Posts Tagged ‘performance’

Santa Claus and VUCA

Monday, December 15th, 2014

The Holiday season set me thinking.VUCA and its impact on strategy

One of the traditions in our version of the Holidays is the letter/email from each child to Santa Claus, the determination if the child has been naughty or nice and, assuming the latter, the resulting delivery of gifts on Christmas morning.

To execute successfully, Santa manufactures or purchases the gifts then packages and delivers them.

These operations take place in his workshop and distribution centre, located at the North Pole and staffed by elves.

This much we know for fact.

This year, however, there’s a question around Santa’s strategy which is of fundamental interest to all strategy consultants.

What is the impact, if any, of VUCA (volatility, uncertainty, complexity and ambiguity)?

Academics and key figures in the consulting world appear to agree that VUCA exists. But that’s about it.

Because, while some say it has made strategy and strategic planning redundant, others argue it has no impact whatsoever on the need for an organization to develop and execute a coherent strategy.

It’s important at this point to determine Santa’s KPI’s.

The 2 critical performance factors are accuracy (the right kid gets the right toy) and on time delivery (the toys are delivered during the night on Christmas Eve). Quality is irrelevant because kids spend more time playing with the wrapping than with the presents.

It’s assumed that Santa has availed himself (I’m assigning a male orientation to the incumbent. A discussion of the suitability of other genders for the role is a topic for a future post) of all modern processes and technologies.

Lean manufacturing; warehouse management systems; mobile computing; performance-based compensation for elves; and video monitoring of child behavior, with NSA input on social media patterns; the use of ‘big data’ etc., etc., are all givens.

And Santa’s strategy is tried and tested over many years.

So the only variable is VUCA.

The only way we can be sure of the outcome is to wait until Christmas morning and conduct rapid research by monitoring social media trends and conducting structured telephone interviews with a representative sample of the population.

Now, I am not given to making predictions.

But, given the season, I am going to break this habit. I predict that Santa’s performance this year will be at least on a par with previous years.

Which means that VUCA will have had as little impact on his need for a strategy as it has on the needs of every other organization.

Happy Holidays!

 

If you enjoyed this post you’ll also enjoy 3 Techniques For Removing Bias From The Big Decisions

Click here and automatically receive our latest blog posts.

 

Jim 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

Share

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.

Click here and automatically receive our latest blog posts.

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

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

Click here and automatically receive our latest blog posts.

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

Risks 3 and 4 to Growth – And How To Avoid Them

Tuesday, June 24th, 2014

During the last 12 years we’ve worked with well over 100 companies ranging in size from less than $1 million to over $300 million in annual revenues. They were

  • In a variety of industries, from manufacturing to software development.
  • All at different stages in their lives, for example in some, growth had stalled, while others were growing quickly – too quickly.Risks 3 and 4 to business growth and how to avoid them

In a recent post, I talked about the 4 things we’ve done for the ones that we know, with the gift of hindsight, achieved the results they wanted.

Was their success solely attributable to what we did for them?

I can’t prove that. But I can say this, ignore these 4 things and you will not get the results you want and your company will not achieve its potential.

Last week, I talked about 2 of them – having a clear growth path and linking it to action – in some detail. Here are the other two.

3.  Get Buy In

How often have we seen a team of committed people do the apparently impossible?

When people participate in the development of the growth path and understand the role they must play in making it a reality, they become fully engaged in achieving the company’s goals.

Some of the things which make that happen are:

  • The owner and management team get representatives from across the company involved in building a picture of what the company will look like in 3 years time.
  • The picture, and annual goals, is communicated throughout the company – repeatedly.
  • Departmental and individual goals are linked to the company goals.
  • Progress toward goals and targets is communicated and updated continuously.

4.  Accountability For Results

Moving a company or division along a growth path involves identifying and completing a number of initiatives, made up of specific, measurable steps or actions.

