Archive for 2012

Can You Lower Your Sales Goal During The Year?

Tuesday, July 10th, 2012

The meeting was moving along well until the topic of the annual sales target came up.

The leadership team wanted to lower it to a point significantly below the previous year’s actual results. They believed that the arguments for doing so were logical and made good business sense.

• Actual performance at the end of the first quarter was well behind target.

• Research, admittedly informal, revealed that sales producers made a limited contribution in their first year with the organization. Things improved in the second year. But it took 3 years for them to produce sales at a rate which would keep the organization at the level of the previous year.

• Because of growth, almost half of those responsible for producing the sales were in their first year with the organization.

• There had been a number of large non-recurring sales in the previous 2 years. And while it was reasonable to hope there might be some this year, it seemed unwise to plan on them.

Some of those at the meeting were shocked. After all, this was only the end of the first quarter.

The target was set a few short months ago. The leadership team believed it was possible then. How could they argue it was impossible now!

Then the view was expressed that companies couldn’t (or didn’t) change their budgets once the year started.

We hear this quite often and my response is usually “Who says they can’t”? There’s no external authority that says it’s not allowed.

Publicly traded companies regularly revise their budgets during the year (ask any RIM shareholder). They call the new set of estimates a forecast.

Why can’t privately owned companies do the same? What happens if, for example, it becomes apparent that the company can or will exceed its budget? There isn’t a leadership team I know that won’t revise upwards.

The challenge is when it comes to a downward revision. Our first response is that it’s giving up, quitting, losing. But that’s an emotional reaction.

What happens, for example, if the economy tanks; or a competitor introduces a new technology; or people with needed skills can’t be found; or financing for additional resources couldn’t be obtained?

All of these events can be demonstrated to have happened. They’re not a matter of opinion, they’re facts. To cling to a budget that was developed either before any of those things occurred or which assumed their impact would not be as great as it was seems illogical.

I mentioned some of the facts in this case earlier. Here are some others.

• Every member of the current leadership team was new to their role when the budget was developed.

• No analysis of the drivers of the organization’s previous results had been done in recent times. So none was available to help or inform the new team. 

• The previous leadership team had been in place for only a year and had other challenges to deal with.

• The handover period between the teams from was relatively short.

After some heated discussion the budget was lowered.

If you enjoyed this post you’ll also enjoy Where Do The People Fit?

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The More Things Change……

Thursday, July 5th, 2012

….the more they stay the same. I was reminded of that old adage twice last week.

The first time was when I caught myself saying something my father used to say. The second was when I read a blog post about growth strategies.

And the same thought occurred to me on both occasions. My father’s saying and the piece on growth strategies are as true today as they were when I first encountered them.

My dad, a grizzled fisherman and survivor of the Atlantic convoys in World War 2, had a number of sayings. One of his favourites was “Rules are for the guidance of wise men and the blind obedience of fools”.

Substitute “people” for “men” and I believe it’s every bit as wise and useful today as it was in his day. I use it all the time – ask anyone who works with me.

The piece on growth strategies talked about Ansoff’s 3 intensive growth strategies – which were first published in 1951. They are:

  • Market penetration – when a company increases its share of its existing markets by – getting current  users  to buy more; users of competitive products to switch; and non-users to start purchasing.
  • Market development – selling existing products into new markets. There are 3 ways to do that – identify new groups (markets) in the current geographic area; use new distribution channels to reach more users also located in the current area; or start selling in new locations e.g. into the U.S., Europe or Asia.
  • Product development – developing new products or services for existing markets. A company could add new features to existing products; offer different versions at different price points – silver, gold or platinum variants; or introducing a new technology which offers more benefits to the user.

Diversification, which was also included in the article or blog post, is a fourth strategy which, to be fair, was added later.

A company can use its core business strengths to diversify in 3 ways. Add new products which are related in some way to its existing ones. Or, add new services, unrelated to its current offering but which appeal to its current customers. Finally, it can move (perhaps by acquisition) into a new business which is unrelated to what it has been doing.

