Tweet

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

Written by: Aaron Hoos

Article Overview: Entrepreneurs need to understand their small businesses in order to fix problems and optimize their companies for greater profitability. However, when most business owners view the engine of their business, they see a complicated mess of moving parts. In this article, you will learn about the Business Diamond Framework, a strategic tool for small business success that helps business owners understand their business.

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.

Related Articles
  Seo Keywords
  Seo Process Search engine optimization process in 10 easy Steps
  Diamonds Are A Cereal Marketer's Best Friend
  What is the Value in your Supply Chain A PI Q and A
  Creating Separate Paths for Visitors

Article Tags: average person, big picture, business diamond, business functions, business markets, business owners, chaos, confidence, gaze, inner workings, li li, logical framework, moving parts, nbsp, profits, raw ideas, raw materials, small business success, small businesses, tool business



Related Forum Posts
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
New Study - Women prepare better business plans - I found an article in Business Week and I found this quite interesting. [quote:ka7lg35i]Who Prepares Better Business Plans, Men or Women? A new study based on four years of data from men and women in a training program for microenterprises finds that they come out the same in quality scores. "However, women scored significantly better on the presentation of their plan to judges," conclude the study's authors, Ronald G. Cook, Paul Belliveau, and Christine Lentz of Rider University, in a paper presented at a recent meeting of the Small Business Institute. [/quote:ka7lg35i] What do you guys think?
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
The Little Man Introduction - Good Morning, This is John Hoover from Little Man Consulting. Our company has been floating along as a after thought for a few years. This year we decided to make a go of it. So far we are doing great. We are Virtual Administrators, Web Developers, Database Designers, and Software instructors. Basically, if you have someone in your office to do it, we can do it virtually. Our company was created to "Provide Big Business Resources to the Small Business". Wish me luck, I plan on revolutionizing the small business world with this!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Quick Tips on Buying a Business

Join Conversations Politely, Part 1

Do You Pretend To Listen To People?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.