The individual who has overall responsibility for each initiative and those involved in completing the steps, must be held accountable for the success or failure of their efforts.

This is achieved by:

  • Using a process – it can be a simple Excel spreadsheet or a sophisticated, cloud-based execution management system – to track the progress of each step.
  • Holding regular, quarterly meetings to review progress and adjust plans and budgets where necessary.
  • Reflecting every individual’s performance in their compensation, promotion – or even their continued employment with the company.

So how can you tell how well your company or division is doing all 4 things? I’ll tell you more about that next time.

 

If you enjoyed this post you’ll also enjoy Sustainable Growth – How To Achieve It

Click here and automatically receive our latest blog posts.

 

Jim 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

Targets Are Targets, Results Are Reality

Tuesday, May 27th, 2014

Hubris can be the first of the 5 stages of decline.In the last few days, the weather, in the parts of Canada I’ve been in, has gone from chilly to hot.

About time, too!

It’s almost the end of May. The golf courses are open.

Another month and the schools will break up for summer and vacation time will begin.

And, just in case it’s overlooked in the excitement, companies with a calendar fiscal will reach the mid-point of the year. I know. I’m a dour, Scottish buzz kill.

Some business owners will go off on vacation pleased that results are ahead of expectations. Others will not be so satisfied – and some will be unhappy.

But all 3 types of owner share 1 thing in common. They know more now than they did when they set their expectations for the year.

Why is that worth mentioning?

We live in an achievement-oriented society. So we’re programmed to focus on the latter 2 types of companies – those that haven’t made their targets and those who are barely doing so.

They’re the ones who are underperforming. So they need to figure out why because they need to do better.

And that’s where our thinking often stops.

However, what about the companies that are doing well against their targets?

Is it possible that’s because their targets were low? After all, they were set around 6 or 8 months ago.

And, despite having been in the consulting business for over 12 years, I have yet to meet someone who can consistently predict the future.

Some of the owners, whose companies are doing well, will take the time to review their performance. And, if needed, change their activities to drive for even better results based on what they now know about this year’s performance.

In fact, I notice that the owners who take the time to step back and review their performance regularly, tend to have successful businesses.

The alternative, simply accepting the results as good fortune or, worse, as being their “due”, is a sign of complacency born of hubris.

And, as anyone who has read Jim Collins book “How The Mighty Fall” knows, hubris can be the first of the 5 stages of decline……..

 

If you enjoyed this post you’ll also enjoy Too Early To Tell If It Will Be A Good Year? Think Again!

Click here and automatically receive our latest blog posts.

 

Jim 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

Let’s Hold Consultants Accountable For Results

Tuesday, September 24th, 2013

For a Scotsman, true accountability occurs when results are linked to compensation.Let's hold consultants responsible for results

So I’ve tried various ways of linking our payment to our performance for most of the 12 years that I’ve owned ProfitPATH.

Why? In addition to the one above, there are 2 other reasons.

First, the people we work with are all taking risks. If we are to be credible, why should we be risk exempt?

Second, when I worked in corporations I hated paying consultants before I knew if their recommendations would deliver the results I wanted. When I started ProfitPATH I swore we wouldn’t do that.

It’s relatively easy to link our fees to our own performance.

We make sure the deliverables are clear and give the business owner what they want. We also tell our clients that they can stop an assignment at any time without any financial penalty. Just pay us our fees up to that point.

Linking payment to our clients’ results is a little more complicated.

Why?

Because of the number of things we have no direct control over. They include, for example, everything from the economy (be honest, did you guess the last crash would come when it did) to how they arrive at the profit line on their income statement.

But just because it’s complicated, that doesn’t mean we shouldn’t try.

And so we’ve experimented with a number of things. Like deferring a portion of our fees until the outcome of our recommendation becomes clear; or linking part of our payment to the achievement of a result.

There are other ways to hold consultants accountable.

A client can, for example, refuse to act as a reference; or communicate their disappointment as widely as possible; or withhold part, or all, of the fees. But these are all post completion options.