While they were first defined and described 61 years ago, these strategies have been around for much longer than that. And yet, despite what we hear and read about none of the old rules being useful in this age of rapid change and uncertainty, they are still being used.

For example, could Apple’s (and Android’s) gains at Blackberry’s expense have been the result of a penetration strategy; was Facebook’s acquisition of Instagram a product development or diversification play?

Are these strategies being used in the same industries and in the same way as they were 60 years ago? Clearly the answer is no. But that doesn’t mean they can’t be adapted and applied today.

If rules are used for guidance by wise people then some things, for instance growth strategies, can stay the same, even while other things change.

 

If you enjoyed this post you’ll also enjoy 5 Tips for Fast Growth in a Slow Economy.

Why Would Anyone Hire A Management Consultant? – Part 2

Tuesday, June 26th, 2012

In my last post I talked about how owners of companies can find themselves faced with situations they haven’t encountered before – and not realize what’s happening.

After all, that happens in our personal lives. Remember the first time you fell in love?

We’re caught up in the symptoms – the tune playing endlessly in our head, the face we can’t get out of our mind and the grin we can’t wipe off, no matter what else is going on. How many of us simply didn’t understand what was happening? I don’t know about the ladies but believe me, none of the men did!

Sometimes it takes someone who has already had the experience, to alert us to the situation.

Think for a moment about a company with between $3 and $5 million in annual revenues and which has been in business for anything from 5 to 20 years. The owner is successful by any measure. They’ve grown their businesses to a respectable size, provided employment for others and beaten the odds of failure.

But then things start happening that many of them have never encountered before.

I’m So Frustrated

For example, in companies of this size the owners are typically directly involved in everything that happens. That may work well for a time, but eventually either the volume or the complexity of the business reaches a point at which no human being can sustain the effort required.

That’s when we hear them say things like “I’m just so frustrated!” When we ask why, typical responses are “I’m working 16 hours a day, 6 or 7 days a week – but sales aren’t going up.” Or he or she often feels that they’re not paid enough for hours they work. They only want to work 4 days a week in the summer and take more vacations with their families.

Because they’ve been successful up to this point, they believe they can figure it out for themselves – overlooking the fact that this is a situation they haven’t encountered before.

Some may try developing (or hiring) supervisors or managers to take work off their shoulders. But it isn’t successful and they feel it isn’t worth trying again.

But a consultant, who has had experience delegating and working with a management team, knows that it isn’t something that comes easily or naturally to most people. He or she can help the owner select competent team members and get them working together effectively.

A Victim of Their Own Success

Business owners can also be a victim of their own success. For example, adding a new distributor can result in sales growing so quickly the company can’t cope.

This leads to a dramatic increase in customer complaints – about customer service, quality, delivery or all three. And the owner is caught in an endless cycle of dealing with urgent, day-to-day issues and juggling operational balls.

An experienced consultant can see beyond the symptoms, help the business owner break out of the cycle and put processes in place to maintain control of key functions.

I don’t want to take the romantic analogy too far and suggest that a management consultant could be a business owner’s best man (or woman). Even I realize that may be stretching things a bit!

But there are times when getting an objective, third party opinion could be the best thing to do – no matter how difficult or unlikely a solution it seems.

 
If you enjoyed this post you’ll also enjoy 3 Reasons Why Consulting Assignments Fail Part 1 and Part 2
 

 

Why Would Anyone Hire A Management Consultant?

Tuesday, June 19th, 2012

 I gave a presentation last week on the topic – “Why would anyone hire a management consultant?”

I think the topic the organizer actually had in mind was – why would anyone in their right mind hire a management consultant? But they were too polite to be that specific.

Many members of the group I talked to know business owners whose companies have between $3 and $5 million in annual revenues and who have been in business for anything from 5 to 20 years.

So, I customized the presentation to that situation, which wasn’t difficult, because owners of businesses like that often face an intriguing situation.

They’re successful by any measure. They’ve grown their businesses to a respectable size, provided employment for others and soundly beaten the odds of failure (80% of new businesses don’t make it beyond the second year).

