How often do you look at the functionality of your business?
Do you know that you have the right people, in the right roles, doing the right thing? It might sound like an easy check, but you’d be surprised. In fact, this is one of the few occasions when following your gut feeling rarely pays off. Even the most reliable revenue drivers that seem to be working at full capacity can unintentionally be picking up tasks that are sapping their efficiency.
Functionality is a process that creates the right combination of resources throughout a business, and it’s not something that you should take lightly.
But, that doesn’t mean it has to be complex. At SGFE, we use a brilliant but simple model to analyse functionality; the red, blue, black assessment.
What is the Red, Blue and Black Model?
The red, blue and black model is a magical concoction that, when used correctly, will bring your business a whole range of benefits! It’s a simple business management tool designed to help you determine that the relevant and qualified person is conducting every business action. Let’s take a look at how it works.
Red Roles
Red roles are seen as infrastructure-focused functions, which include business support, HR, compliance etc. They are essential and designed to support the business.
Blue Roles
Blue is anything that contributes to generating revenue. Sales, billing time and marketing are obvious blue activities. Derivative activity such as training is also included in blue (sometimes referred to as light blue). By taking the time to improve your team for the future, you’re making an investment that will produce a greater revenue per head down the road.
Red and blue are all about making improvements within the workforce. When done correctly, they should lead to your senior leadership team having more time to think strategically.
Black Roles
Black roles are strategy-focused and underpinned by creating an asset that carries value over and above the P/L revenue line. Exploring new channels, developing new products or positioning the brand are all examples of activities needed to create an asset value. Black covers the growth of the business and without diligence is often an activity that falls on the proverbial “to do list”.
It’s important to note that functionality is not egocentric. No “colour” is more desirable than another. It’s purely a method to ensure a foundation for structuring a business, growth and systematisation of processes and procedures.
Why is functionality such a necessary process when it comes to how to scale a business? Let’s dive into some of the cultural and commercial benefits to find out.
Culture
Clarity
Not only does the red, blue, and black model eliminate duplication of function in the business, but it also creates a clear internal picture that empowers the workforce. People respond to clarity, and outlining clear responsibilities with a role increases certainty and efficiency. Having staff who know what they’re doing is essential if you’re looking at how to increase profitability for businesses.
Morale
If the right people are in the right role and doing the right thing, then there is every chance their skillset was matched to their job responsibilities. This will significantly improve the likelihood of increased/improved job satisfaction.
Energy
People enjoy succeeding. When you place them in the proper role for their skillset, you should see an increase in their energy levels and enthusiasm. Don’t be surprised if they start taking on more ownership within their role, too!
Commercial
Cost
When it’s clear that a function is under stress, but you’re not sure why, an easy solution is to say, “We just need another person in the team!”. But, this isn’t always a smart idea when capacity planning for businesses. Instead, a well-executed look at your functionality as a whole is a better approach and could help you avoid a costly and ultimately redundant recruitment process.
Efficiencies
By having a slick machine that everyone trusts in the business, the senior management will be free to focus on more strategic business decisions. This is a much more efficient way of structuring a company that will lead to greater value across sectors.
A disciplined process is required to monitor functionality. Even the best-intentioned and high performing people can often creep away from their roles! This is mostly seen in the “blue” responsibilities, which inadvertently perform “red in blue”.
If you want to find out how you can implement the red, blue and black model and learn how to scale a business effectively, make sure to get in touch with our team today.
