The business hierarchy of needs is based on a model first presented by Abraham Maslow, which is a motivational theory that separates different human needs accordingly in a five-stage model. The model states that certain needs that are at the base of the pyramid, the basics such as food, water, warmth and rest need to be achieved before you can move further up the pyramid. This is fairly straightforward, considering that you can’t move to things like belongingness or self-actualisation without the most basic human needs in place first.
The Business Hierarchy of Needs:
- Sales
- Profit
- Order
- Impact
- Legacy
As mentioned earlier, you can’t move further down this list without having the prerequisites in place first. Say, for example, you’re trying to grow your organisation and build high-functioning systems, that’s categorised into the ‘order’ stage, which is virtually impossible to achieve if you haven’t already got sales and profit in place to fund this. The hierarchy of needs says that first and foremost, you need to focus on sales and bringing in cash flow and customers to underpin your organisation’s profitability to avoid the chances of a mortality event that could bring the whole house of cards crashing down.
One of the most common questions we are asked is “how can I get leadership buy-in, how can I get my management team to pay attention and buy into this idea?” the main consideration here is that the two parties involved are thinking about two very different things. The hierarchy of needs illustrates the fact that we’re trying to bring order to chaos, but it’s not an all-in approach; certain things need to be in place before a management team will take an idea’s feasibility – and cost – seriously for the organisation’s improvement. Top management are focused on ensuring the organisation has sales and profitability, making sure that the organisation has a sustainable flow of sales and cash flow to float the aspects higher up in the hierarchy of needs. In short, those people that are trying to bring order into the organisation are likely jumping ahead to something that hasn’t been properly underpinned by sales and profit first and foremost.
While it’s certainly admirable to get some systems in place first, you’re running the risk of allocating funds that you haven’t yet secured to build those systems. According to the model, the improved systems that you envisaged should be funded by your sales and not the other way around. While this isn’t necessarily a rule, it’s a common-sense approach that mitigates the risks involved with investing in a system that hasn’t paid itself off just yet.
With the first two stages of the hierarchy in place – your sales and profit – then you can begin to fortify your systems and optimise things that are designed to bring even more sales and profit into your organisation. When you can start to invest in the order of your organisation, you can initiate systems that bring efficiency, productivity and growth into your operations. We wish we could bring this step into reality earlier in the process, but the harsh reality is that you can’t bring efficiency or legacy into your organisation if you don’t have money. You can’t have a positive impact on your customers or your suppliers if you go broke; in fact, you’ll have a negative impact. We are a big campaigner of this, and if you focus on the promises you’re making to your customers, then you can bring order – the systems and processes – that are contributing to repeat business from customers due to the fact that these systems are customer-centric.
These customer-focused systems will also underpin your impact with your clients and suppliers. We hope that by now, you can see exactly why the hierarchy is stacked the way it is- it’s simply not possible to have the middle in place without the foundations of cash flow. Your impact and legacy are tied closely together, and we think a better way of conceptualising this would be that your impact is the promises you’re making, while your legacy should be thought of as your ability to deliver up, and ultimately improve these promises over time. A certain level of service might be adequate for a number of years, but as we are sure you know, things change – quickly – in the world of business, and organisations that have a long-lasting legacy are the ones that continued to deliver on these promises in the face of dynamic customer requirements and shifts in the business landscape.
While this is yet to be widely adopted by the corporate world, we believe that it’s only a few years away from being implemented in almost all the high-functioning organisations around the world, considering just how impactful it can be to an organisation’s ability to improve in a systematic and effective way.