But, at around $3 to $5 million, something changes and annual sales stop growing. The exact point at which it happens varies depending on a number of things e.g. the industry – but it does inevitably happen. It’s not that sales go into free fall, they just stay flat or go up one year and down the next.

The owners’ first reaction is to focus on their sales team. They may, for example, try to get their salespeople to make more calls or they even make personnel changes. They may also try some marketing – by which they generally mean promotional – programs.

Most of the business owners have never encountered this situation before. And because they’ve always been successful up to this point, they believe they can figure it out for themselves.

However, life is full of situations we’ve never experienced before. The analogy I used in my presentation was falling in love for the first time.

Lots of us (particularly males) don’t understand what’s happened. We focus on the symptoms – the churning stomach, the same tune playing endlessly in our head, the picture of the other person we can’t get out of our mind and the grin that’s fixed firmly to our face no matter what else is going on around us.

It may take a good friend, who is already in a long-term relationship, to alert us to the situation – we’ve finally met the “one”.

An experienced management consultant can play the same role for a business owner. An objective third party, they use the symptoms to find the root cause of the situation.

For example, we had a client in an industry in the early stages of consolidation. The bigger players were beginning to buy up the smaller ones, changing several aspects of how the game was being played. We spotted that because we’d seen it before – unlike our client.

I’ll tell you about a couple of other situations when hiring a management consultant will help in my next post…….
 

How Redesigning Your Website Can Challenge Your Business Model

Monday, June 11th, 2012

 Marie Wiese is founder of Marketing CoPilot and the author of the eBook, “Quality Visitors. Quality Leads.” Marketing CoPilot helps business owners turn their website into their best sales tool.

So you have decided to redo your website. Good idea. Today’s website is more than a corporate brochure; it’s your frontline sales team.

You have selected a marketing consultant to help you determine strategy and messaging.

You have hired a designer who starts to build your new site and suddenly you grind to a halt.

What happens when you go to add to content?

Suddenly you realize that the way you have been describing your product or service doesn’t work on the web. Suddenly you realize:

– There is no clarity around your offer
– You have no differentiation in what you are selling or describing to prospects
– You don’t have a compelling story to tell in social media

Why does developing a compelling web presence for your business suddenly challenge your business model?

Here is a real life story of one business owner and what changed when it came time to articulate their business on the web.

In December of 2011, Marketing CoPilot launched a new web presence for SPM Learning to help drive lead generation and establish a web presence to find customers and nurture existing relationships. The team at SPM Learning agreed early in the process that in the game of selling learning solutions to large corporate customers, a website and web presence needs to:

  1. Clearly state your value proposition in eight seconds or less on the home page.
  2. Be compelling enough for someone to take a next action on the site.
  3. Have content, messaging and compelling actions on the site that lead to more than a visitor passively perusing course listings.

In other words, the process of selling learning courses needed to change and so did the story.

SPM Learning was struggling with an issue that many business owners face when presenting their companies online. In an era of customers who want content that is “all about me”; are demanding relevant content online to make a buying decision; and, are well into the buying process long before you hear from them, just posting product information is no longer good enough.

Here’s a good test:

– Go online and search for “leadership training”
– Review the first five organic search results you get (skip the Adwords)
– Look at what people are actually selling in the top five results

In my top five search results, I get companies selling commoditized training courses. There is no differentiation amongst them and likely they are competing on price.

For SPM Learning, they realized quickly they did not want to be in this category, yet the content they were providing for the website, and the way they were articulating their business, was putting them there.

Upon launch of the new website (www.spmlearning.com), we were able to see in the first 30 days using Google Analytics, where people were landing, what they were reading and what they doing on the site.

And guess what?

They were not looking at course listings. We launched a blog strategy for SPM Learning to change the conversation and drive traffic to the site based on engagement around “learning solutions” and the complete process of leadership training for employees, not just buying courses. The click through rates that SPM Learning enjoys on their blog activity and email marketing has improved by more than 30% and they have built better engagement around the topics of learning solutions. This helped position their company as more than course listings.

