Lifting the Hood of Your Small Business Engine: An Introduction to the Business Diamond Framework

Small businesses are like complicated motors

Businesses are complex "engines" with many moving parts. It doesn't matter the size of the business or what is being sold, companies are like complicated machinery that (hopefully) churn our products for the customer and profits for the owner.

To the average person who lifts the hood of their car, they see a complicated mess of parts that makes no sense to them. In these situations, it's impossible to optimize the engine or repair something broken without a clear idea of what's going on. Similarly, if entrepreneurs could lift the hood of their business, they'd gaze in wonder at the chaos of moving parts and they may not be able to optimize their business or fix problems effectively.

What it takes to approach the machinery of the small business with confidence is a big picture view of the organization: A clear, logical framework that demonstrates how the business functions and makes the functions obvious.

Strategic tool for small business success: The Business Diamond Framework

One tool business owners can use to do this is the Business Diamond Framework. The Business Diamond Framework is a strategic tool for businesses that shows the "inner workings" of a business to help business owners make better, faster decisions.

Understanding how the Business Diamond Framework works

While all businesses are different and uniquely complex, they all share 4 common functions.

• The Leadership function is where vision, strategy, and big decisions are made. The Leadership of a business organizes and directs the company.
• The Value-Add function is where the business takes raw materials (such as basic parts or raw ideas) and converts them into goods or services for sale.
• The To-Market function is where the business markets, sells, and delivers the goods or services it just sold.
• The Support function is the assistance, infrastructure, and administrative back-up that every business requires to keep everything going in the right direction.

These four functions can be arranged graphically - as four diamonds that make up a larger diamond - to assist the business owner to further understand how his or her business operates: The Leadership Function Diamond appears at the top, representing the head. The Support Function Diamond appears directly below it. The Value-Add Function Diamond appears on the left. To-Market Function Diamond appears on the right.

This graphical arrangement is intentional: All leadership functions tend to flow down through the hierarchy of the business to the value-adding functions of the business and the to-market functions of the business and the supporting functions of the business. So the vertical axis of the Business Diamond Framework is called the "Organizational Axis". As well, the value chain of the business progresses from left to right, from the Value-Add Function Diamond to the To-Market Function Diamond. Therefore, the horizontal axis of the Business Diamond Framework is called the "Value Chain Axis".

How can you use the Business Diamond Framework?

So, what can businesses do with the Business Diamond Framework? There are a number of options and, in fact, there is a whole methodology that entrepreneurs can use to drive increased innovation into their business with the Framework. However, for business owners that are eager to lift the hood of their business and start exploring, some of the best steps include:

1. List all activities in a typical week and determine how they are sorted into each function. (There might be some crossover between functions).
2. In multi-staff environments, determine what role each staff member plays within the Business Diamond Framework. If their work covers multiple roles, determine what percentage they spend in each role.
3. To optimize the business for higher profitability, explore ways to lower costs in each Function Diamond while increasing effectiveness.