1 very simple question to radically improve performance.

1 very simple question to radically improve performance.

Do not ask who, ask why.

Piles have been written about changing culture as the means to improve performance.

Most of it misses the point.

Learning organisations, teams, mutual obligation, and all the rest, but when it comes down to it, the core is about people wanting to, being able to, and being acknowledged as doing a good, and worthwhile job.

It does not matter if you are the managing director, or the cleaner, both are there for a set of pretty common reasons, and high amongst them is to do a good job.
Nobody, not even the most militant and unreasonable ‘rabble-rouser’ ever went to work to do a bad job.

The task of the organisation is to organise to get the best, most cost efficient, most customer value specific job done and delivered, and in most cases that requires people.

Therefore the task of management, and everybody involved should be focussed on removing the impediments to getting that job done, and having an engaged and responsive work force that gets the job done better than  competitors.

Only then can you be commercially sustainable.

Years ago, (mid eighties) involved in the early production of a new dairy plant which amongst other products made yoghurt, we used to watch the huge waste bins being carted away, several a day, day after day, a seemingly  intractable set of quality problems was costing millions.

Even worse, the office and management staff could see the waste, and lost confidence and heart.

In the midst of the turmoil, I watched one day as bad product was being pumped out of the batching tanks into the system that mixed in the fruit components, and was then sent to the form & fill packaging machine to be packed, to be sent to the waste bin.

When I raced around to get the machine stopped before it was mixed with the fruit, I was told to nick off, the system could not be stopped mid stride, there was  no choice but to knowingly add substantial cost to a poor product that would cost us to throw out.

After some heated exchanges, the whole system was closed down, and I presided over an impromptu meeting I convened almost by force on the factory floor to figure out the cause of the problem. As I was the marketing and sales manager, this was theoretically way outside my formal jurisdiction, but I was the one taking all the customer calls about bad quality and short delivery, and a key KPI was margin, so the bad product was really hurting the formal measures of my performance.

The production manager and supervisory people were seriously pissed, as their KPI’s were all about throughput, nothing about quality, customers or cost.

The meeting was a very unpleasant finger pointing exercise, nobody was to blame, and yet, everyone was to blame, but it was the beginning of an improvement process that led to the plant becoming a world class plant over the following couple of years.

At the core of the improvement was the conversion of the previous procedure of blaming a problem on someone other than yourself, to investigating and fixing the causes of the problems at source.

The tool used extensively was a version of what has become known as ‘5 why’. It replaced what we began to call the failed ‘5 who’ with the genuine investigation and remediation of  the root cause of problems.

The lesson, always Ask why, not who.

 

The 70/25/5 rule of business turnarounds

The 70/25/5 rule of business turnarounds

Most of my time is spent working with medium sized manufacturing businesses that for one reason or another, and usually many reasons combined, find themselves struggling.

The people running these businesses are often reluctant to spend money on consulting. Understandable, not just because it can be expensive in a cash challenged environment, but because they have been burnt before.

They became successful by being good at what they do, the product manufactured, the service delivered, and the admin and ‘soft’ management stuff just took care of itself.

Unfortunately, those days are gone.

In a variation on the Pareto 80/20 rule which holds true in every case, I find myself using what has become the 70/25/5 split in the things that receive attention.

Having done the analysis to determine the 20% of things that will deliver the 80% of the value,  and be able to leverage from the effort to be made, the improvement task is to focus the effort where it will turbo charge the results.

This is where the rule comes into play.

70% of the effort goes into improving the current operations.

20% goes into spreading the current, and now improving operations into related, or adjacent areas.

5% goes into new stuff, experimenting, going right outside the comfort zones.

It also tends to follow that sequence.

Let me give a generic example.

My point of engagement is usually a perceived problem with sales and/or marketing. They need to generate more revenue, and usually quickly, so call in an expert.

Typically I find a tangle of current practises and issues that are sub optimal, that are not generally seen as ‘Sales’ issues. There are poor delivery lead times, inconsistent quality, poorly understood costings, lack of cash management, a reactive and undertrained sales force, poor customer service, and so on. All current activities and processes that require work before much that is ‘sexy’ which is what consultants usually sell, can be implemented. For example implementing a sales training package will not deliver value if the product quality is questionable, or the lead times longer than customer expectations.  It will just be an expensive holiday for the sales staff.

This is the 70%, the early grind of improving the existing  processes and priorities. It is usually a process of planting a nurturing a variety of improvement seeds in all sorts of corners of the business, rather than applying a silver bullet solution, and it does take time.

When the seeds are becoming seedlings, and some improvement is becoming evident, and often it is anecdotal, as the accounting systems typically look behind, rather than in front so the numbers are usually lagging, it may become time to apply the next 20%.

