Posts Tagged ‘management’

7 Ways to Hold Consultants Accountable Now

Tuesday, September 23rd, 2014

7 ways to hold consultants accountable nowMy wife will tell you I like giving other people advice.

That’s probably why I’m a management consultant.

But even consultants have to take some of their own advice – and change in order to grow.

For example, we must find a process for linking our compensation to our results in a meaningful way.

There’s no doubt this is hard to do. But that’s no excuse for refusing to try.

However, at the risk of making a huge understatement, it’s going to take time.

So, while we’re waiting, what can a business owner do to make sure the consultants they hire actually deliver results?

1. I talked about our own solution to linking compensation to results last year in a post called “Let’s Hold Consultants Responsible For Results”. It isn’t perfect, but it’s better than the traditional model.

2. Four years ago I suggested how owners can keep control when they work with consultants.

3. Around the same time I highlighted 3 reasons why consulting engagements fail. It’s really not difficult to avoid making them.

4. Look for consultants who have had practical, “hands on” experience operating a company. They have 2 clear advantages over consultants who have spent their entire career in consulting roles, as I pointed out in 2011.

5. There are also clues that you can listen for. Consultants who are effective tend to say certain things.

Here are 2 more things that I thought about this week.

6. Yesterday I was talking to a business owner who had been referred by an existing client. He asked if I would go out and meet him. I agreed immediately because that’s the only way to determine if there’s any chemistry between us.

Some people might consider the idea of “chemistry” to be foolish. But I can tell you from experience, that without it, the risk of a project failing increases dramatically.

7. Ask what success will look like. It’s more than just a description of what the consultant’s going to do and the services they’ll deliver. It’s about knowing how, when and what they will do to help you get the results you want.

Success, they say, comes not from doing one big thing well, but from doing many little things well. Perhaps change is like that too.

We at ProfitPATH, and lots of other consultants, are chipping away, doing the necessary things that will bring change to our business.

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Jim StewartJim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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One Big Reason Why Strategies Fail

Tuesday, September 9th, 2014

the main reason a strategy fails is based in how it’s executedI often argue that a strategy isn’t important.

It’s the benefits a strategy delivers – more profit, increasing the value of a company – that are important. They put more money in the owner’s pocket.

To reap those benefits the strategy must, of course, be successful.

A strategy can fail for many reasons.

It could just be a lousy strategy. But that happens less often than you might think.

Even a poorly conceived strategy can deliver results – if it’s executed with focus, energy and passion.

I believe the main reason a strategy fails is based in how it’s executed.

For example:

  • There’s no link between the strategy and the actions which have to be completed if it’s to be successful.
  • Most people don’t know what the strategy is – and the part their job has to play in making it successful.
  • People, at all levels, do know what their role is – but there’s no accountability if they miss targets.

Some examples are less evident.

One in particular is quite insidious. It goes like this.

After intense discussion, the owner and management team reach a consensus on the strategy for the next 3 years. Everyone goes off determined to do the right things to execute it successfully.

However, since much of their time is taken up with running the business day-to-day, after a while, that begins to affect their perspective.

And that gradual, subtle change in perspective can have a major impact on the execution of their strategy.

It is possible to detect it and fix it. But that requires the discipline to do 2 things.

First, hold regular strategy review meetings. Second, keep the agenda off day-to-day stuff, and on measuring progress toward the 3-year goal.

Any shift in perspective can be spotted by asking one question. “Are all of the projects being discussed integrated/aligned with the strategy we chose for the next 3 years?”

The odds are there will be some drift.

That’s because the company is made up of people. And people tend to have their own priorities, concerns, agenda, and goals – which may be directly opposed to the next person’s. In the face of day-to-day pressures, people find it hard to keep the whole company perspective in mind.

But it can be restored – and one big reason why execution fails can be easily avoided.

If you enjoyed this post you’ll also enjoy Strategy Execution – How You Do What You Do

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Jim StewartJim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Strategies That Get Results Are Developed By Thinkers And Doers

Tuesday, September 10th, 2013

The companies we work with are less complex organizations than those in the Fortune 500.Include strategy developers in the execution process for better results

But our clients can experience the same types of problems that the big guys face.

Here’s an example.

A gap between the thinkers and the doers

I read this week about the gap that exists in large corporations because the people who develop strategy aren’t the ones who have to execute it.

In most of the companies we work with, a gap like this shouldn’t exist. However, it does occur in some.

