Hi, Paul Crane, part of the GFA team. Here to explain Red/Blue/Black, which is a fantastic framework. This really helps with what we call responsibility in your business, but also efficiency and where you’re spending your time. A couple of things can also come out of this, is with your team, have you got the right capability across your business, and that will change as your business grows, and people’s roles change as you grow.
Just to explain, really simply, the three key areas, every business has, red, blue, and black.
Blue, any activity that generates today’s revenue, we call that operations. So, meeting clients, sales is blue, designing, putting your product together, that could be your SOAs. It could be some legal documents, could be P and L’s for accountants. Then, the delivery, delivering to your client, which is all around the experience. And then client services is maintaining relationship with your client. Training staff is also blue. So pretty important. That’s today’s revenue.
Red, very simply, is business support, non-revenue activity critical to the business. So, we often use the analogy of blood. If you cut off the blood supply, the body dies. Same with your business, you need the skills in your business. Some of the functions in the red, these are some of the typical ones. It could be others in different industries, but admin, accounting and finance, HR, IT, premise, legal, and compliance, which I know in the financial services industry is a big, big, big time commitment now. So, it’s making sure we’ve got the right people in red.
And then black is an area that a lot of small businesses don’t spend enough time in, which is we call it business management, kind of like The E-Myth, Michael Gerber years ago, about working on your business. That’s future revenue activity, things like putting your strategy together, looking at client management, looking at your clients strategically, looking at it from a profitability point of view and categorizing clients. For a lot of industries, that’s a huge project right now. Looking at your pricing. I’m surprised how many businesses never actually reflect on they haven’t increased their pricing for a number of years and if they’ve got their pricing right. Positioning, which we’ll touch on at another time, which is getting clear on your value proposition and making sure your business is aligned. And then obviously, marketing and business development or distribution, which we talked about a podcast around, without black, you run out of blue.
So, the key to this is where, as an owner, are you spending your time? Are you spending too much time in the red? Are you spending enough time in the black? And most people often have to spend a lot of time in the blue. And then looking if you’ve got a team, have I got the right people in the right roles?
So, we’ve used some examples where you’ve got eight partners at a strategy day, which is meant to be focused on black, and they could spend two hours debating about a data projector for the boardroom, which is red. So, again, you could easily use red, blue, black, and overlay on the agenda for the meeting. And when we did that, it showed they were spending a lot of their time of the meeting on red, blue, and there’s actually no black in that meeting. So, actually, it was a more operational admin meeting, which highlighted to them probably not a good use of their time.
So, this is about being less busy and more effective with your time. And they’re all equally important. The key is having the right people in the right areas and making sure you’ve got the percentages right in your business, where you’re spending your time. Thank you.