The delivery process,
- The interview process,
- The training process,
- The sales process,
- The customer service process,...
Support processes, which are related to supporting operations. In this category we find processes linked to the organization such as:
- The premises maintenance process,
- The process of making the material available,
- The human resources process,
- The payroll process,...

The company can also be defined by its organization(s). There are several, including:

The organic structure, also called solar structure in the image of the business manager who "radiates" at the center of his organization (classic diagram of SMEs and VSEs),
The functional structure, which allows the organization of the collective by optimal distribution of work and responsibilities. It is the second stage in the life of a company (management, accounting, finance, marketing, sales, IT support, etc.),
The divisional structure, which introduces the notion of a distinct and autonomous homogeneous unit,
The matrix structure, which is a mix of vertical and horizontal organizations.

Business Plan

Among the elements of a successful business is the Business Plan. It constitutes the roadmap that management will follow to make key decisions in order to achieve the company's growth objectives.

A business plan contains the following elements :

A market analysis that reflects past results and anticipated trends
The list of company strengths
The list of company weaknesses
The list of threats that can block or slow down business growth
The list of opportunities identified for the company
Documentation of the company vision
Documentation of the mission that the company sets itself with at least 2 distinct goals:
(1) the long-term objective seen from the market - how the company wishes to be positioned by the market
(2) the long-term objective seen by employees - how the company wants its employees to see it
Documentation of the schedule of objectives to be achieved, in other words the "what", these are clear and measurable metrics that have a value at the start of the financial year and an expected value at the end of the financial year
The list of strategies selected to achieve the objectives, in other words the “how” the teams will achieve the objective. Example: organic growth or external growth, partnership development, expansion of the supported market, etc.
The list of needs to achieve the objectives
The list of changes and transformations required, on processes, tools and people
The list of major initiatives and transformation initiatives that will be measured during the financial year
Updating the organization to refine the execution of each process
The budget required to operate and achieve the objectives mentioned at the beginning of the business plan

It is common to see companies, very focused on an organic organization, not having a detailed definition of the business plan. The construction work often stops at the definition of the budget: the costs and the projection of the objectives per month.

Developing a business plan takes some time and should be done seriously. This is the opportunity for management to reinvent the company, propel it towards new markets, address recurring issues, retain talent, mark its ecosystem and have a visible social footprint.

Involving the management team in defining the business plan also means helping your teams grow.

Managing humans

The women and men who work in the company are a powerful source for the company as they gradually constitute the company's knowledge capital.

Indeed, they are the ones who:

Allow the execution of operations,
Detect inconsistencies in processes,
Come together to find solutions or acceptable alternatives,
Convey the image of the company externally (to partners, customers, schools),
React first to unforeseen events,
Recommend new talents,
Suggest improvements,
Participate in establishing a good working climate.

This is why the Human Resources department is so important in the company. It makes it possible to measure employee satisfaction and proposes the necessary adaptations to protect know-how but also to retain employees by proposing progression and training plans adapted to each person.

In an period where IT and automation are developing exponentially, we are seeing a gradual replacement of many human positions by robotization or Artificial Intelligence. However, these technologies only unfold pre-established scenarios... what will be the impact on the company if an inconsistency is not reported ?

The market, needs, resources, new technologies are constantly evolving. It is critical to support employees in these changes, through the development of company values and the establishment of a culture that promotes innovation. The good health of the company in the broad sense is at stake.

Company success factors

A business is a project whose success depends on many factors.

Below we share observations from more than 30 years of interactions with companies and their teams in constant transformation and across all sectors of activity.

Among the success parameters we retain:

A defined, communicated and updated business plan
Clear processes, well-defined roles and responsibilities
Risk management
Adequate training for management/supervision teams
Project management
Continuing training of employees
Set clear collective and individual objectives and respect commitments to employees
Continuous process optimization
Integration of innovative technologies
Establishing and managing partnerships
Visibility of the brand and products
Clear and regular communication
Be attentive
Manage time, emergencies and priorities
No longer accept the status quo which undermines performance
Put things into perspective but know how to make decisions
Providing and receiving feedback
Understand mistakes and learn from them
Celebrate successes
Bringing teams together around a common vision and mission
Do better and always strive for excellence
Be supported by experts to accelerate diagnoses and establish justified corrective plans
Measure convergence and deviations
Automate non-value added tasks
Placing people at the heart of decisions and changes
Delegate and recognize effort
Have a visible social footprint

If you don't find yourself completely aligned with this list, it's surely time to understand how to change to make your organization more agile and efficient.

Conclusion

It is possible to construct the company's referential on the basis of its theoretical and functional definitions. This referential is essential for team alignment.

However, a business is much more complex. The market in which it operates, its competition, the complexity of its products, the areas where it deploys its solutions are all parameters to consider to evaluate the delta that we see between current performance and the business plan which was initially imagined.

In addition, the company is doomed to always evolve and must therefore always face permanent change. The business manager and his right-hand men must free up sufficient time to contribute to administrative and operational tasks and help navigate each change and unforeseen event.

Training, coaching, sharing of experiences, sharing of techniques are key elements - inexpensive - which will release a collective force visible to employees, partners and customers.

It also allows managers to better understand, be reognized for their participation, and to better manage their own teams, transmitting rational messages for a better climate and a better culture.