The Grid — The master model behind business success

Total business health check

WHY YOU’LL LOVE IT: TIPS:
Discover your shortcut to growth by taking a holistic perspective on your business. You’ll pinpoint • You can work through the checklist individually,
your most promising growth opportunities and the hidden constraints that are holding you back. or with your team. An interactive version is also
available on our website: www.methodical.io

GET ANSWERS TO THESE QUESTIONS AND MORE: • We've included explanations on the last page
in case any of the terms are unfamiliar.
What are the current strengths and weaknesses of my business?
Which areas of our business should we prioritize?
• Each question has space below for to-dos,
Where are our blind spots?
notes or next steps.
What constraints are limiting our growth?

• The Grid book will help you work through

unknowns, risks or challenges quickly and easily.
YOU’VE GOT IT RIGHT WHEN: Page numbers for the relevant sections are noted
You’ve worked through all the questions, have a clear idea of the strengths and weaknesses next to each question.
of your business, and which areas to prioritize.
• This checklist works best if you consider a
specific product or service line and a particular
territory (e.g. headphones in Brazil).

© Methodical 2018
Total business health check — Desirability
YOU R BU S INE S S , P R OD U CT, OR SE RV IC E :

Looking to grow or improve your business? Use this checklist to pinpoint the strengths, risks and challenges to your desirability.

CUSTOMER VALUES & BELIEFS CUSTOMER GOALS ADOPTION BARRIERS

1 61 – 68
2 68 – 73
3 73 – 82
WANTS AND NEEDS

How well does your business align with your customers’ Are you helping customers achieve the goals Do barriers prevent customers from doing
beliefs and values? they really care about? business with you?

A strong fit — our customers are happy to be associated with us Yes, based on real-world feedback Adoption barriers are low
We're at risk of drifting apart Ish We haven’t really thought about it
There's definitely some friction there... We're drifting out of touch with their needs It’s tricky to adopt our products and services
I'm not sure — we should research this This is something we should research This is something we should research

CATEGORY TERRITORY ALTERNATIVES & SUBSTITUTES

4 87 – 91
5 91 – 92
6 92 – 98
RIVALRY

How healthy is your category? Is the territory you cover affecting business success? How's the competition looking?

Great — there's potential for profitable growth Our territory is teeming with customers or ripe for expansion We're outperforming our rivals
The category is becoming more challenging We're reaching saturation We're feeling the pressure
Not so good — margins / demand are declining Customers are thin on the ground We're underperforming against rivals
I'm not sure We've not considered this We're not sure

PROPOSITION BRAND APPEAL CUSTOMER EXPERIENCE

7 101 – 108
8 108 – 112
9 112 – 120
OFFERINGS

How strong is your proposition? How strong is your brand? How is your customer experience?

There are compelling reasons to choose it Our brand has a strong, distinctive appeal Effortless and enjoyable — our customers are very happy with us
Middle-of-the-road It could do with some TLC — it's a bit generic There are a few wrinkles and grumbles here and there
If we’re really honest, there are better alternatives Our brand is suffering Honestly, the customer experience sucks
We haven't thought about it I'm not sure — we should look into this We don't know

WE’VE GOT YOUR BACK: Reading The Grid book sections (shown by the topic title) for any issues will give you the clearest picture of what to prioritize. Visit www.methodical.io to find out more.

© Methodical 2018
Total business health check — Profitability
Want to boost your profitability? This checklist will show you where to focus your attention.

REVENUE MODEL PRICE VOLUME

1 123 – 128
2 128 – 136
3 136 – 143
REVENUES

How is your revenue model affecting the business? Do you have a clear pricing strategy? How are sales performing?

The current revenue model can support our continued success We research and experiment, adjusting our prices precisely We're happy with our current growth / volumes
Rivals using a different revenue model are gaining traction We're in the same ballpark as alternatives There's room for improvement
Our revenue model has become a limiting factor We make up our prices as we go along Sales are worryingly low or declining
We've not considered this We haven't thought much about pricing for a while We don't know

WITH CUSTOMERS WITH SUPPLIERS RULES & REGULATIONS

4 146 – 165
5 146 – 165
6 151 – 165
BARGAINING POWER

How much bargaining power do you have with customers? How much bargaining power do you have with suppliers? How is the regulatory environment affecting your business?