In this case the gap is not caused by the separation of responsibility for developing and executing strategy. It’s caused by a strategy development process that isn’t sufficiently inclusive.

In our clients, the business owner is responsible for both developing strategy and ensuring that it’s executed.

Arguably, everyone else is responsible only for execution. And their responsibility is very often limited to only the parts of the strategy that directly affect them.

The owner can:

a)  develop the strategy by him or herself, or

b)  involve her/his management team, or

c)  involve the management team and key players from all parts of the company.

In the companies we work with, the gap occurs when the owner opts only for alternative a) or b).

Disadvantages of having a gap

There are several disadvantages of excluding key players.

•  They are the people who have been intimately involved in executing all of the strategies that have been developed in their past, either with their current employer or in other companies. As a result, they know what is involved in making a strategy work, in getting results. They can provide valuable input at the development stage, even nipping impractical strategies in the bud before time and resources are wasted on them.

•  If the key players understand the reasoning and logic behind a strategy it will help them make the right decisions and best choices when circumstances change (as always they do) during implementation.

•  People are more committed to a course of action when they’ve had a part in developing it. So the key players are more likely to keep persisting in the face of difficulty.

An example of how to prevent the gap

One of our clients had a workforce of 300 unionized employees, spread across the Province. When it came time to renew the strategy, the General Manager invited 10% of the workforce to participate in the process.

The representatives, chosen by their teammates, were expected to represent their areas in the sessions and to provide feedback when they went back to work units.

The quality of the input the representatives brought with them and the value they added to the discussion and debate was quite remarkable.

 

If you enjoyed this post you’ll also enjoy 5 Reasons Why I Love Execution

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3 Questions Linking Strategy and Execution

Tuesday, August 6th, 2013

My friends think it’s a little sad, but I get excited when I find a book about business strategy that I haven’t read.The link between strategy and execution

I saw an article about one the other day, and was impressed by the author’s answers to 3 questions about the link between strategy and execution.

Judging by the article, the book focuses on larger corporations. But the lessons apply, I think, equally to owner-managed businesses.

Question 1:  Why do companies spend more energy on strategy development than execution?

Strategic planning off-sites usually take a few weeks to prepare and only last a few days.

But executing a strategy takes months or years during which time things go wrong – e.g. the economy changes, competitors react and the managers who developed the strategy leave the company.

Also there are more people involved in execution than in development. Some have different attitudes and levels of commitment to the strategy than the people who developed it. They may not really understand how what they do fits into the strategy or they become distracted by day-to-day problems.

So it’s easy to give up when things get in the way of execution.

Question 2:  What are the biggest mistakes, or most common pitfalls, when it comes to turning strategy into results?

A big one is failing to realize that there’s no silver bullet. Turning a strategy into results takes time.

Another classic is not putting a detailed implementation plan in place. Without one there can be no focus on key action plans and the responsibility and accountability for completing them. Nor will there be a process to manage the relationships and reactions between the constantly changing variables – e.g. resources, priorities, departmental rivalries – that are in play.

A third is that, in some bigger companies, management think that having created this beautiful strategy, their work is done. “Other people” have to buckle down and turn it into action.

Question 3:  What can you do to improve the odds of executing successfully?

Here’s where the saying “culture eats strategy for breakfast” comes into play.

Because the best way to execute successfully is to have a company that is “results oriented”. In those companies everything – the values, processes, individual rewards and, most of all, the behavior of the owner and management team – supports the achievement of the company’s goals.

Building this kind of culture isn’t easy and it can’t be done quickly.

It takes time build a workforce in which employees’ personal values match those of the company. And it takes time for employees to feel confident that they won’t be ridiculed if they suggest something new, or penalized if they take a risk and it goes wrong.

By the way, the book I found is called “Making Strategy Work: Leading Effective Execution and Change” and the author is Lawrence Hrebiniak. You can read more about it here.

 

If you enjoyed this post you’ll also enjoy So Tell Me, What Is Strategy?

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The One Thing You Must Do To Grow Your Business

Tuesday, July 30th, 2013

Here’s the single biggest thing that I think separates companies which grow successfully from those that don’t.Learning to give up control to grow your business

It’s that the owners of successful businesses understand that they personally will have to change – and they are willing to make those changes.

I said that back in March of this year.

Today, I read about Clay Mathile – who sold his company for $2.3 billion in 1999.

In case, like me, you hadn’t heard of him, he owned “Iams” the pet food company. And he built annual sales from $500,000 in 1970 to $1 Billion in 2012.

