Posts Tagged ‘organization’

Are You Fit For Growth?

Tuesday, September 3rd, 2013

This week’s guest is Dick Albu, the founder and president of Albu Consulting, a strategy management consulting firm focused on engaging and energizing leadership teams of middle market private and family business to formulate robust business strategies and follow through on execution of key strategic initiatives.

 

As we talk to current, past and prospective clients, they readily share their concern regarding achieving profitable growth. Their concerns center on the uncertainty surrounding economic policy that is creating business uncertainty and dampening economic growth. They are also finding it challenging to shift their focus from reducing costs (for the past 5 years to survive the recession) to driving sales growth. Yet, these same leaders realize their organizations will be facing headwinds for some time and need to move forward with a growth agenda.

The companies we spoke with are not alone in their concern in achieving profitable growth. According to a recent Booze & Company survey Fit for Growth (Survey) – only 17% of the 197 companies surveyed are prepared to achieve sustained profitable growth. The realization that most companies are struggling, represents an opportunity for those willing to prepare for growth by taking a more deliberate approach to developing and implementing their agenda. The Survey created an index based on assessing companies in three key areas:

1. Strategic clarity – clear set of strategic priorities supported by strong capabilities, a product portfolio aligned to the strategy, and a presence in critical markets.

2. Resource alignment – investment in key capabilities, targeted cost reduction, and continuous improvement initiatives aligned to strategy.

3. Supportive organization – Effective and timely decision making, strong leadership, and a supportive culture.

The first area addresses strategy, and areas two and three capture a company’s execution capability. Strategy and execution were given equal weights in the index to acknowledge their shared impact on performance.  In addition, the Survey compared index values to total shareholder returns (TSR) and found that companies with high index scores generally scored higher in TSR performance. Essential to a company having a high index value was scoring well in all three areas, highlighting how these three areas reinforce one another, resulting in higher overall performance.

The evidence is compelling. Being Fit for Growth can lead to sustained profitable growth. So how do you go about determining if you are Fit for Growth? Booze & Company suggests starting by answering these three questions:

1. Do you have clear priorities, focused on strategic growth, that drive your investments? You might not have clear growth priorities if you feel you have too many conflicting priorities, or your leadership team is not aligned when asked what things the company does well.

2. Do your costs line up with your priorities? Are you allocating resources to priorities effectively and efficiently? You may be able to improve your allocation of resources if high-priority projects are missing milestones because they do not get appropriate attention, or department annual budgets are only based on prior year.

3. Is your organization set up to enable you to achieve your priorities? Your organization may not be fully supporting your growth agenda if incentives are motivating people in ways that actually undermine the behaviors needed to achieve growth priorities, or most suggestions are being rejected causing people to be afraid to take calculated risks.

Get fit for profitable growth by answering the above questions and take steps to get better in the three areas of Strategic Clarity, Resource Alignment, and a Supportive Organization.

Is your organization Fit for Growth?  We would be interested in hearing about your experience. Give us a call.

Dick can be reached at 203-321-2147 or RAlbu@albuconsulting.com. For more information on Albu Consulting visit www.albuconsulting.com.

 

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Can You Scale Up Your Company? – 4 Key Questions

Tuesday, June 11th, 2013

I’d stop short of calling it an obsession – but it’s certainly a fascination, a preoccupation, even a passion.Can you scale up your company?

I just have to understand why some companies grow to a certain size then stall, or plateau, while others continue to grow.

When I figure it out, I’ll retire, but not before.

Fortunately, I’m not alone. Better minds than mine are also captivated by this topic.

I came across one the other day in a blog post that seems to support a theory I’ve developed. Daniel Isenberg has written a book about what he calls “scale-up entrepreneurs”, business owners who “start up a big venture that just happens to be small at first”.

To promote the book, he’s developed a quick test to help people figure out whether they’re cut out to be scale-up entrepreneurs.

The test contains 18 questions that are, in fact, all statements. Business owners must decide whether they agree or disagree with them.

I particularly like 4 of the questions/statements.

•  “When I don’t know what my next step is, I have experienced people I can turn to for ideas”.

•  “When I achieve my objectives, I keep raising the bar higher and higher.”

•  “If my venture stands in one place too long, it runs the risk of perishing. We have to keep moving forward”.

•  “I used to think our great technology would take us to leadership in our market — now I realize it is our team, our organization, our marketing and our ambition to sell”.

To my mind, if a business owner agrees with these statements, he/she is saying they will change.

The most explicit support for my theory comes, I think, in the final statement/question. In order to agree with this statement, the business owner is admitting that they have changed.

