The Business alphabet starts with „C”.
Doing business is a profession like any other. You need to have talent, know-how, determination, and methods. Technically, everything that is valid for a profession is valid for business. The weight of each element can vary, as per any situation, but all elements are required.
It is also well known that entrepreneurs have huge talent, and many business management theories are based on the success of some entrepreneurs. But when we talk about sustainability in business, we talk about the capacity of such companies to generate long-term value for more stakeholders.
Should we consider business as a language, we may start with the letter C since three words form the foundation of a successful business: Context, Consciousness, and Communication.
Context is a set of information, an existent situation in which any company is placed by elements which are or are not under the control of such company. The external context is generally defined by strategic risks and opportunities, such as regulatory, geopolitical, technological and social risks. This context is not under the control of the Company, while the internal context (e.g. strengths and weaknesses) is. Both internal and external contexts co-exist in a situational frame. Without entering now into the theory of situational force, for which there is a rich academic literature (e.g. Lewin 1939, Meyer et al. 2010, 2014, and Mischel 1968), what I consider to be essential is the capacity to be conscious of the context. Here we talk about the main points, where we are and where we want to be, or, in simple terms, Point A and Point B, and the journey in between.
Once the external Context is understood, you may analyse yourself, as an organization, using external representations. "
For big companies, it became more and more usual to define a scope, a North Star, and plan the journey to the destination (e.g., final objectives, partnerships, milestones, resources, etc.). For smaller companies, this journey seems to be a luxury that is not appropriate to the short-term challenges they face, which are somewhat of a surviving nature. We all get to a specific destination; the difference is how we plan the journey.
A better understanding of the Context, through covering a larger spectrum of elements than those of daily operations (the surviving ones), can help to be equally conscious of challenges and opportunities, internal and external, and therefore to help define a better journey from Point A to Point B – where am I and where I could get.
For this, a self-reflective process is required. I hear so many times, „This is not for me, this doesn’t apply to me, I have different priorities…..” but if you understand the general context and analyse what is not for you, or in other words, which are the challenges you may reach the conclusions that it is for you, and even more, that you may do even better than others so that you have a competitive advantage.
One example that I like to use is access to talent (skilled human resources). I have rarely heard of this not being a problem or a risk related to the topic, be it at the operational level (quick access to skilled personnel, turnover, etc.) or strategical (demographic evolution or specific professional skills, new or old). But at the global level, access to skilled labour is one of the top 5 challenges for most companies acting in market-based, democratic economies. This problem is caused by different elements and is framed as a priority on the European Union’s political agenda and many companies' priorities. If you know the complexity of the challenge and the actions of those sharing the same concerns, your effort moves to finding solutions and eliminating the risks. For how long you think your problem is unique, you are more prone to accept the faith…as if it is something beyond you. Once you understand the normality of the phenomenon, it is easier to look for solutions.
Once the external Context is understood, you may analyse yourself, as an organization, using external representations.
Any company's scope is to achieve financial performance. Otherwise, it would be a not-for-profit organisation, but financial performance has many more implications and depends, again, on the context. For some businesses, performance is strictly related to shareholders' value; for others, this means competitiveness, and for another purpose, meaning more general value creation, what is essential is to be aware of it.
Once we know where we are and what we want to achieve, it is crucial to be able to properly communicate this to all our stakeholders, partners, leadership team, employees, customers, local community, and suppliers. For such communication to be effective, it should be constructed on the following criteria (i) it has to be reciprocally seeking feedback and valorising it, (i.e. the power of collective intelligence), ii) it should be continuous and iii) it should be transparent, meaning to offer credibility and trust which ultimately can generate ideas, talents, reputation which are fundamental for a sustainable, forward-looking performance.
In a nutshell, Context, Consciousness, and Communication are the elements that can define the destination and influence performance in a sustainable way, helping organisations successfully enjoy the journey 1.
1. For other applications of the letter ‘C’ in business language, I recommend the decisional model “5C”, defined by Patrick Dunne in his fantastic book ‘Boards’ (Dunne, Patrick, Boards, 2nd edition, 2021, Governance Publishing and Information Services Ltd).