For the first 10 years he put all of his energy into growing the business, working 12 to 16 hours a day. Sales reached about $10 million annually.

He realized then that he couldn’t run the business alone. So he hired the best plant manager he could find – so far so good.

But a month later the new plant manager took Mathile out to lunch and asked, “Are you going to let me run the plant?”

That’s when Mathile realized that not only was he unable to let go of control of the company but, worse still, it was an obstacle to the company’s success.

Shortly after that he signed up for a professional management program. In one session he was asked to write all of Iams’ production and manufacturing challenges on white boards.

In another flash of insight, Mathile recognized that he’d created 75% of the problems that were up on the wall.

That’s when he stepped back, looked at what he was doing and learned to let go of his desire to control everything and listen to the experts he had hired.

This was a key part of what allowed him to lead the company to achieve consistently high rates of growth.

Mathile knows from experience that giving up control can be a challenge for entrepreneurs who have poured so much of themselves into their business.

He describes it as not only a shift in how the business owner thinks of his/her role, but also a shift in how they have to behave – in what she or he gets up in the morning and does each day.

“You need to let go instead of holding on so tightly,” says Mathile. “If you don’t bring on expert employees and begin delegating responsibility, you will prevent your business from growing to its full potential.”

Realizing that he had to change must have been difficult for Mathile. But making those changes to his thinking and behaviour must have been excruciating.

He did it and he was successful.

I rest my case.

You can read Catherine Clifford’s article about Clay Mathile here and you’ll find details of Mathile’s new book here.

 

If you enjoyed this post you’ll also enjoy To Be Or Not To Be … In The Room That Is

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Why Conflict In A Family Business Is Bad For Strategy

Tuesday, July 23rd, 2013

We’ve worked in a lot of family businesses over the past 12 years.The negative impacts of confrontation and infighting on strategy

During that time we’ve had assignments disrupted, even brought to a premature end by family conflict.

I’ve seen family members say, and do, some terrible things to each other.

It’s not as if it’s a new experience. I saw some ugly political games in the 25 years I spent climbing the corporate ladder.

Confrontation and infighting are bad for any business. Their impact on the strategy, however brilliant and well executed, can be enormous.

There’s a difference though. In a family business, the damage isn’t just to the company.

The unpleasantness spills over into private lives, and relationships that should be close – parents and children, brothers and sisters – are shattered. And sometimes they remain unrepaired until it’s too late, because one of the parties dies.

I’d realized that the conflict in family firms seemed more intense than the ones I’d seen in my corporate days. But I hadn’t realized why until a blog post I read recently made it clear.

Corporations have barriers that prevent conflict becoming too ugly. Rules, processes and structures govern the behavior of every employee, from the lowest to the highest. For example, if a manager talks or behaves inappropriately, he will find himself on the wrong end of disciplinary action initiated by HR.

The same rules exist in many family businesses, but they apply to everyone except the owners.

Why? Family members apply the dynamics from their personal relationships to business situations – even though they know they shouldn’t. For example:

•  When a child becomes an adult and joins the family firm, the parent who raised her remembers her missteps and miscues from childhood and adolescence.

•  Parents try to resolve disputes by forcing everyone to toe the line.

•  Siblings deal with difficult circumstances by withdrawing, avoiding, or undermining each other.

Even if the child has left the family home, the plant or office can become a replacement.

As the owners of the business, the family can ignore the rules or processes. So there is nothing to stop conflict, caused by the ineffective behavior of both generations, blowing the lid off the family’s assumed harmony and threatening the success of the business.

Does this mean that every family business is fated to erupt into a bitter fight? No, of course not.

Some families use their values, long-term orientation to their investment and loyalty to employees and customers to maintain a “professional management” approach to challenges, problems and conflict.   In the other cases, family members can be helped to understand that conflicts can result if there are no formal boundaries on their behavior.

And, in fact, we have been able to help families like these, put greater structure in place. Which enables focus to go back on the execution of the strategy and getting results.

If you want to read the full blog post you can find it here.

 

If you enjoyed this post you’ll also enjoy Little Things Can Have a Big Impact

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3 Reasons Growth Slows In Good Companies

Tuesday, June 18th, 2013

It caught my attention immediately.Periodic slow-downs in growth are inevitable, even in solid companies

A blog post about why successful companies stop growing. A topic I was tempted, only last week, to call an obsession.

While the examples Ron Ashkenas uses are all large corporations, it really doesn’t matter.

The points he makes apply equally well to business owners and family businesses.