Before you hire a consultant, talk to web developers or write a line of copy, ask yourself these questions:

  1. What is the most important action I want someone to take on my website?
  2. How will I help them take that action?
  3. How will I articulate the “offer” and what they can buy from me?
  4. How much information can I share to guide them in the process?
  5. Could my current business model and what I am selling translate on the web to let prospects “self-serve”?

Your website is one the most important business tools you have today. Use it wisely for your business and it will pay back in spades.

You can contact Marie Wiese at 416-436-7931 or marie@marketingcopilot.com

5 Tips for Fast Growth in a Slow Economy

Wednesday, April 25th, 2012

Inc. magazine is packed full of good advice for business owners of all sizes.

An example of the great articles I’ve read in it over the last 10 years is Fast Growth In A Slow Economy from their latest (April) issue.

It focuses on 5 strategies which have transformed the business of the owners who adopted them.

Here they are.

1.    Drop your worst customers

Inc.’s emphasis is on customers who don’t pay on time, but the definition can be broadened.

We include customers who want non-standard products or services; always want a deal on price; leave it to the last minute to order; or are abusive to employees. Some bad customers do all of these

I was interviewed recently by Diane Buckner, of the Dragon’s Den, for her post, Customer from Hell? Don’t be afraid to fire them.  She comes to the same conclusion.

Get rid of the customers who drain your lifeblood.

2.    Get help from your customers

Email or on-line surveys are inexpensive ways to get insight into customers’ thinking and challenges.

In the Inc. article, Barrett Distribution, reported a 30% response rate to their survey. The fact that 56 questions could be completed in 12 minutes helped.

Barrett surveyed half of their customers immediately and half 6 months later. That allowed for quick reaction to the feedback. One opportunity they uncovered meant business with one customer quadrupled – providing, by itself, a decent ROI on the survey.

3.    Act locally, not globally

Pursuing companies with a national brand can appear to be very lucrative. However, it’s easy to find yourself competing hard just to get their attention.

The experience of Door Number 3, an ad agency, can be typical. They pursued national accounts and won fewer and fewer of them. When they examined their business, their best accounts were located in their own area.

It’s easier to build relationships with decision makers in smaller, local accounts. Travel costs are less and you can spend more time with them, getting to really understand their business.

Finally, local companies talk amongst themselves and so there’s more word of mouth promotion and referrals from them.

4.    Treat everyone as a potential employee

Virtual organizations offer many advantages (we run one at ProfitPATH). So I can relate to the consulting company in the Inc. article. The owner, Tom Koulopoulos, needed access to specialist skills to complete bids on RFPs his company had a high odds of winning.

For a number of reasons, he couldn’t add the people he needed as full-time employees. So he forged partnerships with them, exchanging a share of the contract value if they won the RFP.

Since Koulopoulos’ company was the vendor he had to find people whose values were similar to his. The key to his success his use of his network, in many cases people he had known for many years.

5.    Get small to get big (think niche)

The owner of Medisys Health Communications’ breakthrough came when she read Blue Ocean Strategy

She realized that they had to stop trying to be all things to all people, competing with everyone else doing the same, find a niche that no one inhabited – and then own it.

So they focused on something they’d been giving away free for years and ended up collaborating with her previous competitors – doing something none of them can do.

If you enjoyed this post you’ll like 4 Things Every Business Owner Must Think About

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Things Really Good Consultants Say

Thursday, April 5th, 2012

I am so excited!

There’s an absolutely fabulous article on the Inc. magazine web site. Okay, everything they publish is good. But this article is way up there.

The point the author makes is that consultants who get results and deliver a great service say certain things while they are pitching for business. Business owners who listen for them can dramatically reduce their risk when selecting or hiring a consultant.

Why am I excited? Because we say these things all the time – we really do!

Here are my favourites.

1.    “I don’t know.” Why would you say anything else? The client is going to figure out that  you don’t know what you’re talking about sooner or later.

And we’re not in business to learn at a client’s expense.

