The Grid

Success in business isn’t about fixing isolated problems, but about understanding how every part connects, just like the human body.

1. Businesses Thrive with a Holistic Approach

Businesses are like human bodies in that they perform better when addressed as a whole. Isolated solutions often fail to resolve core issues because they ignore the underlying larger connections and influences at play. The author uses his own experience of overcoming chronic knee pain as an analogy. Specialists had treated his knees in isolation. The true cause, however, turned out to be a muscle imbalance affecting his entire body.

In business, focusing on individual departments, processes, or goals often results in incomplete fixes. It’s essential to treat the business holistically, reflecting on how every aspect—finance, marketing, customer relationships—interacts. Looking at these combined dynamics provides clarity for businesses aiming for better results and solutions.

Much like how the author’s recovery began with retraining his whole body’s system, companies must assess complete organizational patterns. Holistic thinking allows businesses to unlock true potential—the connections between issues often reveal deeper causes.

Examples

• The author’s muscle imbalance showed how knee pain wasn’t just a knee problem.
• A struggling business focuses solely on marketing but ignores product innovation, leading to failure.
• Nicole Parsons' approach to holistic sports rehab treats interconnected body parts for better health solutions.

2. The Three Universal Business Goals

All businesses aim for desirability, profitability, and longevity, which are inseparable from one another. A business must create something desirable to attract customers. Profitability ensures the business can sustain itself. Lastly, longevity builds trust and ensures the organization gains deeper roots over time.

These three goals work together. A wheelchair maker, for instance, prioritized desirability above all else by using expensive carbon fiber. While the sleek design impressed, the costs made the product unaffordable, destroying profitability and longevity. A balance among all three goals is vital.

Focusing too heavily on one goal hurts the others. To thrive, companies must find harmony in making customers want their products, earning enough profit to stay in business, and building trust over time.

Examples

• Desirable but unprofitable wheelchair designs doomed a company.
• Profitable but untrustworthy businesses crumble—like those involved in unethical practices.
• Apple balances desirability (innovation), profitability (premium pricing), and longevity (customer loyalty).

3. Change Is Unavoidable: Customers, Markets, and Organizations

Businesses must adapt to ever-changing customers, shifting market trends, and their own evolving structure. Customers’ needs often depend on external events, like urban parking costs that increase reliance on car rental services like Zipcar. Similarly, markets evolve due to new competitors or regulations, forcing companies to pivot.

Organizations change from within, too. A startup with five employees behaves differently than the same company after scaling up to 500 people. Ignoring these transitions risks creating blind spots and poor strategic decisions. Even minor market missteps, like Volkswagen’s emissions scandal, have long-lasting reputational fallout.

Effective strategy continuously assesses these dynamic factors—remaining adaptable means survival in difficult environments where these forces constantly pull businesses in different directions.

Examples

• Volkswagen’s misjudged emission requirements led to billions in damages.
• A city adopting ride-sharing caused reduced vehicle sales.
• A bootstrapped startup struggles with bureaucracy after rapid growth to mid-sized corporation.

4. Desirability Depends on Wants, Rivals, and Offerings

Creating desirability starts with understanding customer wants and needs, crafting unique offerings tailored to these preferences, and standing out against competitors. Needs are not fixed and can shift based on cultural or societal inputs, as evidenced by De Beers transforming diamonds into a symbol of eternal love.

Competition also impacts desirability. Companies must assess barriers to entry in their sector and consider rivals’ movements. AirBnB’s entry into hospitality became disruptive by avoiding fixed asset costs associated with traditional hotels.

Lastly, offerings matter. The way a business positions its products to reflect customer values bolsters desirability. Coca-Cola’s personalized “Share a Coke” campaign, for instance, made its classic product much more appealing and relatable to a broad audience.

Examples

• De Beers rebranded diamonds into engagement essentials.
• AirBnB created desirable, low-cost accommodation, avoiding hotels' regulations.
• Coca-Cola used name personalization to spark emotional connections.

5. Profitability Requires Price Strategy, Power, and Cost Management

Raising prices, preserving bargaining leverage, and cutting costs are all big contributors to profitability. Price adjustments can yield significant profit margins without as much added effort as increasing volume. As McKinsey once reported, even a 1% hike can deliver huge gains.

