Peter Marks of Design Insight developed what he called the “MBA in Box” (or the basic business equation MS3 nearly 40 years ago) To me, it is still the simplest yet most complete explanation and framework for making business decisions. Does it enlarge the size of a market? Does it increase your share of that market? And/or finally does it increase your margin on sales to that market?
An increase in anyone of those dimensions will increase your profits organization.
When I am presented with any business idea, I ask the 3 basic questions.
Will it increase the size of the market? Will increase the share of the market? Will it increase the margin on sales in the market?
When I am comparing different opportunities, I play out different scenarios with this basic equation.
And when I am feeling extra fancy, I sometimes to project those equations out a few years to make sure I don’t over emphasize short-term gain.
It is great guide to help you keep yourself focused on levers that can make a difference.
Sometimes companies get a little too focused on one dimension which over time can really do great harm to the health of the business.
The basic business equation is a very useful framework for making smart business decisions with regard to technology.