How to develop a SMART business – 7 things that matter
The decision to start a business could have a cerebral or visceral underpin – or better still, both.
Regardless of the inspiration for starting, for an enterprise to actualize the vision of the promoters and more importantly to survive new business early mortality “curse”, the business leaders/promoters must be deliberate about developing the business into a SMART one.
In this blog, we’ll take a look at:
- SMART goal-setting framework
- What a SMART business is
- How the concept of SMART business relates to SMART goal-setting framework
- How to adopt SMART business management
- 7 things that matter for a SMART business
A Look at SMART Goal-setting Framework
The concept of business SMARTness as propounded in this blog is borrowed from the popular SMART goal-setting framework. Setting SMART (an acronym for Specific, Measurable, Achievable, Relevant, and Time-bound) objectives is a good way to plan the steps required to meet long-term goals. It helps with clarification of goals, accountability and timing.
Before we go into the details of what a SMART business is and the key steps towards being one, let’s have a refreshing look at the SMART goal-setting framework.
As generally known within the SMART framework, for objectives to be effective, they must be:
Specific – Expectations, and the objectives to meet must be clearly defined, and responsibilities must be properly allocated. In other words, what needs to be done must be clearly articulated and communicated; having enough details but without ambiguity.
Measurable – The metrics for determining the accomplishment of the objective must be well defined, preferably in quantitative terms.
Attainable – Are the objectives achievable given the existing capabilities and capacity? The resources required to achieve the objective must be available and functional. Such resources would include tools, funds, time, manpower, technology, authority and others, as may be crucial to the accomplishment of the objective.
Relevant – The objectives must be relevant to the overall course of the entity. It must help to meet the purpose of the project, the team or the organisation.
Time-bound – The time-frames for the accomplishment of the objective must be well-articulated.
In general, the SMART framework sets businesses, teams and individuals up for success, helps to give a clear sense of direction and helps businesses organize better to reach their goals.
The Concept of SMART Business
Overall, a SMART business is that which has built efficient planning, monitoring and improvement mechanisms into all its activities and undertakings. Not only do they plan, monitor and improve, but the processes of executing each of these follow the SMART principles.
By so doing, they are constantly ahead of trends and competitors.
Characteristics of a SMART Business
A smart business is one that:
- Optimizes the use of its assets to achieve ambitious goals
- Knows how to generate, process, and use data generated by its activities; the business consumers (existing and potential); industry; and overall global trends
- Is proactive, yet knows how to adapt to market changes through internally built mechanisms for improvement
- Has a sustainable advantage over its competitors
- Is a digitally efficient business
Developing into a SMART business involves running the enterprise with the SMART framework. We believe this framework can – and should – be adapted as a global core in managing business enterprises, especially new businesses and SMEs.
By intelligently and diligently applying the elements of SMART framework in the day-to-day operational and strategic undertakings of an enterprise, a business gradually becomes smarter and makes an upward journey towards sustainably outperform its competitors.
How to integrate SMART into the business core – 7 things that matter
- Business idea and Value Creation Matters
Being smart starts from the first day of formation or when the idea of creating the business was first mooted. Why was the business created? What was the idea behind creating the business? What’s the purpose? Many a business had their destiny nailed right from this formative stage.
Without doubt, every business enterprise is established for a particular purpose. In the conventional theory of the firm, the principal objective of a business firm is profit maximisation. Although this objective has been severely challenged by modern-day business management enthusiasts, the overarching need for business sustainability remains unchallenged.
Whether a business is established out of sustenance reasons; social factors; wealth building; or out of clock-building vision, what is important is that the purpose of the business should be tied to value-creation. A business that cannot sustainably provide value which can sustain it in operations has no business being in business.
It’s not enough to have beautiful vision and mission statements. What’s more important is the quality of value that the business intends to give today, and the improvements (or “disruptions”) that it will make to that value in the future – to sustain growth. This value must be specific, measurable, achievable, relevant and timely. The ways and mode of providing this value must be clear to the promoters and the leaders of the business. It is tied to the reason the business exists. Beyond commencement of business, business leaders must continually assess the value subject. For instance, business executives must constantly ask the question – is our value proposition still unique and relevant?
Does your business have a well-formulated philosophy? Click to read more.
