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What is the Most Important Function for a Company?

What's the most important function for a company? 

That's a question that's debated about in pretty much every company. More often than not, everyone thinks it’s their own department.

To figure this, and more importantly, how to successfully scale your company, there are two simple but powerful questions you need to ask yourself.


How do you define what’s actually important for your company? 

Before talking about these questions, let's quickly cover the basics.

What is the purpose of the company in question?

I find the question extremely intriguing. Personally I’m a big believer in the customer-first philosophy, but for the sake of not going completely off-topic, let’s take the easy answer and use the traditional definition:

The purpose of a company is to create profit for its shareholders.

From the point of view of trying to discover the most important function of a company, it's the one that’s creating stakeholder value. Let’s again take a shortcut and just say that the way to do that is by growing the company (profitably).

So, what are the best paths that lead a company towards that growth?

If we summarize and simplify things a bit: you’ll have to make sure you’re creating actual value for your customers.

By following this logic, we’ll reach the conclusion that the most important function is the one that creates the most value for customers.

The most important function for a company is the one that creates the most value for a customer.

Whose job is it to understand the customers?

To figure out who in the company contributes most value, you first need to figure out what exactly that value is and how your customers perceive that.

So whose job is that exactly if there's no dedicated team out for the job?

I love the description of Rob Engelman's blog post of what a marketing department actually is. It’s quite concise, yet still gives you an accurate picture on how diverse their responsibilities really are.

However, nowhere in that list does it say “to do advertising and press releases”. All too often is marketing just perceived to be about communications, advertising and self promotion, often by marketing directors themselves.

So a case could be made for it to be the job of the marketing department. The same case could, however, be just as easily described to belong to the sales or product teams.

How do you measure ROI?

If we know what value is, then next up is the question of Return On Investment. 

For most business roles, be it in sales or marketing, it’s quite straightforward to measure ROI. It’s also something that you can systematically measure and keep improving upon.

With advertising, these activities are also really easy to scale up and down as needed. With sales, it's equally easy to measure but much more difficult to scale. 

As a result, sales and marketing, especially advertising wise, are often the largest investments in a growth company and who can blame the executives for choosing to invest in them as long as they bring in more dollars than they spend?

However, it gets more difficult the moment you move to the parts of the company that are more remote from the sales transactions, such as product development or customer insight.

Short term vs. Long term

As difficult as the question of how to measure ROI is in many cases, the more important question is what the timeframe for measuring that is?

How do you measure the ROI of being able to figure out the most important unmet needs of your customers and communicate these to your product development?

It’s virtually incalculable, yet at the same time priceless, for your long term success.

How do you measure the value of sacrificing creating some additional value for this one large customer if that means that you can ensure your offering staying simple enough to keep your future operations scalable? 

How do you measure the value of recruiting the best and only the best talent?

Taking these points into consideration are just some examples of the difference between some of the most profitable companies in the world that can scale their business and grow rapidly, as opposed to the businesses that continue to micro optimize and then consistently grow 3.2% on an annual basis.

So what's key?

It depends.

As boring as it is to say this: it depends.

The key for scaling the business of a B2C focused retailer is very different from that of a B2B enterprise software. 

I'd say that the most important function can be determined by answering these long-term focused questions:

  • What is the core of our value proposition now and in the future?
  • How do we make sure that we can deliver that value on scale?

Let's use an example to clarify this from the point of view of a B2B SaaS company. For this company, it's quite obvious that the core driver of value creation is the product team. SaaS doesn't really work without a great product and a great product alone can create an incredible viral effect for growth.

Of course the product in this case isn't just about great engineering, but also requires a great product manager who understands the business needs of their customers and can translate them to a product design.

For the second question, the product team is still crucial. 

As mentioned, the product itself needs to not only be a growth engine in itself, but it also needs to be simple enough to ensure scalability of operations and future development since complexity is the fundamental enemy of both.

However, at this point, the marketing team also steps into the picture. 

Sales is much slower and more difficult to scale than marketing so the fastest growing companies are, almost without exception, marketing driven as opposed to sales driven.

Just take a look at Slack, which hasn't hired a single sales person on their way to a $4B valuation in just a couple of years!

So no matter what business you're in, always remember to keep these two simple but crucial questions in mind.

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