Last time, we introduced the organization and it’s firmographics. Firmographics are an organization’s ownership and governance, legal structure, size, life stage, industry, business type, organizational structure, and culture. They can be regarded as the sum total of employed strategies and resulting outcomes that a firm has experienced. In a way, a living history of the organization.
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.
Legal structures may be in the form of a c-corp, an s-corp, a sole proprietorship, non-profit, an LLC, an LP, or a cooperative. C-corporations provide the most flexibility for firms looking for diversified ownership, s-corps provide many of the benefits of a c-corp for a smaller group of owners each of whom may care to write losses of. Sole proprietorships require no administration or cost but leave an owner personally liable should the organization be sued. LLC’s provide asset protection for a single owner, although fraud and malfeasance may not be covered. Partnerships include general and limited partners. Limited partner are often brought in to raise financing and receive legal protection as well as pass-through status whereas general partners often receive a management fee and are held liable for debts incurred by the partnership. Cooperatives offer democratized ownership. Not for profits may earn surpluses but are required to retain rather than distribute their earning and to reinvest them in a manner consistent with the attainment of the organizations stated goals.
Next time, we’ll highlight size and life stage as we continue to introduce the dimensions which compose our dynamic strategy map. 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.