We’ve got a strong, favorable negotiating position We can negotiate good deals with suppliers Regulations are changing favorably
There’s some tension emerging There's some tension emerging We're not sure how recent changes will affect us
Our customers can drive a hard bargain with us We're powerless to negotiate Regulatory issues are a challenge for our business
We haven't considered this We've never thought about this No recent changes that affect us either way

FIXED COSTS VARIABLE COSTS CAPITAL EXPENDITURE

7 169 – 181
8 169 – 181
9 181 – 187
COSTS

What's happening with your fixed costs? How well-managed are variable costs? How are capital expenditures affecting the business?

Nothing to worry about We have a healthy contribution margin on sales Capital expenditure is nothing to worry about
They could probably be reigned in a bit… We could manage variable costs more carefully We could probably manage our capital expenditure better
Too high / out of control The cost of making and selling each product leaves us no margin Heavy capital expenditure is putting a strain on our resources
We don't know I couldn't tell you, actually Capital expenditure is a mystery to me

WE’VE GOT YOUR BACK: Reading The Grid book sections (shown by the topic title) for any issues will give you the clearest picture of what to prioritize. Visit www.methodical.io to find out more.

© Methodical 2018
Total business health check — Longevity
Use this checklist to determine which factors have the greatest influence on the long-term health of your business.

AWARENESS ACQUISITION RETENTION

1 191 – 197
2 197 – 207
3 198 – 207
CUSTOMER BASE

How is awareness affecting your business? Are you successfully acquiring new customers? Are you successfully retaining your customer base?

We have a strong or growing market presence We're happy with our performance Yes, we're happy with our retention rates
We're a bit hit-and-miss when it comes to raising awareness Conversion and acquisition could be improved There's some churn creeping in...
Low or declining awareness is holding us back We're struggling to acquire new customers We're all leaks and no ship
We don't really know We haven't considered this I don't know

LEGAL PROTECTION DURABLE ADVANTAGES COMPETITOR LAG

4 212 – 219
5 219 – 233
6 224 – 233
IMITABILITY

Does your intellectual property provide an Do you have any durable advantages over existing Do you out-innovate your rivals?
inimitable advantage? or potential rivals?

Yes, we manage our IP carefully We are genuinely difficult to imitate We're ahead of the pack
We could do with revisiting our IP strategy Rivals are chipping away at our advantages We're about the same
Mismanaging our IP has left an open goal for our rivals We're easy to copy We’re already playing catch-up
We don't compete on this basis I'm not sure We don't compete on this basis

CASH POSITION SCALABILITY OR CAPACITY COMPLEXITY & RIGIDITY

7 239 – 244
8 244 – 246
9 247 – 256
ADAPTABILITY

How strong is your cash position? How is your current capacity or ability to scale How complex and rigid are your operations?
affecting the business?

We have a healthy cash position This isn’t something we need to worry about Our operational agility is a strength
Our cash flow / working capital management could be improved We’re starting to feel the heat We’re slower than we once were…
We're running out of funds We’re maxed out We make an oil tanker look nimble
I don't know I've no idea I couldn't tell you

WE’VE GOT YOUR BACK: Reading The Grid book sections (shown by the topic title) for any issues will give you the clearest picture of what to prioritize. Visit www.methodical.io to find out more.

© Methodical 2018
 The Grid — The master model behind business success
To succeed, every business must pursue three goals: desirability, profitability and longevity. These goals are affected by three forces: the customer, the market, and the organization itself.
This reveals a grid of nine factors that together determine the success of every business. Each box contains three essential elements, defined below.

