Understanding Business Maturity

A business must benchmark its maturity in order to progress. Possessing the information of whether or not your organization is maturing or standing in place is essential. For this purpose, you need a fine measuring system, one that will also allow for detailed comparison to the organizations of your competition, strategic partners, or even your clients.

Financial measuring tools can be helpful in verifying the maturity of your organization, but they are not part of the core determinant of its maturity. To state it another way, financial position and strength do not maturity make. To properly measure the organizations maturity, you can utilize a system I developed, called the Business Maturity Index.

The Business Maturity Index

The BMI is a scoring and grading tool that is based on ten Value Aspects, further reduced to five success elements. Finally, the BMI of a business can be identified in the form of a number between 1.00 and 5.00.

This index is basically a simplified form of the popular Capability Maturity Model that was first conceived as a concept in the 1970s. This universally accepted model can be adapted to all kinds of systems and processes, as well as organizations. For businesses and organizations, this model is applied in the form of a Business Maturity Index. As such, it can be used to understand the maturity and growth of a business, as well as serve as a benchmark for comparison between different organizations (based on score).

Manual presented The Culture Imperative at Service Management World!
Learn more!

The 10 Value Aspects of Any Business

The 10 aspects of any business or organization that result in value creation and that must be continuously managed are:

• Communications and Collaboration. This Value Aspect focuses on all activities and functions related to the communication and collaboration processes throughout the organization. It’s about the culture and methods around the collaboration and communications between your team and yourself, their skills, practices, and the utilization of the available tools.
• Human Resources. The human resources aspect focuses on all activities and functions related to human resources. It’s about the human side of the organization, the cultivation, assimilation, as well as acquisition of talent throughout. It includes wages, training, hours, advancements, policies, and regulations.
• Finance and Accounting. This Value Aspect focuses on everything related to finance and accounting. More specifically, it includes the collections, invoicing, payments, planning, budgeting, day-to-day transactions, procurement, and the utilization of the business capital. Of course, it is not limited to only these.
• Marketing. This aspect is focused on all activities and functions related to marketing, such as the defining of the products, targeting the target market, researching the market, using promotions, executing advertisements, as well as differentiating the organization from its competition.
• Procurement and Logistics. Procurement and logistics is an aspect related to all the activities and functions related to procurement and logistics, such as purchasing, outbound and inbound logistics, processing, receiving, shipping, inventory control, returns, supplies, warehousing, and exchanges.
• Organization Infrastructure. The organization infrastructure aspect focuses on every activity and function related to the infrastructure of the organization. It is primarily concerned—but not limited to—management, planning, legal, information systems, government affairs, leadership, and quality management.
• Production Operations. This aspect of the organization is concerned with everything related to the operation in terms of production, such as the transformation processes that turn the materials and talent into finished services and goods, the methods of production, assembly, maintenance, packaging, and facility operations, as well as their controlling.
• Sales. Sales is a business aspect focused on all activities and procedures related to the sales that the organization makes. It is focused on the activities with the single objective to facilitate and promote a purchase on behalf of the customers. It includes advertising planning, promotion planning, customer relationship management, public relations, refunds, fulfillment, exchanges, and returns.
• Research and Development. This business aspect is focused on the lifecycle of the product, the viability testing, the production, and even the idea about the product. Therefore, it includes innovation, development, research, design, refinement, revision, procedures and processes, as well as documentation.
• Service Delivery. Finally, the service delivery aspect is concerned with everything related to the delivery of the service, such as the coordination of delivery of products and services, client management, installation, maintenance, and scheduling.

Success Elements for Any Value Aspect

The Value Aspects are further separated into five success elements:

• Leadership and Staffing addresses everything about the human element.
• Knowledge Management addresses the creation, maintenance, and dissemination of explicit and tacit knowledge within the organization and, when necessary, outside the organization.
• Roadmap and Strategy addresses the future plans, goals, metrics, and cross-function alignment for a given business Value Aspect.
• Continuous Improvement (often referred to as Six Sigma) addresses the continuous improvement of every relevant process through statistical process control.
• Continuous Refinement (often referred to as Lean) addresses continuous refinement, the relentless pursuit of creating the highest-value products and services by focusing on the reduction or elimination of waste in all aspects of the business.

Maturity Levels of Any Success Element

There are five levels of maturity for each Success Element within each given Value Aspect:

• Level 1: Chaotic. No processes at all or no uniform processes. Disorganization within the organization. Common duplicate work and rework.
• Level 2: Aware. A company that learns to be proactive in nature. They are aware of the needs of the company. Can be reproducible and repeatable. Can start to drive duplicate work and rework out of their organization’s system.
• Level 3: Enabled. Companies that strive to create value. Key processes are well documented and defined. The company has established internal procedures and standards. Projects are reproducible and repeatable, with limited duplicate work and rework.
• Level 4: Managed. A company with good process control and measurable metrics, as well as established systems. A learning company with focus on innovations and value. Duplicate work and rework at low percentage.
• Level 5: Optimized. An organization that leverages all systems and processes to drive margin and focus on value. They outsource everything except for the core functions of the organization. Embedded repeatability and reproducibility.

How to Determine Your Business Maturity Index

Score each of the Success Elements from Level 1 to Level 5. Do this for each Value Aspect of the business. Next, tally up and average the score for each Value Aspect. This is the Maturity Level for that Value Aspect. [Note: Each Value Aspect has its own maturity level; this information will be useful later, so keep track of the individual scores.] Finally, average all the Value Aspect scores together to get the overall Business Maturity Index. What level are you at?

Depending on your company and its main function, the business Value Aspects will have a different order based on priorities. However, this does not mean that you should neglect or ignore any one value aspect for another. Without the necessary symmetry and balance within your organization, you cannot truly get the business to the next level. This means keeping the maturity of any given Value Aspect within the same level of all the others. Find one aspect out of range and I promise you, this will be your problem child when executing on strategy.

How to Use Your Business Maturity Index

The BMI is a gauge of your organization’s maturity and thus can be used to measure your progress as you execute on business strategy. It can help you keep balance in your organization as you develop business strategy. It can also be used to gauge your organization’s maturity versus your competition, strategic partners, and even your clients.

Of course, your competition is not going to figure out their BMI score and then hand it over to you for comparison, but you certainly can point it at them with some degree of certainty. Your strategic partners, and your clients, may very well share their score.

What you need to know is this: You should be partnering with other companies that have a similar maturity to you, or slightly higher. And you should be taking on clients that are at least as mature as you are, if not slightly more mature. In doing so, you’ll find that the company your organization keeps will always push (or pull) you to get to the next level.

You should be partnering with other companies that have a similar maturity to you, or slightly higher.

Manuel Palachuk is the author of the book Getting to the Next Level: A Blueprint for Taking You and Your Business to the Top and the coauthor of The Network Migration Workbook, the definitive guide to zero downtime network migrations. He has more than 30 years of business, management, and training experience in the computer and electronics industries, including owning and managing successful IT and managed service provider companies. He's a well-known speaker and trainer at industry conferences, and he holds degrees in electrical engineering technology and automated manufacturing technology.