- Corporate Philosophy Matters
A company’s philosophy is a combination of its vision, mission and values; usually manifesting in and influencing its corporate culture. It gives a direction and serves as a guidepost in the journey of the business. For instance, Google’s philosophy is captured in their “Ten things we know to be true” publication. See below..
We first wrote these “10 things” when Google was just a few years old. From time to time we revisit this list to see if it still holds true. We hope it does—and you can hold us to that.
- Focus on the user and all else will follow.
- It’s best to do one thing really, really well.
- Fast is better than slow.
- Democracy on the web works.
- You don’t need to be at your desk to need an answer.
- You can make money without doing evil.
- There’s always more information out there.
- The need for information crosses all borders.
- You can be serious without a suit.
- Great just isn’t good enough.
The above tells a lot about Google as a company, and if you have followed their business, you’ll concur that they have used the above 10 points as a guidepost in their operations and dealings.
Creating and living the right philosophy help you run a SMART business. However, the philosophy must be well articulated, specific, measurable, achievable, relevant and timely.
Note: SMARTness is not in the articulation of the philosophy; living it is where the juice is.
- Knowledge matters
“If you don’t understand the details of your business, you’re going to fail” – Jeff Bezoz
Knowing the specifics of your business matters. When we talk of the specifics here, we mean the business dynamics – the numbers that matter and the ones that don’t the driving forces, the risk elements, the industry, the competition etc.
Knowing these specifics is smartness, knowing what’s relevant and what’s not is smartness, and ability to measure the specifics is smartness. Understanding those things that will help you create much better results is smartness.
In reality, business leaders aren’t expected to generate or produce all knowledge all by themselves. However, real smartness lies in hiring the right people and deploying the right systems to generate the information required. Again, as Jeff Bezoz puts it –“we do not hire the people we’re smarter than. We hire those who are smarter than us”. As much as possible, hire very smart people and enable them to produce what you cannot.
- Strategies Matters
A business only becomes smart if it’s able to formulate and implement strategies that put it ahead of its competitors. Having the right strategies across your business can make a world of difference and can be the clear separator between your business and the competitors.
Ability to raise required funds requires strategy. Ability to attract the right staff requires strategy. Identifying the right technology that’ll lift your business above the curve requires strategy. Aside these elements, developing that specific (unique), relevant attainable, relevant and timely (SMART) “one idea” or a set of ideas that will disrupt the market requires strategic thinking.
Read also: Business Strategy – An Indispensable Tool for Business Excellence
- Corporate Governance matters
According to the Chartered Institute of Governance, UK and Ireland, Corporate governance “is the system of rules, practices and processes by which a company is directed and controlled. It refers to the way in which companies are governed and to what purpose.”
Corporate governance involves balancing the interests of the company’s stakeholders, including investors, the board of directors, management, suppliers, customers, the government, and the immediate community. Components would include structures for corporate, statutory, social and environment accountability.
Whereas, corporate governance is mandatory for running a smart business, it appears to have been reduced in many instances to statutory and industry compliance matter.
Without doubt, a business that will thrive and sustain growth needs to have rules and policies that are specific, measurable, realistic, relevant and time-oriented. In other words, to develop into a smart business, a business must organise itself and operate within the confines of rules, processes and policies that are SMART.
Building corporate governance into the structure of a business from the onset matters. Continual review and improvements of the structures, policies and processes matter.
- Organisation Matters
Developing the right organisational structure tailored towards the achievement of business objective is crucial, and it’s a big factor in being a SMART business. We call it the optimal organisation – that in which the assets (human and non human), processes and policies are designed and executed for relevance and achievement.
Consider how smart it is when you have specific and relevant people with SMART Job Descriptions (JD) and SMART Performance Indicators (PI’s) working within a structure that’s optimized for achieving SMART objectives.
- Performance Management Matters
“What is not defined cannot be measured. What is not measured cannot be improved. What is not improved is always degraded”
This quote by the British physicist and mathematician, William Thomson Kelvin concisely captures the essence of performance management in developing a SMART business.
Performances across the spectrum of the business must be measured in a SMART way. For such appraisals to be smart, they must be instituted for individuals, teams, departments, divisions and the entire business itself.
Specificity and tailoring of the performance management systems matter. Evaluation metrics matter. Relevance matters. Timeliness of the evaluation matters.
Conclusion
Developing a SMART business could be challenging, but the benefits are immense. The good news is, all that is written above become self-regulating when the necessary mechanisms and processes are put in place.
See you on the side of SMARTness!
