Organization assessment is foundational in many professions, including management consulting, private equity investment, venture capital, investment banking, and turnarounds. While each has its own set of principles and practices, there are common elements that can be found in their assessment approaches. While there are certainly others, here are 16 big questions to ask when assessing your organization.
1. What problem do you solve and for whom?
The Value Proposition is a short statement that clearly communicates the customer, their painful problem, your unique solution to this problem, and the net benefit of this solution from the customer’s perspective. An organization that doesn’t have a worthy value proposition doesn’t stay in business in the long run. Do you know your value proposition and the extent to which it provides benefit to your customer?
2. How do you deliver your Value Proposition?
The Business Model defines how the organization designs work to execute its value proposition. It is derived from a series of business system choices, including systems such as Sales, Marketing, Supply Chain, and Finance. Business model decisions drive much of the performance characteristics of an organization such as costs, response times, and the customer’s experience. Has your business model been defined with a specific intent to deliver the cost, response, and customer experiences that make your value proposition a winner?
3. How do you make money?
Profit Drivers are defined by what the organization sells, for how much, to whom, by when. As the old saying goes…no margin, no mission. Profit drivers enable all other good things to happen in the organization. What drives profitability in your organization?
4. What does the organization strive to attain?
The organization’s Vision defines what it hopes to become. The organization sets Goals that, if attained, will achieve its vision. Its Strategy drives the collective plans and actions of the organization’s business systems in pursuit of its goals. Does your organization have a vision, goals, and strategy that drive it forward?
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5. How do you execute the business model?
An organization’s Business Processes define how its business model gets deployed. Business processes take an organization’s many work activities and structure them for repeatable execution. Strategy without process is like a head without the body. Do you have defined business processes that are owned, measured, and performing to your satisfaction?
6. Who do you employ to do the work?
People are hired to implement the organization’s strategy and business model and to operate its business processes. Each element of work within the organization requires a certain level of leadership, skill, education, and experience. Do you have the right mix of leadership, skills, education, and experience to deliver your desired vision?
7. How do you assign organizational responsibilities?
Organization Structure defines how the organization leads and manages people through the execution of its business model. Organization structure can either enable or hinder the organization’s pursuit of its vision. Is your organization structured to implement a strategy, supported by high-performing business processes, that successfully delivers the business model?
8. What tools, equipment, furniture, and hardware do you use to support your business model?
Fixed Assets consist of the investments necessary to enable high performing employees to execute the organization’s business model. Because fixed assets are expensive and typically contribute over the long run, their effective use is essential to a high performing organization. Are your fixed assets utilized to their fullest potential to improve organization performance?
9. What working capital do you need to support the business model?
Current Assets are temporary assets that you expect to convert to cash within a year or so. Generally speaking, an organization desires to minimize or eliminate the need for current assets in the execution of its business model. Does your organization operate a business model that minimizes your need for current assets?
10. Where do you locate your people and assets?
The organization’s Footprint is directly derived from its business model and footprint decisions heavily influence cost, customer responsiveness, and employee satisfaction. For most organizations, the challenge is to provide a footprint that adds the greatest value while minimizing costs. Does your footprint maximize performance while minimizing waste?
11. How do you manage your knowledge?
Intellectual Property is the organization’s knowledge, which includes a wide variety of content, such as work instructions, records, data, policies, standards, training, metrics, bills of materials, specifications, regulatory requirements and patents. By correctly locating knowledge sources and uses, an organization can better manage its knowledge and place it where it adds the most value. Do you know the intellectual property within your organization and how it is managed and used by those who need access to it?
12. How do you automate the organization?
The use of Information Technology can dramatically improve or hinder organization performance. The combination of cost reduction, speed enhancement, and problem-solving usefulness continues to drive change throughout the competitive landscape. How does your deployment of information technology enhance or hinder your organization’s performance?
13. How do you fund your organization?
Finance is the combination of debt and equity used to start, build and grow the organization. It is often said that organizations more often go out of business due to improper financing than for any other reason. Both financing amounts and structure matter when funding the organization. Does your organization have adequate funding with an optimum financial structure to enable success?
14. How do you make decisions?
An organization’s Decision-Making style greatly influences its culture and establishes the relative trade-offs between speed and risk. Typically, distributed decision-making can be executed faster but with more risk, while centralized decision-making carries less risk but is slower to execute. How does your organization make decisions, both large and small?
15. How do you oversee stakeholder interests?
Corporate Governance oversees the control and direction of an organization. Governance is typically executed by a Board of Directors who represent stakeholders with an interest in the organization’s welfare. Who are the organization’s stakeholders and how do you represent their interests?
16. How do you manage organization performance?
Performance Management encompasses the activities necessary to monitor the organization’s performance towards goals. Measuring and managing the right performance indicators is an important driver of improvement. Most companies measure what is easy versus what is important. To what extent do you measure and monitor key performance drivers in your organization?
Quickly Assess Your Organization
While they won’t lead to every essential answer needed for action, these 16 questions provide a great start to assess the organization and provide a baseline of knowledge that builds sound judgment on its current state, potential and opportunity.
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