The value of diagrams

data flow

I’ve posted previously about the value of diagrams in presenting your business. In fact by creating some of these diagrams you will also better understand your business.

In discussing the value of diagrams for founders with MIT VMS mentor Beth Kahn she mentioned that she had a number of types of diagrams she would share with me and the mentee. Thanks to her for providing a full deck of diagrams, of which I’m just going to present a few.

Process diagrams are useful in three ways:

  • Information: how decisions get made
  • Activities: who takes action
  • Products: how the product is delivered
  • Money: the flow of funds

There are three types of process maps:

  • Ecosystem: who are the stakeholders
  • Workflow: how your product is built or your service is delivered
  • Value chain: how value is added during the product lifecycle

I generally ask founders to first map their ecosystem: who are the suppliers? competitors? sales channels? value-added resellers? service providers? substitutes for your product? analysts who track your market segment?

Here’s an example of the ecosystem of the stakeholders in a company called LimeFinder.


Here’s the value chain for an electric car:

value chain electric cars

Here’s the work flow diagram for LifeFinder:

workflow Limefinder

There is one other diagram I will share with you that outlines the customer discovery process, which should be the starting point for founders:

customer discover

Once you actually have a product and are selling it you need to understand who are the players in the sales process:

  • Decision maker – makes the final decision to purchase
  • Influencer – can sway the decision maker but is not the decision maker
  • Economic buyer – issues the PO or signs the check – not necessarily a user of the product
  • End user – the actual end user of your product or service
  • Early evangelist or product champion – an early adopter who advocates for your offering
  • Saboteur – someone who seeks to undermine the adoption of your product due to real or perceived negative impact of your offering – you may be seen as a competitor

These are the major types of diagrams that are useful for both learning about your processes and presenting them to interested parties, such as investors or candidates for hire.

If a picture is worth a thousand words, in business I would say a diagram is worth ten thousand words. Yes, they are a lot more work that just snapping a photo with your smart phone, but the work that goes into them with have real value in proportion to the time you invest in developing and modifying these diagrams for your business.

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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