I’ve written in the past about my belief that the single biggest thing that separates companies which continue to grow, from those that don’t, is that the business owner understands that he or she personally will have to change, and that they are willing to do so.

Giving positive answers to those 4 questions – agreeing with the statements – I think supports my belief.

Are the topics made in the other questions in the survey equally important? Yes, they probably are.

But Isenberg says that to clearly be a “scale-up entrepreneur” requires agreement with 16 of his 17 question/statements. To do that, the business owner has to agree with at least 3 of the questions I‘ve highlighted– as well as all of the others.

Isenberg’s book Worthless, Impossible and Stupid is being published in July. You can read about it and take the test here.

 

If you enjoyed this post you’ll also enjoy Pilot, Perfect, Scale Up.

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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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The People Pipeline

Thursday, February 9th, 2012

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Of all the interesting and valuable things Tony Hsieh says about managing people in his book “Delivering Happiness” for me, one concept stood out.

That was “The Pipeline”.

Hsieh makes the point that, unlike many companies, Zappos doesn’t believe that (individual) people are an asset. They think of a pipeline of people with varying levels of skill and experience as the asset.

Here’s why I really like this approach.

It Solves 3 Fundamental Problems

First, traditional thinking is that people are a company’s greatest asset. But if an employee leaves, the company has lost an asset.

The second problem (which we see all the time) occurs as a company grows, an employee who was considered valuable, or even outstanding, at an earlier stage of the company’s life begins to disappoint and become a liability. It’s usually a result of the employee not developing or upgrading his or her skills as the company grows.

The third problem occurs when the company deals with the other 2 problems by bringing in someone from outside the company.  The new person may bring the right skills and have great experience – but they don’t fit the company culture.

The “People Pipeline” Solution

  • Bring almost all new hires in via entry level positions. This offers two benefits.
    • If they aren’t a fit for any reason the company faces the least expense and disruption by making another quick change.
    • Entry level positions will likely attract people with limited experience. The new employees are more likely to be open minded about adopting the company’s processes – and culture.
  • Provide a comprehensive training program and mentors for the new hires. Then offer a series of courses, either internally or at local colleges, which cover the skills the employees will need in order to progress in the company.
  • Make the route upwards quite clear.
    • Set expectations around when employees can expect to achieve each level.
    • Make completion of certain courses a pre-requisite for promotion.
    • It helps if a company is growing at the rate Zappos did (and is doing) – that generates lots of new positions in the org. chart. However, positions further up the organization will become available as people move on (natural attrition). At this point a business owner could argue that all of the investment in that person has been lost. That’s possibly true – but every company loses some employees (e.g. they move to another city, make a change in career).
    • By investing in training and offering a career path a company may keep those who would have drifted away for much longer.
  • With the pipeline there is always someone ready to fill the shoes of the people who do leave, who have been training for the opportunity and who know the culture.

A Couple of Points to Consider

When Hsieh arrived at Zappos he was an experienced, successful business manager. And he brought one or two key management team members from his previous company – most notably his CFP – with him. So at least some members of the management team knew each other’s strengths and weaknesses and that they could work together.

On the other hand, one of the original Zappos team, Fred, joined as a buyer and rose to become a senior executive.

The pipeline can only be used when a company reaches an appropriate size. A start-up doesn’t have the resources.

If you enjoyed this post you’ll like 10 Strategy Tips from Tony Hsieh.

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A “BEMI” – Does It Work And Is It Really New?

Friday, October 21st, 2011

In the last 2 weeks I’ve seen 3 blog posts talking about growth, all more or less claiming that their concept is the best or only way to grow companies in the future.

But do these concepts really work (in anything smaller than a global corporation)? And are they really new?

The first one is all about “big-enough market insights” or BEMIs¹  and is based on the argument that real, rather than incremental, top-line growth can only occur when there’s a significant change in the nature of demand.

That change is caused by either a shift in customers’ circumstances or in their thinking e.g. when the housing bubble burst or when tablets became simple, affordable tools for use at home and at work.

1.    What is a BEMI?

When a business owner can see the connection between a change in demand and the lucrative market the change will eventually create she has found a BEMI.

That Insight becomes the foundation for either a blockbuster product or for a suite of offerings.

2.    Identifying a BEMI

BEMIs are usually spotted first by employees at the fringe of the organization. For example in the 80’s, a Toyota executive in California saw that increasing affluence and the growing number of yuppies was creating an opening for a new kind of luxury car – the Lexus.

More recently, the Air Wick Freshmatic originated with a brand manager in Korea.

Closer to home, one of our clients realized in the late 90’s that, as cell phones began to be adopted, users would want cases, rechargers and extra batteries for them. Consumers would be more easily upsold if these accessories were packaged in a kit rather than sold as individual items.

