Archive for November, 2010

5 Reasons Why I Love Execution

Thursday, November 25th, 2010

I think I may be in love.

I’m reading Larry Bossidy and Ram Charan’s book “Execution – The Discipline of Getting Things Done”. Although I’m only one third of the way through it, I believe it’s the most rational, practical book about strategy that I’ve read in years.

Why do I think that? Well, for a start I buy into their fundamental premises. Here are 5 that I think are particularly important:

1. The difference between a company and its competitors is often the ability to execute.

All business owners have access to the same business books, webinars, training programs, coaches and consultants etc. Why then do 2 companies in the same industry, operating in the same markets and with similar strategies, produce different results?

The only remaining variable is execution. Which doesn’t mean the market leader is executing well – they’re just executing better than the other players. As an old friend used to say – “In the kingdom of the blind the one-eyed man is king”.

Some of you may argue that we haven’t considered culture or leadership. In that case, read on.

2. Execution is the biggest issue facing business today – and nobody has explained it satisfactorily.

Bossidy and Charan make several great points. Over the years, a great deal of thought has been given to strategy development – the result of which has been thousands of books and articles. You can hire a strategy consulting firm (including mine) who will guide you through the various “models”. The same is true – or rapidly becoming true – of leadership development and culture.

But how much thought has been given to how to execute? Not much. (Although, I have to say, our firm has always emphasised it). Perhaps execution has been neglected because it’s traditionally been confused with tactics. But it’s not – execution is integral to strategy.

You could argue that the field of project management is concerned with execution. But is it? Or is it concerned with how to manage the projects that someone else decided have to be executed?

3. Execution is the major job of the business leader. The leader who executes puts in place a culture and processes for executing.

If execution is the biggest issue in business today it had better be the #1 job of every business owner. But there are a couple of bear traps here.

Entrepreneurs have to avoid the temptation to execute or do everything by themselves. They also have to avoid micro-managing or being too hands-on. If the owners don’t do that they lose sight of the forest and only see trees. They stop being strategic and get lost in tactics.

The authors say the most effective approach is “active involvement”. That means getting things done through people. But having such a detailed knowledge of how the business makes money that an owner can constantly probe and ask the right questions – leading people to develop the right solutions.

The owner/leader has to find the correct balance if she is to lead by example and make execution part of the culture.

4. Execution is a discipline, a specific set of behaviours and techniques that, if mastered, will give you a competitive advantage.

The “easy” parts of the statement are that there are specific techniques, they can be mastered and, if you pull that off, you will gain competitive advantage.

The more difficult part is that there are a specific set of behaviours to be mastered also. Human nature being what it is, changing behaviour – even our own – usually takes far more effort than learning a technique. But perhaps that’s where the discipline is required.

5. Execution includes mechanisms for changing assumptions as the environment changes.

This is my personal favourite. Many of the owners and management teams we work with get the intellectual concept of “no fault, no blame” when following up on plans and finding they haven’t worked quite as intended.

But even they find it hard to put guilt and value judgements aside when targets are missed because assumptions were “wrong”. The authors’ stress need for “realism” in running a business. Realistically then, has anyone ever been able to accurately predict the future? Let’s put the fault, guilt, and blame away for good.

In case you hadn’t noticed, I’m excited. There is just so much common sense in this book I’m looking forward to reading the rest of it. I should have read it years ago………but there goes the guilt thing again!

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Give Yourself A Chance in 2011

Thursday, November 18th, 2010

Last week we sent a survey to over 600 people in our database and asked for their input on 6 things that we think may impact their performance in 2011. They were the Canadian economy; the US/global economy; changes taking place in their industry; competitors’ actions; finding people with the right skills and experience; and the ability to secure financing.

We also asked the respondents if they expected their profits to increase in 2011. Over half of them said yes. Their fairly positive outlook is similar to, but more cautious than, the mood in recent survey by accountants PriceWaterhouseCoopers (PwC)[1]

When we asked the participants how they thought they will do against their goals and expectations for 2010, half said they would miss them.

