In this article we will talk about:
- What is the Business Diagnostics
- 5 Ways to interpret a business diagnosis
- Diagnosing your company in practice
Diagnosis, when applied in the business world, serves to evaluate the reality and history of a particular company. With this ready analysis and a deeper knowledge of the business you can plan what needs to be done to correct errors and optimize the company as a whole.
As I already said in the post about how to calculate the degree of maturity of a company, the main results you can achieve with a business diagnosis are to understand which areas of your business need attention most urgently and to be able to organize a program of action plans of what should be done.
To get this direction of what to do it is important that you understand how to interpret the results obtained in a business diagnostic worksheet and that's what I'm going to talk about in this post.
If you are a little lost where to start or can not decide which area deserves more attention, it pays to understand the 5 ways of interpreting the results of a diagnosis that you can perform:
- Understanding which areas are most important to your business
- Comparison of your current level with where you (minimally) should be
- Comparison of your current level with where you would like to be
- Analysis of deficiencies by area
- Analysis of the degree of maturity
Now let's see each of them using our business diagnostic worksheet for example:
1. Understanding which areas are most important to your business
To begin with, it is worth to understand that each company has unique characteristics that differ from all others, either by its field of activity, its sector, geographic location, team (partners and employees), among many other items.
Knowing this, we need to arrive at criteria for defining minimum scores for each of the areas analyzed in the diagnosis that are in line with the company's reality. The score table containing current, recommended minimum, desired score and urgency would look something like this:
Now to reach the minimum score by sub area you will need to establish the degree of importance in each of the more than 70 questions that the spreadsheet has.
After filling in this field, the worksheet will automatically generate the recommended minimum score. See the example for each of the sub-areas related to the major areas of strategy and finance:
Okay, you've just set minimum criteria that your business needs to have. This is not to say that if your score is higher than the minimum you will be fine, but it is already a first filter that you can analyze to know which areas are most important to your business.
2. Comparison of Current Score x Recommended Minimum Score
If we already know the minimum recommended score for all the main areas of our business we can now move on to the actual analysis and completion of the business diagnosis. In our worksheet, this is done by answering several questions related to each sub-area:
Each answer will give you personalized feedback and help you understand how to improve on that particular aspect, but more than that, it will also form your company's current score automatically:
See that we have now been able to have a comparison between our current score and the recommended minimum. Simply put, any notes that are smaller than the minimum should raise a warning tone for you. Taking the financial area, we have the following differences (where 0% indicates that the area has a score greater than or equal to the minimum).
- Finance - Financial Planning - 13%
- Finance - Financial Control - 0%
- Finance - Mg. Contribution and Profitability - 0%
- Finance - Financial Indicators - 0%
That is, only the financial planning sub area has a poor quality indicator. Now imagine a scenario where the financial area is most important to your business and all items have a minimum score of 70%:
In this situation we would have a very different and totally critical scenario with a high percentage of lag in all the sub-financial areas, see:
- Finance - Financial Planning - 39%
- Finance - Financial Control - 45%
- Finance - Mg. Contribution and Profitability - 26%
- Finance - Financial Indicators - 45%
From this interpretation you can already begin to plan actions directed to the most critical areas or sub areas.
3. Comparison of Current Score x Desired Score
If you want to further refine your analysis, you can enter another variable related to a desired score (which will usually be greater than or equal to the recommended minimum). It's like a challenging goal for all of your areas to pursue excellence.
Note that when you enter these values in the worksheet, fields automatically become green or red according to your current score, making it easier to analyze which areas are below your planning:
In any case, the coolest thing about analyzing the current score against the desired score is to understand where the biggest gaps are (differences) and this process is very easy with a good graphical analysis. See below the graph with the current x desired scores:
Current Chart x Desired
In a simple way we can see that we have gaps (where the blue line is bigger) in finance and in the people management area, while we have good results (above the target) for the areas of strategy, marketing and operations. Once again, the idea is that you can direct your actions according to the reality of your company.
4. Major deficiencies by area
In addition to the analysis of the business diagnostic worksheet, it is also possible to delve deeper into these notes and assessments to understand what are the main deficiencies within each of the areas.
These notes will help you to further direct your action plans, since they serve to show you if the problems are behavioral (problems with teams, faults, noncompliance with rules, etc.), tooling (lack of a good spreadsheet, software outdated equipment or machines, etc.) or technical (specific capacity of employees, need for training, training of new employees, etc.).
Here's an example of the area of operations:
Clearly we see that the biggest problem is tooling (75%), followed by technical problems (50%) and few problems with behavioral deficiencies (25%). Knowing this, you can think of plans and activities to correct these problems and have these areas working in the best possible way.
5. Degree of Maturity
To close, the last item that needs to be analyzed to have good inputs for your strategic planning or action planning is the degree of maturity. It is nothing more than the end result of business diagnosis and ranks the company into levels according to what has been filled.
Although it is a bit comprehensive, it can help you in setting priorities, since beyond the main level, it shows a consolidated of the two scores by large area. In our example, you can see that the most critical area is finance, followed by the areas of marketing and people management.
If you liked what you saw then this may be the time to start interpreting the results of the business diagnostic worksheet with your company details!