Bargaining power also enables better financial results. For example, Apple responded swiftly to Taylor Swift’s objection to early Apple Music royalties. Rather than damage its image, Apple shifted terms to maintain power relationships.

Cost management adds a third layer of profitability. SpaceX reduced rocket steering component expenses from $120,000 to under $5,000 by implementing granular approval systems, showcasing how active effort saves money.

Examples

• Price hikes improve revenue easier than volume boosts, as McKinsey studies show.
• Apple strategically shifted policy based on feedback to maintain bargaining power.
• SpaceX’s cost breakdown spreadsheets reduced materials budgets significantly.

6. Longevity Hinges on Awareness, Adaptability, and Distinctiveness

Businesses that carve an enduring niche ensure success stems not just from innovation but repeated recognition. Marc Barros learned this hard lesson when his camera business Contour lost to GoPro simply because GoPro marketed better. Awareness, not the “best product,” wins.

Originality helps ensure longevity. When companies craft distinctive products or rely on trade secrets rather than patents, they discourage competition. Ferrari, for instance, protected information with non-disclosure agreements, fending off threats while maintaining originality.

Lastly, adaptability safeguards businesses against irrelevance. Framestore, the effects studio, pushed into areas like virtual reality to maintain relevance as older tech models faded away.

Examples

• GoPro succeeded over Contour by prioritizing marketing awareness.
• Ferrari kept its designs largely in-house to prevent replication.
• Framestore continues innovating post-1980s initial success via VR pivots.

7. The Interconnectedness of Every Business Element

The nine elements of business success—wants and needs, rivalry, offerings, price, bargaining power, costs, customer base, imitability, and adaptability—are deeply tied. Ignoring any one sparks imbalances that cascade into failure.

For instance, outsourcing production may cut costs but can have ripple effects, reducing bargaining positions and making products more imitable. Dell learned this painfully when Asus transitioned from supplier to direct competitor, undercutting Dell's market.

Businesses that cohesively strategize across domains, respecting links between marketing, pricing, logistics, and cultural shifts, keep operations harmonized long-term.

Examples

• Asus leaped from Dell’s supplier network to full-blown competitor through outsourcing pathways.
• A firm pricing by production costs underestimated customers attaching independent value.
• Companies ignoring adversaries’ campaigns suffer deeply without rivalry consideration.

8. Applying the Grid to Identify Operational Blind Spots

A struggling company often fails to notice obvious gaps. By integrating the Grid framework into their review process, organizations systematically flag deficiencies across the nine elements. For instance, improving customer proposals led one service company mentioned by the author to achieve better sales.

Rather than chase intuition, replacing subjective judgment with evidence-based review pays dividends. It prevents waste while prioritizing sustainable, high-return solutions.

Sometimes tweaking a single aspect fixes both upstream and downstream issues while increasing internal clarity across departments.

Examples

• Proposals simplified with relatable formats instead of reworking entire services boosted sign-ons.
• Customer retention improved when overlooked repeat-services triggered loyalty-building.
• Avoiding costly mass advertising resolved reduced long-term commitment without extra budgets wasted.

9. A Fresh Perspective Uncovers Hidden Opportunities

External feedback often highlights what internal teams overlook due to routine bias or blind spots. The author’s coaching resolved overlooked revenue loss patterns without bloated ad campaigns or unnecessary rebranding.

Allowing independent analysis refreshes rigid self-limitations stifling growth innovation risks. Struggling ventures should avoid isolation when building stronger roadmaps by fostering external objective diagnostic opinions.

Often, clarity arises precisely where assumptions go untested until someone interrogates unasked inquiries deep organizational layers expose outward needs correctly measured adjusted product designs.

Examples

• Simplifications only forced faster cycle times product/noncommodified aspects targeted innovations.
• Increasing underexposure activity deep-share oversights sustainably resolved direction fail flaws upcoming repeats predictable paths instead risk sudden failures incoming investments diverted competitor advantages avoided plain hindsight-specific problems.

Takeaways

1. Diagnose issues by considering how parts of your business interact rather than treating them as isolated problems.
2. Regularly review customer experiences and proposals to uncover ways to boost engagement or trust.
3. Rather than cut costs without caution, assess whether changes impact bargaining power or product originality.