DESIRABILITY P R O F I TA B I L I T Y LONGEVITY
WANTS AND NEEDS

REVENUES

CUSTOMER BASE
C U STO M E R VALU E S & BE L IE FS REVEN UE MODEL AWA R EN ES S
Customers prefer products and services that reflect their values, beliefs or Your revenue model is how you make money: a fixed price, or charging People can’t become customers unless they know you exist. Raising and
self-image: like riding a Harley, or believing the more megapixels the better. by the hour, for example. maintaining awareness is vital to building and keeping your customer base.
CUSTOMER

C U STO M E R G OAL S PRICE ACQUI S I T I O N

Every product or service is a means for customers to achieve a goal they Pricing typically has the most powerful impact on profitability. Undercharge Awareness should lead to acquisition — new customers joining your business.
care about. You bait the hook with what the fish wants to eat! and you leave profit on the table. Set prices too high and volume suffers. There’s no customer base if people won’t buy what you’re offering.

B A RRI E RS VOLUME R ET EN T I O N
Barriers prevent customers from achieving their goals or adopting your Sales volumes are determined by the quantities people buy, and the Your customer base won’t grow if existing customers leave at the same rate as
offering. A skill required or incompatible technologies for example. frequency with which they buy them. new ones join. Retention — keeping hold of your customers — is often crucial.
RIVALRY

IMITABILITY
BARGAINING POWER
CAT E G O RY WITH CUSTOMERS LEGA L PR OT ECT I O N
Your product or service category determines the intensity of the rivalry. Powerful buyers can drive down your margins, so it’s important to consider Legal protection — patents, trademarks and copyright — can prevent rivals
Customers like buying from clear categories where comparison is easier. your bargaining power with customers and how it might be changing. from copying you.
MARKET

T E RRI TO RY WITH SUPPLIERS D UR A B LE A DVA N TAGES

Where your business is located and the area you cover impact the size of Bargaining power with suppliers is equally important. Powerful suppliers can Durable advantages — such as a unique cost structure, product ecosystem
your opportunity, the regulations you must meet, and the rivals you face. also turn the screw on you — growing their profits at the expense of yours. or network effects — can make your business challenging to imitate.

A LT E RN AT I V E S & SU BSTITU TE S RULES & REG ULATION S CO M PET I TO R LAG

Alternatives are direct rivals, like competing airlines. Substitutes are Every business must comply with basic regulations that limit their power You can make yourself inimitable by moving faster than rivals, or forcing
indirect rivals, like an airline competing with a train. — like tax, or health and safety laws — as well as industry specific regulations. them to make difficult trade-offs that slow them down.

ADAPTABILITY
OFFERINGS

COSTS

PRO P O S I T I O N F IXED COSTS CA S H PO S I T I O N

The product or service proposition is the concept the customer is buying into. Fixed costs, like rent or salaries, stay the same regardless of how much you If you run out of cash, you cannot continue to operate the business. The
O R G A N I Z AT I O N

Customers must have clear, obvious reasons to choose it over alternatives. sell, affecting your break-even point and subsequent profitability. stronger your cash position, the greater the scope of options you can pursue.

B RA N D A PP E A L VARIAB LE COSTS S CA LA B I LI TY O R CA PAC I TY

The expectations and associations people have about your business — its Variable costs depend on volumes — like the materials needed to make Operating at full capacity leaves you unable to plan for the future. If your
brand appeal — affect the desirability of all your products and services. products. Cars have high variable costs compared to software, for example. business cannot scale it cannot grow.

C U STO M E R E X P E R IE NC E CAPITAL EXPEN DITURE CO M PLEXI TY & R I GI D I TY

If your website is confusing, staff are impolite or returning damaged goods These are longer-term investments, like factories or equipment. Their impact Complexity and rigidity within a business can make getting new ideas off the
is difficult, desirability will suffer — no matter how good your product. on profits are spread over the useful lifetimes of the assets. ground or changing direction agonizingly slow — if not impossible.

WE'RE HERE TO HELP: Visit www.methodical.io to learn more about the grid and how it can help your startup, business or project succeed.

© Methodical 2018