Ashkenas argues that periodic slow-downs in growth are inevitable – even for solid companies. That doesn’t mean that business owners and their management teams can’t do anything to slow the decline or to reverse it quickly.

First, however, they have to understand the 3 forces that Ashkenas says always slow down high-flying companies. Here they are.

1.  The Law of Large Numbers

When revenues are $5 million, targeting annual growth of 20% means adding $1 million to the top line. When they’re $50 million, chasing 20% growth means adding $10 million in sales in 12 months.

It takes significantly more resources to support $10 million in new sales than it does to add $1 million. And some of them, e.g. people with the skills and experience required, can’t always be found quickly and easily.

Then there’s the size and growth rate of the market. If it’s $100 million and growing quickly, adding $1 million in sales means taking, at most, 1% more market share. However, adding $10 million in a mature or declining market means getting 10% more market share – and that probably means taking it away from competitors.

2.  Market Maturity

When a market turns hot, competitors multiply like mosquitos. That limits the potential for price increases, which are a relatively easy way to increase revenues.

Some companies build stronger brand loyalty than others, slowing the ability of the weaker competitors to grow. Some products become commoditized, price becomes king and margins become thin, affecting bottom line growth.

Eventually markets become saturated and the bigger, stronger players either gobble up the weaker ones or force them out.

3.  Psychological Self-Protection

Ashkenas describes this as pressure to maintain the base business and unwillingness to risk it with innovative new products.

In the companies we’ve worked with, it often appears in a different form (and perhaps deserves a different name). As these companies grow, the management team spends more and more time focusing on meeting the increasing demand while maintaining quality. This is often caused by weak processes, lack of discipline and lack of accountability.

In both cases, however, management is the cause of the declining growth.

No company grows forever without hitting some bumps along the way. The challenge for the business owner is to recognize what’s really going on and to deal with it.

Sometimes it takes an external, third party to be able to do that.

You can read Ron Ashkenas’ full post here.

 

If you enjoyed this post you’ll also enjoy Why Would Anyone Hire A Management Consultant? and Why Would Anyone Hire A Management Consultant? – Part 2.

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The Elusive ‘Silver Bullet’

Tuesday, May 28th, 2013

Take a good, hard look at the attached picture.'Silver bullet' quick-fixes to complex business problems don't exist.

Why?

Because it’s probably the only time in your life you’re actually going to see a silver bullet.

Why should you care, why is it important?

Because a ‘silver bullet’ is a term used to describe a solution to a complex business problem; which can be implemented quickly, with very little cost or effort; and which will deliver the desired results, immediately, at the first attempt.

How often have you seen one of those? Have you ever actually seen one?

I haven’t. In fact I believe silver bullets simply don’t exist.

Yet some of the business owners we meet expect us to be able to produce them. And some consultants are foolish enough to let their clients believe that they can produce them. Needless to say, we’re not amongst them.

The need for a silver bullet often arises when a management team has been unable or unwilling to solve a fundamental problem with the way in which their company has always made money.

The management team hasn’t suddenly become incompetent – but they have become ineffective.

They have actively addressed the situation but have typically only tackled the symptoms. For example:

• Sales drop so they implement sales force improvement and lead generation programs – without understanding that the products or services they’ve been selling successfully for the last 30 years are being replaced by a new technology.
• They acquire a new technology and sell and support it using the same people and processes they used with the old one – because the people have been loyal and the processes have always worked.

As a result, the first ‘solution’ they try doesn’t work so they try another, then another – wasting money and, more importantly, time. Nothing works and the slide continues.

By the time the fundamental problem is recognized, the level of frustration being experienced by the owner and management team may, by itself, be driving the desire for a ‘quick fix’.

Or sales may be down to a point at which layoffs and cutbacks have started because cash is tight.

Either way, the pressure is on.

So, while the owner and management team may understand the far-reaching, intensive changes that are required, they can’t or won’t accept that those types of changes can’t be made quickly or easily. They expect, for example:

• Employees who have been doing the same thing, in the same way for many years to adapt to a completely new process with minimal training.
• To be able to acquire lists of qualified leads or prospects for new products and new markets.

Those are ‘silver bullets’ which go far beyond being elusive because they simply don’t exist.

 

If you enjoyed this post you’ll also enjoy Adaptive Strategy – A Way To Profits In The New Normal?

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10 Commandments of Business Development

Tuesday, May 21st, 2013

10 Commandments of Business Development

I’m not enjoying the after-effects of the 2007/2008 financial crisis.