Consultants should only offer services in areas with which they’re intimately familiar (no I won’t use the “expert” word, I dislike it intensely). That’s because they’ve spent a long time acquiring skill and experience in the topic. And they’re still learning and staying up to date in the field.

Our field was originally strategy development and execution. To that we’ve recently added succession planning

2.    “You can do that on your own.” I’m going to meet a client later today and tell him just that. Why? Because he has the expertise to complete some of the project steps in house.

I appreciate it when the people and companies I deal with try to save me money. Why wouldn’t our clients feel the same? And the time that we save by taking this approach we spend looking for things that truly only we can do.

It’s also our policy to bill out at the rate of the person who does the work. So if we use support staff to complete a task, we bill it at their rate, not mine.

Yes I’m a Scotsman but I like to live up to my name as the “canny Scotsman”.

3.    “I still don’t understand the requirements.” I’ll risk appearing slow to understand at the front end of a project to avoid risking missed expectations at the back end.

Despite the number of years I’ve been in business it never ceases to amaze me how quickly and easily misunderstandings occur. One bad assumption about what was meant can lead to great frustration – and damage to our reputation.

So, if there’s any room for misinterpretation it’s better to ask a clarifying question.

4.    “We’ll want to come back later to see how things turned out.” The challenge for our profession is that the consulting assignment could be finishing just as the real work is starting.

Call me nosey but, while some consultants will walk away at the end of the project, I want to know if the work we did produced results. That’s as important for us as it is for our clients.

If we’re not getting results we won’t be in business long. And I’d like a lot of warning and an opportunity to do something about it before that happens.

We offer review meetings as an option for our strategy development and strategy execution services. Even if the client opts not to use us to structure and facilitate those meetings I’ll often ask if I can sit in for part of one and listen.

The article which caused my state of advanced excitement is called “8 Things Great Consultants Say” and it’s written by Jeff Haden.

I think he’s really hit on 8, if not the 8, differentiating factors of really effective consultants.

So what do you think? Want to share some experiences?

If you enjoyed this post you’ll like Why You Need A Consultant With Hands-On Experience

Click here and automatically receive our latest blog posts

Things Really Good Consultants Say

I am so excited!

There’s an absolutely fabulous article on the Inc. magazine web site. Okay, everything they publish is good. But this article is way up there.

The point the author makes is that consultants who get results and deliver a great service say certain things while they are pitching for business. Business owners who listen for them can dramatically reduce their risk when selecting or hiring a consultant.

Why am I excited? Because we say these things all the time – we really do!

Here are my favourites.

1.    “I don’t know.” Why would you say anything else? The client is going to figure out that you don’t know what you’re talking about sooner or later.

And we’re not in business to learn at a client’s expense.

Consultants should only offer services in areas with which they’re intimately familiar (no I won’t use the “expert” word, I dislike it intensely). That’s because they’ve spent a long time acquiring skill and experience in the topic. And they’re still learning and staying up to date in the field.

Our field was originally strategy development and execution. To that we’ve recently added succession planning

2.    “You can do that on your own.” I’m going to meet a client later today and tell him just that. Why? Because he has the expertise to complete some of the project steps in house.

I appreciate it when the people and companies I deal with try to save me money. Why wouldn’t our clients feel the same? And the time that we save by taking this approach we spend looking for things that truly only we can do.

It’s also our policy to bill out at the rate of the person who does the work. So if we use support staff to complete a task, we bill it at their rate, not mine.

Yes I’m a Scotsman but I like to live up to my name as the “canny Scotsman”.

3.    “I still don’t understand the requirements.” I’ll risk appearing slow to understand at the front end of a project to avoid risking missed expectations at the back end.

Despite the number of years I’ve been in business it never ceases to amaze me how quickly and easily misunderstandings occur. One bad assumption about what was meant can lead to great frustration – and damage to our reputation.

So, if there’s any room for misinterpretation it’s better to ask a clarifying question.

4.    “We’ll want to come back later to see how things turned out.” The challenge for our profession is that the consulting assignment could be finishing just as the real work is starting.

