Over the years I have talked with several executives who have shared with me that they are working increasingly hard to grow their business as well as increase profitability but fail to get the results they desire. That does not surprise me.
Many companies are often in a dilemma. How much time do they need to spend working “on” their business as opposed to working “in” their business? Working “in” your business is performing tasks to sell, develop, manufacture and deliver your product or service. Working “on” your business relates to tasks like developing sales and marketing strategies and improving systems within the company.
Businesses spend approximately 95% of their time working “in” their business as opposed to 5% of their time working “on” their business. While I am not going to debate the merits of moving these targets one way or the other, if you are going to spend only 5% of your time working on your business, then my suggestion is that you had better make this time efficient and effective.
Most business owners find it difficult, or say they don’t have the time, to work on their business, and therefore don’t usually give it the attention it deserves. I have found that one of the main reasons is that they don’t have a system or format to follow. Consequently, they are unable to resolve challenges and take advantage of an upcoming opportunity resulting in no to slow growth.
In this article, I am going to take a look at 3 techniques that any business can follow that will have an immediate impact on solving problems that will improve their bottom line.
1. Quantitative and Structured Brainstorming, and Business Flow Mapping
Brainstorming is a concept that has been around a long time. The key though is to have a systematic approach that quantifies the financial impact of ideas you develop. Here are some practical steps to brainstorming.
Form a Team
Assemble a cross functional team of 6-8 staff in your boardroom. The team should be from all areas of the business, and at varying levels (junior to senior staff). You want input from all areas and facets of your business. You will be surprised and delighted by what you will learn.
Let the Ideas Flow
When gathering ideas, give each person the opportunity to state their ideas to the group, without any debate or criticism of individuals or the ideas raised. Continue until the group comes up with as many ideas as possible. This can be done over 2 one-hour sessions. Participants learn from each other and reflect back on their thoughts to come up with very insightful ideas in the subsequent sessions.
Map the Business Flow
Next, map out the business process from how you attract business to when you receive payment for your goods or services. The group can use any format it wishes but all participants should contribute and be able to see the flow chart. Don’t make this too detailed and circle 3 areas within the business workflow for improvement and add this to your list of ideas.
Categorize and Quantify
Boil down the ideas to 20 by grouping “like” ideas. Determine the impact each idea will have on the bottom line if implemented. This is where your accountant can really help. Consider all impacts solving the problem will have on the bottom line; such as increase in sales, improved productivity, costs savings, shorter time to market and reduced waste. Rank these ideas from largest to smallest affect on profit. In my experience I have learned that 2-3 one hour sessions done over different days yield the best results
You now have a clear path of 20 ranked and quantified ideas to move forward with to improving your business growth and profits.
2. Taking an Idea from Inception to Implementation Using a Team Approach
Identifying top ideas is not enough. In fact, most companies are generally good at coming up with ideas. However, the initial energy and enthusiasm is lost in the day to day urgencies. It is imperative to build a structure that ensures that ideas are taken from inception to fruition in a time bound manner. In an era when top down management is failing, one of the best ways to ensure ideas are implemented is to engage employees using a team approach to solve a problem or implement an idea into practice. Such approach enhances employee engagement and improves the company culture to become more collaborative. Once again, you want a systematic and practical method of accomplishing effective implementation. Here are some steps you may want to consider.
Select a team of 6-8. The team should include those directly related to the idea and one or two staff not directly related to the problem but who can provide fresh insight. Select a team leader and a scribe. The team will meet one hour a week for 4 weeks and no longer than 6 weeks.
Identify Root Causes and Develop Standard Operating Procedures
Spend the first one hour performing root cause analysis. Do not skip this step. Determine what is preventing the idea, problem or opportunities from being resolved or implemented. Record this list of detracting root causes and order them in terms of importance. The next week work on solutions to the problems. Here you can use the brainstorming technique above and also call in an expert to offer some solutions as well. In the last weeks, the group will prepare Standard Operating Procedures (SOPs). Use a template here to assist you that address the most important areas such as problem definition, root cause analysis, solutions considered, important decision criteria, and proposed new operational procedures. The SOP should also set out the objective, detailed procedural steps to be carried out, targets and metrics to be achieved, and a conclusion. After each week, the team leader can report back to management on the status and ensure management concurs with the progress.
Roll Out Solution
Once the standard operating procedures are complete, the team leader will promote the SOP throughout the company and maintain metrics to ensure targets are met.
A few words about SOPs. They are extremely important. If you don’t believe it, look at McDonald’s. You may not like their food but you know exactly what you are going to get in every McDonald’s store right down to a clean washroom. Also, SOP’s are not static. Once the action team writes the initial SOP, the team leader must stick with it and re-calibrate the steps in the SOP. As the SOP is being implemented and you receive feedback, you will need to fine-tune the procedures.
3. Building KPI Dashboards and Financial Metrics that Really Provide Management with the Right Information to make the Right Decisions
This is another area where the process is dynamic. If designed and implemented correctly, KPI’s and metrics can guide, motivate, direct, and focus. At the same time a poorly designed metrics can rather confuse, de-motivate, stagnate and stall creativity.
Therefore, I recommend some key guidelines before establishing metrics and KPI’s.
- Pertinent – does it really add value to the manager(s)?
- Specific – is it detailed enough that it holds the particular manager accountable for the performance of the process measured?
- Timely – when actually received by the manager(s), is it current enough to make decisions with?
- Accurate – are there ever any errors in the reporting? Can a manager rely on the information?
Generally companies track only financial metrics. This poses some serious limitations, and in today’s times financial metrics alone are not sufficient. We need to include customer measures, internal measures, and learning and growth measures to enable management in tracking company performance in a more holistic way. Ask yourself the following question and you will be able to identify other important non-financial areas of your business that you must consider to expand your view of metrics.
Customer measures are about designing metrics to measure customer satisfaction. Some important questions to consider are:
- How have our objectives reflected our customers’ acceptance of our price/value relationship?
- In what ways do our customers understand the value they are getting?
- What do we need to know about our customer’s business?
Internal measures will help you track the efficiency of your internal processes at a company wide scale. Some important questions to consider are:
- How reliable are our sales forecasts?
- How can we streamline our proposal and contract approval process?
- What sales tools are we providing our sales force to maximize effectiveness?
Learning and Growth Measures
Learning and growth measures are designed to ensure that a company is not only competitive in current times, but will also be sustainable and profitable in the future. Some important questions to consider are:
- How well do we know that we are building a company that is well-positioned for the future?
- How are we going about avoiding “trial and error” approaches for creating success?
- How do we know that we are creating an environment that will attract the kind of people we want?
Financial Measures, of course, continue to be important, and here are some good questions to think when designing financial based metrics.
- How risky is our present composition of clients?
- How well do we assess our investment in the existing sales force?
- How do we know we are growing in a profitable manner?
In conclusion, apply these simple yet powerful techniques in your business and transform your profitability as well as culture.
Brian Cookson has been passionate about business innovation and new product development since 1982. He runs his own innovation consulting practice, RDP Associates Inc. (www.innovationnpd.com) that specialises in helping companies develop their own in-house processes to improve corporate culture and profits. Please email firstname.lastname@example.org if you have any questions or suggestions.