And I’m certainly not a fan of the banks, investment and other, which I believe were a significant contributor to the mess.

But, while my wife may disagree, I like to think I keep an open mind.

So when I saw an article talking about how Goldman Sachs grew from mid-tier firm to global player in a few decades I had to peek.

John Whitehead, a co-head of the firm in 1970, wrote the following 10 commandments that guided their business development efforts:

1.   Don’t waste your time going after business you don’t really want.
2.   The boss usually decides — not the assistant treasurer. Do you know the boss?
3.   It is just as easy to get a first-rate piece of business as a second-rate one.
4.   You never learn anything when you’re talking.
5.   The client’s objective is more important than yours.
6.   The respect of one person is worth more than an acquaintance with 100 people.
7.   When there’s business to be found, go out and get it!
8.   Important people like to deal with other important people. Are you one?
9.   There’s nothing worse than an unhappy client.
10.  If you get the business, it’s up to you to see that it’s well-handled.

I love them. They’re full of common sense and they’re very practical. Written in 1970, these 10 commandments add to my belief that the basic, common sense principles of business never change.

Here are 4 things that business owners today can take from them.

First of all, being clear about what business they want and avoiding the temptation to grab every deal that comes along in order to increase revenue. Only take deals that provide good margins, with companies who pay on time.

Hold out for the first-rate piece of business. That’s the one that allows a company to do what it’s good at. Second-rate deals require the company to reinvent its core competency at short notice, for difficult customers who are price shopping and who never buy from the same vendor twice.

Companies, and sales people, that really understand that it’s the client’s objective that’s important, don’t have unhappy clients. Hard driving entrepreneurs sometimes forget that in their rush to achieve their objectives. As a service provider, I try never to take on an assignment unless I understand the deliverable. For example, I’ll say to a client: “Imagine we’ve just finished your offsite and you’re telling me how pleased you are that we achieved your goals. What has happened, what do you have, that’s making you say that?”

Finally, the last of Whitehead’s principles emphasizes the importance of focusing the company culture on customer satisfaction.

Mark Graham, who wrote, the article says that he’s built his business by putting integrity first, even if it seems at times he has to sacrifice short-term profits. He’s right – and that could be the 11th commandment.

 

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

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The Difference Between A Strategy And A Plan

Tuesday, March 26th, 2013

Hang on a second, don’t tune out yet!

I’m not going to write a scholarly piece which will bore you to death.

I want to talk briefly about what I think is one of the worst mistakes – confusing strategy and planning. Roger Martin wrote a post for the HBR last month in which he dealt with this very topic.

I frequently hear business owners talk about the need to do “strategic planning” in order to create a “strategic plan”. Some talk – every year – about holding a “strategic planning meeting”.

But if you really are reinventing your strategy every year, isn’t that a bit of an indictment of both the strategy and the way it was developed?

Coming back to the meeting, the expectation is that the output from it will be a document, a plan. And that will contain a long list of initiatives (often referred to as strategies) with time frames for their completion.

Martin wonders how (and if) this “strategic plan” differs from a budget. I think that’s a great question. But I have a different one.

Isn’t this so called strategic planning meeting really an annual (business) planning meeting? That doesn’t make it any less important – because it still plays a key role in the execution of the company’s strategy.

And if that’s the case, shouldn’t we stop calling the output a “strategic” plan. And start calling it what it really is – the initiatives, which if completed in the next 12 months, will propel the company toward the achievement of its strategy.

Each initiative is accompanied by the Action Plans required to complete it. Each action plan has a champion who is accountable for it’s completion. The action plans have resources allocated to them. And they support, or even drive, the sales and margin forecast and expense budget.

Now let’s go back and talk about the company’s strategy for a moment.

Roger Martin puts it really well –

• “…we need to break free of this obsession with planning. Strategy is not planning…”

and then

• “…strategy is a singular thing; there is one strategy for a given business — not a set of strategies. It is one integrated set of choices….”

Choices about, for example, where and how a company will compete.

The strategy sets the context for the annual planning meeting. It should make it easy for the owner and her/his management team to decide which initiatives are relevant. (Assuming, of course, that they have already developed an effective strategy.)

I think the first step toward developing and executing business strategies that actually yield results is to stop misusing words.

If we call things by their real names we’ll stand a far better chance of understanding what they really are – or vice versa.

You can read Roger Martin blog post in full here.

 

If you enjoyed this post you’ll also enjoy Strategy – Don’t Think It, Experience It

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