Call me nosey but, while some consultants will walk away at the end of the project, I want to know if the work we did produced results. That’s as important for us as it is for our clients.

If we’re not getting results we won’t be in business long. And I’d like a lot of warning and an opportunity to do something about it before that happens.

We offer review meetings as an option for our strategy development and strategy execution services. Even if the client opts not to use us to structure and facilitate those meetings I’ll often ask if I can sit in for part of one and listen.

The article which caused my state of advanced excitement is called “8 Things Great Consultants Say” and it’s written by Jeff Haden.

I think he’s really hit on 8 (if not the 8) differentiating factors of really effective consultants.

So what do you think? Want to share some experiences?

Strategy, Productive Paranoia and Boiling Frogs

Tuesday, March 27th, 2012

A friend of mine, who is a social media strategist, talked in a recent blog post about what happens when companies hang on to a strategy for too long.

Jeremy Miller believes that they either:

  • Never live up to their potential (even if they make a profit and do good work).
  • Or they stagnate and decline.

The reason they hang on to their strategy, he says, is because it’s hard for owners and their teams to accept that they need to change when things – top and bottom line – are going well.

I know that’s true from my experience over the last 10 years at ProfitPATH – and also from  my corporate days, where I experienced it first-hand.

Jeremy mentions that, in the book The Lean Startup, Eric Ries argues that a business must constantly evaluate whether to persevere with their strategy or “pivot” to a new one.

But how do you know when to pivot or change a strategy?

I think the need to change (and therefore the timing) is driven by events. I gave some examples of them in early February 3 Times You May Need To Change Your Strategy

But, if it’s driven by events, is waiting for them to happen leaving things too late? Yes, possibly – maybe even probably.

So how do you anticipate events before they occur?

Ries’ theme of constant evaluation is echoed by Jim Collins, in his book Great By Choice. Collins’ research shows that one of the things the leaders of successful businesses do is instill a “productive paranoia” in their culture. They and their teams are always thinking about and discussing things that could change in their world – and how those changes would affect them.

This type of paranoia is productive because it gives successful companies the opportunity to consider their response – as opposed to reaction – to the events beyond their direct control.

But to be productively paranoid the owner and her team must refuse to succumb to 2 temptations.

The first is to simply be paranoid – in the conventional sense. Owners who do that are in a constant state of (over) reaction and are likely to change strategies too soon and too often.

Remember, there’s a world of difference between a response and a reaction.

The second is the temptation to become complacent. It is hard enough to accept the need for change when a company is successful. And the longer the success continues the more likely it will produce feelings of security, even invincibility and, that least attractive and most destructive of human characteristics – arrogance.

So what’s an owner to do?

No owner sets out to become complacent – that’s not the issue.

The issue is that it can be hard to recognize a problem when you’re right in the middle of it. In fact they even have a name for that.

It’s called the boiling frog syndrome.

So when someone tries to tell you something about your business which you think is wrong, misinformed, or even ridiculous, take a moment to do the “Man (or Woman)  from Mars” test before you dismiss them out of hand.

Don’t know what the “Man (or Woman) from Mars” test is? Call me and I’ll be happy to tell you for the price of a cup of coffee.

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Do You Know What You Don’t Know?

Friday, March 16th, 2012

It’s really important to know what you don’t know.

But it’s even more important to be able to admit it to yourself.

When I started my company almost 10 years ago I made a list of everything the consultants I’d hired in my previous life had done which annoyed me.

ProfitPATH’s values statement is to do the opposite of everything that is on that list.

Something that really annoyed me was….

….having a consultant tell me that they could do something when they knew there was someone else out there who could do it better.

It meant that I paid them to learn, or perfect, a new skill or technique. Then they inflicted a sub-standard (compared to the more knowledgeable or experienced third party) performance on my company.

In the best case they wasted time, slowing me down while they got up to speed. Meaning it took me longer to achieve the results for which I was accountable.

In the worst case they didn’t master the topic or process well and that adversely affected our performance.

I felt so strongly about this type of behaviour that it was near the top of my “hate” list.