Other alternatives, that we recommend, are frequent, regular progress reviews. When coupled with the “terminate at any time with no penalty” policy I mentioned above, these reviews carry some weight.

Holding us accountable is part of my wider belief that the management consulting industry needs to take some of its own advice. It has to change its business model.

Now Clay Christensen, author of “The Innovators Dilemma” and one of the leading thinkers about innovation, has weighed in. A Harvard academic, and former consultant with the Boston Consulting Group, he believes that the consulting industry is ripe for disruption.

He’s joined by Ron Ashkenas, managing partner of a consulting firm and academic at Berkley, whose article first set me off on this rant.

I’ve been convinced for years that change needs to happen. It’s encouraging to see thinkers of their caliber saying similar things.

 

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

Click here and automatically receive our latest blog posts.

Should The Business Owner Remain CEO?

Tuesday, July 2nd, 2013

From time to time a business owner we’re working with will ask if we think he or she is the right person to take their company to the next level.Should business owners remain in or relinquish the position of CEO?

This concern has its roots in a broader question.

Can entrepreneurs scale the companies they start or should a professional manager/CEO be brought in at some point?

Arguably this is a leadership not a strategy issue. But the two are interwoven, perhaps even inseparable.

Randy Ottinger nicely summarized the alternative approaches in a recent article.

1.  The founder stays on as CEO

This theory, like the others, is supported by research from very credible sources.

The conclusion – founding CEOs consistently outperform professional CEOs on a broad range of business and financial measures. The founders of technology companies, in particular, have core competencies an outsider may not have.

Some high profile companies with successful founder CEOs are Starbucks, Amazon and Apple.

2.  The founder forms a partnership (not necessarily in the legal sense) with a professional CEO

This time, the research concludes that founders maximize the value of their equity by giving up the CEO position.

The founder of LinkedIn supports this alternative. He argues that retaining the founder prevents the loss of the essence and entrepreneurial nature of the company, while at the same time gaining the expertise to scale the company in the professional CEO.

Other companies, which went this route, were eBay and Google.

3.  The founder is replaced by a professional CEO (brought in from another company)

The third alternative is to replace the founder with an outsider.

But Jim Collins, amongst others, concludes that great companies have a much greater chance of success if they hire from within rather than go outside to find a CEO.

So where does all of this leave us?

4.  The fourth alternative – common sense at work?

Clearly, not all situations are the same.

So, perhaps it’s not about choosing either a founder/CEO or professional/ CEO, but about using the leader whose skills and abilities best match the requirements of the task at hand.

Founders typically are innovators with entrepreneurial drive who may not have the skills needed to execute. Professional managers typically know how to execute or scale but are not strong on innovation.

The question, in both cases, is does the individual have at least some of the missing skills and the desire to build on/improve it? (Which ties to one of my theories.)

If the answer is “no” then a “team” approach may be more effective. Titles can always be massaged (e.g. 1 person is President, the other CEO; 1 is CEO, the other COO).

But the job responsibilities must be clear and unambiguous.

You can read Randy Ottinger’s article here.

 

If you enjoyed this post you’ll also enjoy Don’t Shoot Your Strategy In The Foot.

Click here and automatically receive our latest blog posts.

6 Things We Can All Learn From Family-Owned Businesses

Tuesday, April 23rd, 2013

The 6 things I’m going to talk about come from a study of 149 large, publicly-traded, family-controlled businesses.

However, stay with me because we’ve seen the same characteristics in the successful family-owned businesses we’ve dealt with – and none of them are publicly traded.

Another thing – the study looked at 1997 – 2009, covering some good and some very tough times. Guess what? The family-controlled businesses, on average, turned in better long-term financial performance than non-family businesses – in multiple countries.

So what are the 6 things we can learn?

1. Family-controlled businesses are frugal in good times and bad. How? They don’t, for example, have luxurious offices. That’s because they view the company’s money as the family’s money – and so keep a tight rein on all expenses.

