The best run orgs optimize use of internal v. external staff
Last time we discussed industry and life stage within the firmographics category. This time, we’ll continue to explore the firmographic dimension by highlighting business type and size. Remember, an organization’s firmographics 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.
Broadly defined organizations either create or extract goods, distribute or sell goods, provide a service, or construct a business model that uniquely combines these three. Ford creates (designs and manufactures) and distributes several lines of automobiles as well as offering financing services for qualifying consumers. Ford’s business model can be understood as a combination of these three—similar to but distinct as regards details from say GM’s business model. By contrast, a lawyer provides you with a service.
Size can be understood in two primary ways: amount of annual revenue and number of total employees. The size of an organization plays a great part in the sort of business model it may employ. Organizations with high revenue are more likely to have access to money to invest in product development, marketing, patent protection or hiring employees which increases the size of the organization in our other category. The number of employees a firm has plays a critical role in defining the capabilities it has to create new or better offerings and to market and distribute them as well as ensure profitability through quality administration. Because labor costs are often a firms highest, especially in service fields, an organization that grows in employee size is under constant pressure to continue high earnings. While outsouring, insourcing, & offshoring can provide cheap labor alternatives many executives are still uncomfortable handing off critical jobs to non-employees. The best run organizations optimize the use of internal and external staff such that they are able to do outstanding work while realizing the many cost savings that our globalized and specialized economy provide.
Next time, we’ll round out the firmographic dimensions by highlighting culture and structure. 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.