Not doing it became one of our primary values. One, I know, that has cost us revenue over the years. But I’m comfortable with that – we didn’t get into consulting for the short term and we’re not in it for the short term now.

But what happens when…

….a business owner, a potential client, knows what they don’t know – but won’t admit it to themselves or anyone else?

One of the things I’ve learned, now that we’re the consultants, is that this situation does arise – in companies of all sizes.

In my experience there are 2 possible outcomes.

The first is that the owner will go ahead and make decisions or take the company into areas that they’re not equipped to deal with. And, sooner or later, they will make a mistake.

How wide ranging the impact will be depends on a number of factors.
In the best case it might mean a minor setback. In the worst case it could seriously affect the company’s ability to operate and the livelihood of the employees.

The second possible outcome is that, rather than seek out or listen to advice, the owner will do nothing. It could be argued that this is the better alternative.

However, it’s not, it’s also a mistake. It means avoiding decisions, or putting a halt to initiatives, which could have benefited the company and the employees. And doing it knowing there are people out there who have the skill, knowledge and experience required to be successful.

If the owner continues to take this approach she or he could be the factor that limits the growth of their own company.

The moral of the tale is…..

My Mum used to say that 2 wrongs don’t make a right.

Here we have 2 different parties – consultant and business owners – doing the same thing wrong.

The result, the outcome will be the same. And it won’t be the best one for the company.

That’s just not right.

It Starts With A “Corny” Story

Friday, March 9th, 2012

Ever been in a situation when you see or hear something – and then a few days later you see or hear a variation of it?

That happened to me this week.

It started when I read a blog post called “What You Can Control in a Tough Business Climate” by Karie Willyerd.

A “Corny” Story

She describes how, as communism came to an end in Romania, bureaucratic decision making resulted in a cornfield being divided amongst local farmers.

Each farmer was given 2 rows.

They didn’t – or wouldn’t – collaborate so the results of each individual’s work could be easily compared with those of his or her contemporaries.

When the following summer came, the quality of corn which grew varied widely. Some rows produced knee-high, healthy plants. Others produced shin-high plants which were sad to see.

Willyerd’s point is that everyone had been given the same seed and fertilizer and so the difference in results was caused by the people and the decisions they made.

And now to business….

Next she describes a study she conducted with some colleagues.

The goal was to determine if simply executing a business strategy, regardless of what it is, would make a difference to the value of a company.

They focused on the 4 variables they believe are the foundations for the ability to execute. And they found that improving any of them produced an increase in the company’s value.

But they found that 2 of them – aligning goals throughout the organization, top to bottom and across; and identifying and treating high performers differently than low performers – produced the greatest increase.

Putting it together

Willyerd believes that in business, as in farming, there are many factors which can’t be controlled – e.g. drought and the performance of the economy.

So the key to success is to focus on those that can be controlled.
A company’s ability to execute its strategy is definitely one of those.

Two other controllable factors are:

  • Whether the owners, and their management teams, communicate explicitly with every member of their team and align them behind the company’s goals (derived from the strategy). If they don’t parts of the company may meet the business owner’s expectations, but others won’t.
  • People are the seeds of the growth, and ultimately the value, of a company. Owners should, therefore, surround them with resources and nurture them with benefits – particularly the high performers.

The Variation

As you know if you saw my last post, I’m reading Jim Collins’ book Great by Choice. In it he compares pairs of companies in 7 different industries to determine why one did well in uncertainty, even chaos, while the other did not.

Collins’ main theme is that the successful companies focused exclusively on the things they could control. And they kept on doing it no matter what was happening to the things they couldn’t control.

The final chapter talks about the role of luck – and it’s not what you might think (read the book)! In the summary, Collins talks about the importance of finding great people and building deep and enduring relationships with them as a means of creating good luck.

Final thought

You could argue that focusing on what can be controlled and getting good people aligned behind the goals is common sense. But, while Willyerd’s study confirms that they do produce results, Collins’ study demonstrates that companies routinely ignore them.

Where’s the sense in that?

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