We closed the survey by asking 2 questions about a key internal process for growing companies – business planning.

About a third of respondents told us they finish planning 2 or more months before the new fiscal year begins. Another 30% complete their planning during the month before the fiscal year begins. The remainder only complete their planning during the first month of the new year, or later.

Then we asked the participants if they used a structured planning process, an unstructured process, or no process at all.  Almost 40% said that they have a structured process, while only around 15% have no process at all. The remainder said they have an informal process.

The answers to the last 2 questions could be influenced by the size of some of the companies responding to our survey. However, it is tempting to speculate that the companies (every participant works for a different company and 75% of the respondents said they were the owner of the company) who expect to miss their 2010 goals are the same ones who leave planning late and have either an informal process or no planning process at all.

But a sample of individual responses showed that many companies who will miss their 2010 goals say they have a structured process and finish their planning before the start of the fiscal year.

Clearly this raises some questions, such as;

  • How well did the companies gather information about the external environment?
  • How realistic were they about their strengths and weaknesses and the quantity and quality of the resources they had?
  • Were the assumptions which formed the basis for their goals/ expectations/forecasts overly optimistic?
  • How well did they actually execute on their plans?
  • Is some combination of these 4 at work?

And if the companies which have a structured process and plan well in advance of a new fiscal year still miss their goals – what chance do those with an informal process who leave planning to the last minute have?

I wonder how many of those companies will actually increase their profits in 2011!

Give yourself a chance next year, download our 2011 Business Planning Checklist

If you want more information about the survey, or would like to participate in the next one, contact us at growprofits@profitpath.com


[1] “The new business as usual. The Business Insights Survey of Canadian Private Companies 2010” PriceWaterhouseCoopers

6 Tips for Getting Better Results in 2011.

Monday, November 8th, 2010

In a recent blog posting I wrote that business planning has started/is starting/should have started for 2011. Then the other day I came across these 6 tips which I pulled together at the end of 2008.

At that time, you may remember, there was a deluge of bad news pouring from the newspapers, Internet and TV all day, every day. Some forecasters were saying the economy would rally in late 2009, others were saying it would take years before we saw an improvement.

I made the point then that, when so much of what is going on around you seems out of control, it’s easy to stop focussing on the things that are under your control. So, since uncertainty is still with us, I thought it was worth freshening up the Tips.

Tip #1 – Remember that we have always had to deal with uncertainty when developing plans and strategies. It may be true that there is more uncertainty now than in the past. However, don’t forget that no one has ever been able to accurately predict the future with any degree of consistency.

Three ways to deal with uncertainty are – keep digging until you find the best information available before firming up assumptions; put flexibility into plans and strategies; and think through contingency plans (e.g. plan for the best, worst, and most likely outcomes and be ready to deal with all of them). A fourth technique is to review, and adjust, goals more frequently.

Tip #2 – Make sure that you actually implement your plans and strategies. According to an Ernst & Young survey, 66% of corporate strategy is never executed.

In our experience implementation is handled just as poorly in owner managed companies – which generally have fewer employees (who are often located in the same premises) and which have fewer departments and layers. All of which should make communication and coordination easier.

There are a number of reasons why strategy implementation fails and the remaining tips will help you avoid them.

Tip #3 – Develop detailed Action Plans for execution. Involve key people when figuring out your goals for 2011 – and they’ll buy into what has to be done.

Compare the goals with the current situation and gaps will appear. Then ask them what – specifically – has to be done to close the gaps, by whom and by when. The answers to those questions will form the basis of your Action Plans for 2011.

Tip #4 – Avoid attempting too much, for 2 reasons. Firstly, there may be a long list of things to be done to close the gaps and no company has the resources to attack them all. So, prioritize the things which have the most impact on your goals and focus on them. You can go back and tackle the others later.

Secondly, you want to stay flexible enough to respond to whatever happens.

Tip #5 – Commit enough resources to completing the priorities. Business owners are inclined to tackle too much at once. They also try to do everything in the minimum amount of time – while spending as little money as possible.