3.    Embracing a BEMI

BEMIs often face a lot of resistance from inside the company. Many critics opposed the Lexus because e.g. setting up a separate network of Lexus dealerships, had the potential to alienate existing dealers. They also attract opposition if the company doesn’t have the necessary expertise to develop the product e.g. Reckitt Benckiser had little experience with the electronic technology required for the Air Wick Freshmatic.

In the late 90’s the cellular carriers were the major distributors of accessories via their retail outlets. Our client had to overcome the carriers’ resistance to kits by acquiring the technology and resources to design, assemble and package for them.

4.    Exploiting a BEMI

Pursuing a BEMI can take a lot of perseverance because they rarely lead to a surge in revenues and profits over the short term. That’s because they originate in an understanding how shifts in current trends will change markets – and using that insight to create an opportunity for the future while sidelining competition.

Pampers disposable diapers, introduced in 1961, took advantage of the growing desire for greater convenience, and the fact that women were increasingly joining the workforce. But they had to be made by hand, making them uncompetitive with diaper services. It took years before P&G could mass-produce them and that did not come cheap. However Pampers created a multi-billion dollar market.

5.    So do they really work and are they new?

It took time to launch cellular accessory kits but consumers really took to them and sales took off. So I’d say that the concept works equally well in any size of organization.

However I’m not sure they’re new. I think strategists and business owners have been doing this for a long time but just calling it something else (trends analysis springs to mind).

But regardless of what you call it – it works and works well.

__________________________

¹Where Top-Line Growth Really Comes From HBR, 6 Oct 11

Profit In Process

Thursday, April 28th, 2011

This week’s guest post is by Tibor Shanto – Principal of Renbor Sales Solutions Inc., – a recognized speaker, author of the award winning book Shift!: Harness The Trigger Events That Turn Prospects Into Customers, and sought after trainer.

Most sales people are taught that companies go under due to lack of sales. We all know that the reality is that companies fail due to a lack of profits.  But this disconnect is one reason sales people see discounting as an alternative to selling. Reps fail to realize that the 5% discount they give on a deal could be half, or more, of the margin in the sale (why worry, they still get  their commission).

One way to address this is to ensure that you have a detailed, clearly defined and suitable sales process.  This needs to include defined stages that align with the buying process, and clear workflows.

The sales process also needs to align with other processes in the company. While sales does drive orders,  if it is not synchronized with the rest of the organization, there is a real risk to productivity and profits. One example is the waste that results in working at cross purposes, typified by the often found disconnect between sales and marketing.  I recently saw the results of a survey that suggested that 75% of marketing managers do not know what the sales team’s quota is. 

Once the sales process is aligned with other processes in the organization, they can be harmonized and leveraged for further advantage. A good example can be found in environments where production and related resources are directly tied to orders.  Having a logical process that helps sales execute and at the same time delivers predictable and reliable forecasts to production is a definite competitive advantage. 

For example, one of our clients publishes a series of trade magazines. One challenge they face is maximizing revenue from each issue.  Specifically, the more ads sold the larger the issue, but this impacts editorial, layout and other areas of production.  Add to this the fact that the issue has to be locked down many days before publication.

There was a constant to-and-fro between sales and production with sales trying to get one last advertiser in to an issue after the deadline or ads that sales had guaranteed would come in evaporating. Both situations caused havoc for production.

We worked with both groups, analyzing how different ad sales unfolded, the time from start to finish of the process, critical points along the way (go/no-go points), confirmation points and elapsed times from those points to close. This allowed sales to quantify aspects of the sale and establish reasonable probabilities to close from specific events during the sales.

Armed with these facts, we sat down with the production team with two goals in mind. First, was to help them understand in an objective way how a typical sale unfolds,  including critical turning points. Second was to establish a rule and workflow with respect to objectively agreeing which opportunities were to be included by production, based on where they were in the process at a specific point in time prior to publication date.

This allowed production to better plan a given issue, and sales to be more confident in communicating and adhering to deadlines with advertisers.  While there are still instances where sales try to bring in one more ad, production has built in a bit of wiggle to their timelines.

This same approach can be implemented by aligning the sales process with other areas of the company.  It goes without saying, that the same efficiencies can be realised in other environments – JIT or otherwise.  The key is to have a sales process to begin with, one that suits the needs and the type of sale on which the entire organization needs to execute. 

This removes the emotion and subjectivity when it comes to sales predictability, forecasting and driving both revenue and other key objectives of the organization.

Tibor can be reached at info@SellBetter.ca, or + 1-416-822-7781. You can read his blog, The Pipeline and follow him on Twitter @Renbor.

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