Measure So You Can Manage

Having the right performance metrics helps you drive growth. Let me share with you six steps to implement effective measures to manage. Keeping a competitive edge in today’s marketplace requires ongoing investment in the transformation of your business. As Mark Twain said:  To stand still, is to fall behind.

1)      Clearly define your corporate goals

Without a clearly defined and documented strategy, it is impossible to set expectations and monitor performance. You can only manage what you can measure, so if you lack such a strategy, begin to brainstorm and evaluate opportunities for continued growth.  Understand what your weaknesses and strengths are and begin documenting so that when it is finalized, you can share it with your employees. You may think that everyone knows where you are going, but don’t’ assume.  No one has ever over communicated!

2)      Identify short-and long-term operational goals

Take your strategy and identify what you want to accomplish short-term (3 mos) and what needs a bit more time (12 mos).  This would include approaching the weaknesses and turn them into strengths. In operations you want to evaluate each step taken and whether it adds value or not to the final product or services.  Think lean here and optimize the process.

3)      Establish milestone, deliverables and tasks to support your goals

Now you may be ready for the roadmap.  Establish milestones, deliverables to be achieved and identify tasks and who performs them.  Now that you have documented and shared the strategy with your employees, it is important to listen to them and get their input.  Agree on goals, objectives and timetables.  Evaluate whether you have adequate resources, so you have a better chance of succeeding.

4)      Develop and implement metrics for all key activities

This is where the measuring starts. Make sure you engage your employees in setting performance metrics.  Here are some examples: Customer retention rate, supply chain rate of return, funnel conversion rate or call center support metrics. Be proactive and pay attention to leading indicators in your industry and pay less attention to lagging ones.  Clarify expectations with your executive team and staff, empower your employees and boost their engagement. Set some incentives in advance and make sure that all metrics are objective and not subjective.

5)      Monitor progress and make improvements as needed to stay on course

Now you have a roadmap in place that you can begin to monitor and manage. Your employees understand what is expected of them and how they can help the company grow.  Making a difference goes a long way in terms of talent retention.  There needs to be purpose and connection to the larger scheme as participation can give them a better understanding of how they personally can affect the business.

6)      Assess the effectiveness of metrics and modify if necessary

Close the loop by evaluating regularly how the metrics are working.  What is the assessment of your staff and how well are they adhering to these metrics?  Do you need to change them, are they giving you information that is meaningful to the future of your business?

Start the conversation today regarding how you can drive results with the right performance metrics. Transparency and accountability will be on your side as you seek a way to measure and manage. This is an ongoing process and of course, if your business changes, so do your performance metrics.

My book “Stop Compromising” has its own chapter (chapter 5) on this topic and explains ways to think about KPIs and performance metrics.

Let me know what KPIs and performance metrics have worked for you and what particular leading indicators you use for your roadmap.

 

Work Horizontally

Why working across departments adds value to your bottom line…Logo

As you grow your company, one of the pitfalls is that departments slowly but surely form into silos. Once that silo mentality is established, it is harder to break them down. A big piece of this is failing to recognize the importance of the interdependency of the various functions or departments. Working horizontally begins with the CEO who understands that the four business elements: Sales, operations, finance and the organization need to be on the same page in understanding the critical challenges of the company.

Collectively the four business elements are the engine that makes your business run. Each relies on the other three and if one is underperforming, it drags the others down, hence the interdependency. Working horizontally also implies that each business element understands what the other three need. Rather than compete internally for your budget dollars, lead them to a more collaborative approach where they view themselves as a service internally to the other departments. This is where the alignment of course comes in and is so important.

Clearly share and communicate your strategy with the department leaders. What are the opportunities to grow the business? Minimize risks and simultaneously increase the value of the business. Create a culture of continuous improvement.
How can each business element contribute to continuous and long-term improvement? The collaborative effort will help you uncover key business issues facing your company. Today’s market is swift and trends and competition change at a faster pace. Teamwork, communications and collaborations are essential to run your business in an agile fashion.

So begin your journey by focusing in transforming your business with Best Practices, step by step. This will be vital to your company’s success and profitability. For a start here are the Best Practices areas and questions to ask yourselves:

Organization: Culture set for change through leadership, culture and communications.
Have you clearly defined your mission, vision and supporting core values?
 Have you set key metrics to measure well-defined growth objectives?

Sales: Business market assessment and related risks in sales, marketing and business development.
Do you have a well-defined process for collecting and analyzing market                                    intelligence for potential growth opportunities?
 Do you gather customer requirements and measure customer satisfaction?

Operations: Growth and operations strategies in the areas of manufacturing, R&D, distribution and business services.
Do you have a written strategy for continuous improvement?
 Have you identified scalability issues of existing resources?

Finance: Your overall financial health in terms of finance, IT, risk management and capital raising.
Do you include in your financial reports an analysis of contribution margins for                      each of  your business segments?
 Does your finance team meet regularly with other departments to understand                        their needs?