Think about the priorities this way. You’ve invested time identifying reasonable goals and figuring out what has to be done to reach them. That effort will be wasted unless you commit the resources required to complete those action plans.

Even if you are allocating too many resources, you’ll complete the job ahead of schedule. Who doesn’t feel good when that happens?

Tip #6 – Follow up regularly and in a structured way. There are also 2 reasons for doing this. First, because no one can accurately predict the future you have to make time to compare what you thought would happen with what has happened and adjust for reality.

Second, what could be more important than making sure you complete the action plans that will lead to achieving your goals? Not dealing with the day-to-day problems, which always seem to be “urgent”. Prevent them getting in the way of the “important” priorities by making time to review progress toward your goals once a quarter.

The odds are that you’ve heard each one of these tips before. But the reality is that a gap exists between hearing – even knowing – the right thing to do and actually doing it. That’s why 66% of the companies surveyed wasted their time.

Winners eliminate the gap.

How To Keep Control When You Work With Consultants

Wednesday, November 3rd, 2010

Marie Wiese at Marketing CoPilot wrote in her blog last week that CEO’s begrudge – even hate – spending money on marketing services or marketing consulting. She says that’s because marketing feels like a series of unconnected projects and tasks with vague un-measurable results.

We often encounter similar objections when we meet business owners. Some haven’t worked with strategy consultants and just don’t know what to expect. Even those who have are concerned that they are getting into a situation over which they have no control.

Consulting assignments have a reputation for expanding beyond their original scope and budget. Then there are the results – or apparent lack thereof. Entrepreneurs and business owners who, by nature, want to be in control find this hard to deal with.

But it doesn’t have to be this way. Start by asking for a written proposal which contains the following 5 sections:

1. Our Understanding of the Situation. Look for a detailed description of the situation you now face and the factors which created it. This section should echo your discussions with the consultants – and should be written from their notes of those discussions.

2. Scope of Work. This should contain a step by step explanation of how the consultants will help you deal with the Situation. Ask for the full assignment to be broken into steps and laid out in a table with 3 columns:

  • A description of exactly what will be done by the consultants in each step.
  • A clear statement of the deliverable or deliverables for each step.
  • The resources that both the client and the consultant must provide in order to secure the deliverable(s).

3. Schedule. This section contains the estimated time required to complete each step. The consultant may provide a range of times if they perceive risk, e.g. they have not been able to examine documents being provided by you. Insist, however, that the lowest and highest estimates of the hours required, and the factors which determine them, are clear.

The Schedule should include a proposed start date and may have a target date for completion.

4. Fees and Payment. Preparing the Scope enables the consultant to determine who – e.g. partner, senior consultant, or research associate – will do the work. Completing the Schedule enables a realistic estimate to be made of the time required. Applying the rate for the person doing the work to the hours required to complete it generates the fee for each step. This section should also contain the total cost of the assignment. Ask for it to be broken out by partner etc.

Travel costs – e.g. mileage, air fares – or other expenses should be shown separately. (Note some consultants bill their clients for the time they spend travelling, others do not.)

We always include the statement, at this point, that no additional costs of any type will be incurred without the client’s prior approval.

Usually taxes e.g. HST are excluded from fees.

Make sure the proposal is clear on how and when the consultant is to be paid. In most cases, we send our clients an invoice when we complete a step and request payment on presentation. In this way they are constantly in control of how much they are spending on us.

5. Termination. Insist that you have the right to terminate an assignment at any time. Clarify the financial terms attached to termination before the work begins.

We tell our clients that if, if the deliverable(s) for any step are not completed, they can terminate the project at the end of that step. In that event we simply expect to be paid for the work we have completed.

There is no reason why entrepreneurs and business owners should not be in control when they work with consultants. Getting a clear, specific, written proposal will get you off to a good start. We’ll talk about other ways to stay in control in future posts.

Most consultants just want to deliver results – and we don’t want to be hard to deal with.

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