Legacy and Impact? Do you focus on these?
When we talk about business growth or business success, it’s often in terms of revenue, or profits. And that makes sense, you don’t have a business if you aren’t making money. But the reality is that most business owners want more than that.
They want to make an impact and they want to leave a legacy…
Legacy and Impact?
In his latest book, Fix This Next, author Mike Michalowicz shares an interesting idea that your business operates on a hierarchy of needs… a business centric version of Maslow’s Hierarchy of Needs (see below):
Way back in 1943, Abraham Maslow wrote an article on his Theory of Human Motivation sharing his idea that we are all driven by a hierarchy of needs. It starts with the basics – food, safety, community, but once those are met people are driven by the loftier ideas at the top of the pyramid – esteem and self-actualization.
The Business Hierarchy of Needs
In a similar fashion, Michalowicz developed a Business Hierarchy of Needs as a tool to help business owners figure out where to focus their efforts if their business is stalled or struggling.
Business needs start with sales, profit and order (think processes and efficiency). A business that fully covers all 3 of those layers will be an effective cash generating machine. Those first 3 layers dictates what you Get as a successful business owner. But there are two additional layers that elevate the most successful businesses – Impact and Legacy. Those two layers are focused on what you give as a business…
What are Impact and Legacy?
The Impact layer is about creating a sustainable enterprise that generates a positive impact on your clients, employees and partners. That includes delivering on an altruistic mission or purpose or it could simply mean that you’re making sure everyone touched by your business wins beyond what they expect.
The Legacy layer is all about longevity and permanence – the idea of creating a business that will thrive and last well beyond your participation. This requires having a much bigger picture vision and the ability and willingness to adapt and evolve over time since the world and your marketplace aren’t going to stay the same.
The theory that Michalowicz used to build this model is that a business must focus on the first 3 layers and get those running successfully before they can start to really work on Impact and Legacy. That idea mostly resonates with me – I can think of a few exceptions to that rule… companies like Toms Shoes that started with a business model focused on Impact. Overall most businesses need to be healthy and sound (Sales, Profit, Order) before they can spend time and effort on Impact and Legacy.
Do you need Impact and Legacy?
The idea that you can’t address Impact and Legacy until you have the basics figured out makes sense. Perhaps the better question is do you need to address Impact and Legacy in your business?
The short answer is no. You can absolutely have a strong business that’s only focused on generating cash and profits. And it’s likely a business that can thrive indefinitely – it won’t be as robust in the long term (meaning market changes could have a bigger impact) and it won’t be as valuable down the road. But you don’t need to focus on Impact and Legacy if you don’t want to.
The longer answer to whether or not you need / want Impact and Legacy is… it depends.
A lot of business owners will reach a point in their business life cycle where they start to feel… bored or unfulfilled (kind of a mid-life crisis for a business). They might try to address that with growth, but for most people, money alone won’t fill that kind of hole.
That’s where Impact and Legacy could come into play. If your business is doing well, if you’re making enough money consistently, if you’re able to take vacations and step away from your business as much as you’d like, then maybe it’s time to think about transforming the business into something that’s bigger than just you as the initial owner.
Maybe the 2nd stage of your business isn’t about revenue growth, maybe it’s about community and employee growth. Maybe it’s addressing the challenge of succession and ongoing evolution.
If that sounds even a little exciting to you – then you should check out Fix This Next. It’s well written and does a great job of pulling together a lot of the big ideas from Mike’s previous books – especially The Pumpkin Plan, Profit First and Clockwork (all excellent in their own right).
And if that idea doesn’t resonate with you, that’s cool too. You may still want to check out the book to make sure you’re doing well on the first 3 layers of the hierarchy but having a successful cash generating machine that feeds a great lifestyle is a more than worthy accomplishment.
What do you think? Are you intrigued by Impact and Legacy? Or do you view it as unnecessary icing on an already great cake? Or is Impact and Legacy why you started the business in the first place and you’re frustrated that you aren’t making progress you want to on that part?
We’d love to hear your thoughts – leave us a comment below.
Shawn Kinkade Kansas City Business Coach