Accounting is retrospective, finance prospective.

Organizations are the primary structures in the market. Organizations may be non-profits or C-Corporations and they may operate in the Construction, Biotechnology, or technology industries.

Every organization consists of firmographics (demographics for a firm), activities, resources, and a business model. This business model consists of offerings delivered through channels to consumers (both customers and non-customers) in the market.

To create these offerings, people in the organization (a form of resources) rely on cash or equipment resources to conduct core operating activities, often in conjunction with partners or suppliers. To generate demand for these products or services, sales and marketing staff create or outsource the creation of collateral and messaging to target markets also identified in the marketing process. Delivery of these offerings occurs through clearly defined distribution channels which might be online, in a shopping mall, or on the 90th floor of a business tower. Meanwhile, the administrative activity of accounting keeps track of expenditures triggered by the creation and marketing of these offerings. Finance, another administrative activity is more concerned with valuing and funding prospective growth opportunities for a given organization.

Today, I’ll start to discuss the first component in our firmographics dimension: ownership. Next time we’ll focus on the firmographics other components including legal structure, size, lifestage, industry, business type, organizational structure, and culture. As a whole, we can think of firmographics as a reflection of the sum total of past strategic decisions made by an organization. For example, an organization’s original legal structure was decided at founding but may have been updated to accommodate growth. This growth is reflected in the firm’s size, both in the number of employees and also the annual revenue. An organization’s culture develops over years of interaction between executive managers, mid-level managers, and core operating personnel.

Ownership and governance, the first firmographic component we’ll illustrate, exist in relation to an organization’s founding size, life-stage, and legal structure. Many firms in the US are sole proprietorships or owned entirely by one person. As firms increase in size, owners often prefer to bank some of their hard-earned profit by selling a portion of their ownership either to partners or to shareholders. Startups looking to grow, offer private equity firms a % of ownership for an infusion of cash resources, and often management advice. Whatever a firms ownership structure is, it should reflect and be reflective of the organization’s other key components which we’ll cover next time.

Until then, I encourage you to thoroughly enjoy our scarcest of all precious resources, life. And I’d be remiss if I did not also encourage you to start the deep work of strategy online in 3 minutes with a Quick Map.