Having procedures and policies in written form and shared with employees is another important step. Working horizontally in a collaborative manner will bring you great results. The era of silos is the thing of the past and letting each department run their own show will hurt your business. Starting with a benchmark assessment around best practices is a good start. Focusing on continuous improvements and empowering your employees to find efficiencies and drop anything that is not a value add to the customer will affect your bottom line in a positive way.

My book “Stop Compromising” has its own chapter on this topic and includes a benchmark assessment around the four business elements

Let me know what has worked for you in working across departments and in leading with a collaborative style! Did you see a direct result on your bottom line?

How to Create Value

Create ValueCreating and building value for your business is something you want to bring up high on your agenda and at an early stage of your business! Of course, but…“generating value is one of the most misunderstood tools of innovation” according to Fast Company. Why is that?

It may well be that it’s a misunderstood concept. So how do we define value creation? It’s aiming towards best practices with an ongoing focus on continuous improvement. Value creation is something you create both internally and externally with a heavy focus on customer services.

We also know that value creation directly correlates with the future valuation of the business. The external customer focus, something that a business owner relates to, is a necessity if you want to stay ahead of competition. However, the internal focus on value creation often falls short to the detriment of the future worth of the business.
So again, why is not more emphasis put into this part of running a business? In my experience, the CEO or business owner fails to make the time to work ON the business on a regular basis. Another reason may be that you don’t have enough resources. Maybe you are managing instead of leading and are running out of time. We also know, just like with any new technology or software, you have to invest in an upfront effort to plan and execute accordingly.

Improving organizational capabilities is an intangible aspect of value building. This activity examines its own leadership, talent, accountability, collaboration, speed, mindset and learning. It is a longer term view and effort. Getting your ducks lined up just before you are ready to sell, or transfer the business over to a family member, is going to be too late. Value creation happens over time and is continuous.

Let me share with you a big picture view and a starting point in how to address the Value Creation Process and how you might begin the process. Start with these three disciplines:

1) Operational Excellence
a. Efficiency
b. Streamline Operations
c. Supply Chain Management

2) Product & Services Oriented Leadership
a. Strong marketing and innovation
b. Dynamic Markets
c. Development – short time to market with high margins

3) Customer Intimacy
a. Exceed Customer Expectations
b. Tailor Products and Services
c. Deliver on time

Behind the three disciplines listed above are no doubt a lot of details. Let’s assume you have focused on customer intimacy (3) and it is well established. If not, create a benchmark or baseline around these activities and set a new standard so you remain competitive. Operational excellence (1) and leadership (2) is where many companies fall short. The art of business is to balance both external and internal value creation over time. Planning these activities is essential and will take some time and effort, however, no matter what your next stage, it will be worth your while.

I know as the leader of your company your demands are never ending. Begin your process one step at a time, just like writing a book, one chapter at a time. Begin to identify the low hanging fruit, something that is easy to fix and has the most positive outcome. Maybe it is shortening the number of phone rings for a receptionists. Achievable with immediate positive outcome for you, the employees as well as the client or vendor.

If you find your business experiencing a reduction in market share or have difficulty in keeping costs down and you are doing it all alone, consider an outside group of advisors by establishing an Advisory Board. More private companies are investing in creating an Advisory Board to help them with their strategic intent and guidance in how to plan and implement such goals.

I hope this is a good first step for you. Begin to work ON the business for at least 4 hours a week (in one block) and things will begin to happen. I will be speaking on the topic of Value Creation and Finding the Right Advisors in the next two weeks. You are more than welcome to attend.

My next blog will be on “Working Horizontally” discussing how to aim for organizational collaboration addressing the first discipline of this blog. If you want to receive these blogs directly, please click the button on Follow Rudi’s Blog.

Make comments on this blog or get in touch with me with any ideas or thoughts. You can find my contact information on my new website Stop-Compromising.

With gratitude, Rudi

Improve Your Profitability

Is Profitability on your Radar for 2016?  Improving YOUR bottom line is near and dear to us at Next Stage Solutions. Bragging is not our thing, yet we are very proud of our accomplishments over the years.

Next Stage Solutions professionals work with CEOs who want to increase and optimize the profitability of their existing and potential operations.

Our strategies in finance and operations generally have improved the bottom line by 30% or more in our assignments.

As experts in finance and operations we recognize improvements, which can be readily achieved.

Examples:

  • We increased the use of an existing business processing system from 35% to 75%. The resulting automation and efficiency enabled our client to reallocate two full time employees to pressing needs in the organization.
  • We implemented a monthly forecast process, which resulted in a reduction of backorders, increased customer satisfaction, and eliminated unnecessary expediting costs.  This execution resulted in an immediate increase in EBITDA, while providing much more accurate forecasts.
  • We matched our clients’ workforce with the appropriate Workers’ Comp Insurance and negotiated a 33% annual reduction in premiums.

In all three examples we greatly exceeded our clients’ expectations.

What is your focus for 2016? If profit optimization is on your radar, contact me. I will be happy to share more examples with you to consider and as always, to start a conversation.

Rudi Scheiber-Kurtz, CEO of Next Stage Solutions, Inc. | 617 – 449 – 7728