2. They limit their debt. The family-controlled companies in the study had, on average, debt levels equal to 37% of their capital (compared to 47% for non-family firms). Why, because if something goes wrong, family businesses don’t want to risk giving their investors too much power.

3. They have lower staff turnover. Only 9% of the workforce (versus 11% at non-family firms) turned over annually. And family firms don’t rely on financial incentives. They focus on building a culture of commitment and purpose, avoid layoffs during downturns, promote from within, and spend far more on training than non-family firms.

4. Capital expenditures are tightly controlled. One owner-CEO said “We have a simple rule, we do not spend more than we earn.” Family businesses not only look at each project’s ROI, they compare projects – to meet their self-imposed budget. It costs them some opportunities but means they’re less exposed in bad times.

5. They diversify. 46% of family businesses in the study were highly diversified, while only 20% of publicly traded ones were. The reason – diversification has become a key way to protect family wealth as recessions have become deeper and more frequent.

6. But they do fewer, smaller, acquisitions. There are exceptions, for example if there’s structural change/disruption in their industry. But generally, family companies prefer organic growth and partnerships or joint ventures to acquisitions.

The simplicity of the 6 things makes them easy for any business owner to implement.

There were 7 things mentioned in the study but the seventh, that family-controlled companies generate more of their sales abroad, applies less to the companies we work with. So I can’t talk to it from personal experience.

By the way, the study’s conclusion is that CEOs of family-controlled firms invest with a longer time horizon in mind and manage their downside more than their upside, unlike most CEOs, who try to make their mark through outperformance.

All because their obligation to family makes them concentrate on what they can do now to benefit the next generation.

You can read the full study, which was conducted by The Boston Consulting Group, here.

 

 

If you enjoyed this post you’ll also enjoy 5 Tips To Improve Margins and the Bottom Line……

Click here and automatically receive our latest blog posts.

 

Little Things Can Have a Big Impact

Tuesday, February 12th, 2013

Little things, it’s amazing how much difference they can make.

Is how a business owner, or other member of a leadership team, talks to employees, team members, important? Could a simple, little thing like that have an impact on whether or not a company will reach its goals, get results?Certain behaviours can have an adverse and costly impact on the success of a company

Sara and I were kicking that around last week. Here’s how the thinking went.

Let’s assume that when companies realize that an employee isn’t going to work out they let the employee go.

Logically then, the remaining employees are there because the company has confidence – even trust – in them.

Looking at it another way, why would a leadership team, in a free market for labour, employ anyone they don’t have confidence in or trust?

So, assuming the business owner and her/his management team are surrounded by people they trust, why would they talk “at” them? Or worse, talk down to them?

What do we mean by talking “at” someone? For example, person A is talking to person B but not listening to anything person B is saying. And I’m pretty confident that most people reading this know what being talked down to is like.

Do these behaviours have an impact on results? Absolutely.

The persons B eventually become tired of being treated this way and leave. Turnover has all sorts of costs associated with it and can disrupt a company’s ability to perform at maximum effectiveness.

But turnover isn’t the worst thing that can happen. If a business owner or member of the leadership team doesn’t let an employee participate in a dialogue they risk not hearing feedback or an idea that may be better than anything else up to that point.

Would an employee be capable of coming up with such an idea? Probably, remember they’re there because the owner and management team had confidence, if not trust, in them. And, if you’re still not convinced, just watch an episode of Undercover Boss to see this in action.

So why isn’t the world like this?

Because human nature gets in the way. For example, while the owner may develop confidence and trust in person D, another member of the leadership team just may not; when people are under pressure because the company’s growing too slowly – or too quickly – it’s easier just to tell people what to do. It’s sad but true.

But it’s also expensive.

If you enjoyed this post you’ll also enjoy The People Pipeline

Click here and automatically receive our latest blog posts.

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.

Post History