Lemonade stand — GPE Stratagem Blog

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There they were in the distance, waiting for what would probably be the first customer of the day. As I continued to walk up the street their tentative excitement became palpable - Three little girls and their lemonade stand; a card table, a pitcher of lemonade, a stack of foam glasses and a hand written paper sign that simply said "lemonade 25 ¢". As a general rule I always buy the lemonade, no matter how bad I know it may be for these reasons. The first reason is the smiles and lemonade you get for 25 cents are truly priceless, while the second is a lemonade stand is the simplest and purest of commercial endeavors for generating money, and finally, it is one of the frameworks I use for thinking.

When I say framework, what I am referring to is the basic mental structure and process I use for situational understanding, problem identification and ultimately solution development. As I mentioned the "Lemonade Stand" is one of my frameworks while the other two are the 7S Model* and the 4P Marketing Mix*. It is when using these frameworks that I have been able to focus my thinking with regard to understanding the situation, identifying problems and opportunities, as well as quickly working through the many connections that make up a business when internal and external factors come into play.

For me it always starts with the Lemonade Stand, as it, at a high level addresses the three fundamentals of business***: 1) the customer... the one who wants or needs the lemonade 2) the interaction... the exchange with the customer resulting in the lemony goodness and 3) the business... in the form of the three little girls with the idea and some lemonade mix. It is the connection between these three fundamentals that makes this so powerful as it categorizes broadly a business and the connection that ultimately leads to the customer. More importantly, it re-enforces that what we do with the business will effect the interaction with the customer and there is a ripple effect with any business decision that ultimately washes up on the shore of the customer (metaphorically speaking) - So simple, but sometimes easily forgotten. The customer is everything, and anything a business does needs to connect back to them. If not, why are you doing what you do?

The interaction for me is the interface between the business and the customer and with regard to a thinking framework, I tend to use the 4P Marketing Mix model:

Product or Service: what is being sold or aligned with the customer's needs.
Price: the price of the product or service, reflecting of the perceived value by the customer. (the customer perceives the benefits of the product aligned against the price that he/she is being asked to pay that determines value)
Place (distribution): how the product or service gets to the customer
Promotional Mix: the messaging that is used to communicate, develop awareness and influence the customer to transact with the company in line with its goals, which more often than not are revenue generation. (Sales, promotions, PR, trade shows, social media, etc)

It is with the four P's that your thinking can be grounded regarding this "interaction", either towards the customer or back into the business. These components are the ties between the customer and the business.

My other mental framework is the 7 S model which, as you may suspect, has seven words that all start with "s" - I tend to use this as a starting point when I am looking internally at the business. I have ordered the components from tangible to less tangible as well as importance... this is a consideration when resource management comes into play.

Strategy: the strategy the business is using to achieve its vision and goals.
Structure: the organizational structure used to run and manage the business.
Systems (and processes): the systems the business will use to administer the business
Staff: the people needed to execute the business

The next three are the softer components of the model, but in my opinion are the ones that take a business from good to great... aspects of leadership in my mind.

Skills: the knowledge and skills needed to effectively run and manage the business
Style: the manner in which the business does things.
Shared Values: the established business values that are shared by all people involved with the business defining its culture.

So in all of this I use 12 components as part of my framework of thinking where 11 of these components are connected back to the customer; have they been established, how can they be optimized and what is impacting them negatively? Business is rather complicated to say the least, so I am not suggesting there is a magical check list to cover it all but this does help to frame one's thinking, develop an understanding of the situation, support planning as well as solution development for identified problems. It has been very useful for me over the years.

So what happened to the lemonade stand you may ask? Well the last I heard the operations expanded to 100 little kids, 30 stands aligned to high foot traffic areas with an expanded offering of lemonade, fruit punch and apple juice; Management is concerned with shortfalls in revenue and I suspect its due to supply chain issues as the structure and supply chain just didn't keep up with the growth.

gpe

* 4P Marketing Mix was proposed by marketer E. Jerome McCarthy in 1960, which has since been used by marketers throughout the world

** 7S Model is a management framework developed by well-known business consultants Robert Waterman and Tom Peters.

*** This of course is simplified and also assumes responsible financial and legal management.