Continuing the Sales analogy, you can now reliably manufacture and deliver products that stand up competitively, you know your margins and capacity constraints, so you can start to focus more effort on increasing your share of wallet, engaging new customers in your priority markets, and entering adjacent markets perhaps with a marginally altered product to better meet the specific needs.

By the time the  20% gathers some momentum, the business is usually becoming prosperous, so can afford to start investing some resources in the really new stuff. The 5% effort spent on new products, the next technological development, and perhaps building scale by merger or acquisition.  It is here that the exciting stuff happens, the next breakthrough in performance, and the payoff for long suffering managers, staff, and shareholders.

Are you solving the customers real problem?

Are you solving the customers real problem?

Marketers spend huge amounts of effort and money trying to define the problems they solve for their customers and potential customers. Often they fail simply because they do not understand their customers motivations sufficiently well, or they are overwhelmed by the great, world beating features the engineers have built in.

Customers do not care about your features, they only care about the outcomes for them that come with use.

There is a process that leads from the prospect being identified through to the initial transaction, then the development of a mutually beneficial relationship

At each point in that journey, in order to build the relationship, marketers have learnt that stories are by far the best way to go about it.

There appears to be three types of stories, and these are prevalent not just in marketing, but everywhere we look that stories are told. Books, movies, the theatre, and even advertisements.

External: These are the superficial obvious pieces of the narrative, but do not go to the heart of  the reasons why things are happening. The role the external story plays is that it provides the context for the real messages being delivered.

Internal: The internal parts of a story is usually all about how the protagonists feel about themselves, and those with whom they interact, how they behave under different circumstances.

Philosophical: This about the basic motivators of human behaviour, and the roles being played. Good vs Evil, Envy vs generosity,  Us vs Them, and Right Vs Wrong.

Consider the original Star Wars movie. The external story is about the development of Luke from a boy to a trainee Jedi, and the trials that are encountered as he and his acquired companions try to keep out of the clutches of the Empire.

The Internal story is about the angst and confusion felt by a boy suddenly thrust into a strange world that is trying to kill him and his companions.

The philosophical story is about the battle between good and evil, which comes to a head in the climatic fight scene.

When considering the elements that make up your brand story, remember that customers buy solutions to internal and philosophical problems, not the external ones, as they do not really matter beyond a question of price.

In other words, do not bother selling the features, sell the beneficial outcomes of use.

This works for simple products as well as it does for a complex one.

One of my clients provides a specialist engineering service to large scale manufacturing plants and infrastructure. The external story is that they do a really great job in a potentially dangerous and  highly regulated area. The internal story is about the absolute confidence that clients can have in the technical and project management skills they deliver. The philosophical story is about the need to retain some of these key skills in Australia, as once gone, like the Tassie tiger, will not come back, and the impact of that is long term and painful to us all.

 

Decision time for manufacturers of ‘disposable’ items.

Decision time for manufacturers of ‘disposable’ items.

I have used the term ‘disposable’ to mean that the consumers investment is low, so purchase risk is limited. Buy one and find it does not deliver, and little is lost.

Over the weekend I had a casual conversation with an acquaintance who runs a small business selling such a line of disposable consumer products into a niche via specialist chain retailers, many branches being franchised, so are somewhat independent.

His problem is that he is being overrun by the scale of the retailers who take his ideas and have them fabricated in China under another brand at prices he is having increasing trouble matching.  In any event, they also control shelf space, so he is at their mercy.

Not an uncommon problem.

My rather glib response was that he was trying to sell to the wrong people. His current customers, the retailers, were not actually his customers, in fact they were more like adversaries. His real customers were the ones who had a need that his products fulfilled, and the retailers were just a logistical barrier to be managed and overcome.

The retailers see the only value in his products as a range they should carry as an occasional addition to the customer basket  at the cheapest price that meet their margin requirements. For them there is no investment in the success of the product, and little downside.

To the real consumers however,  the question of whether they outlay $8 or $11 for the items is largely irrelevant once the buying decision, often impulse, has been made. There is little brand awareness or preference involved, there has been only modest marketing investments made, the sales come from demonstrating the utility of  the product.

My advice: Set up an online shop, and actively market to the identifiable groups of customers who would benefit from using his products.

As he has a limited budget, and little brand recognition, this is potentially a make or break decision, not to be taken lightly.

Retailers will be even more disinclined to stock his products when they see him actively competing with them on line, but on the other hand, his sales volumes have been dropping steadily for some time, and the costs of doing business are increasing, so the end game is in sight.

The flip side is that the product is ideally suited to selling on line, the value is demonstrable, it is easily sent via the post, and the margin freed up by selling direct would be considerable.

A change of this nature would be uncomfortable, but I suggest the only way the business will continue to prosper, and have any value when the current owner decides it is time to retire.

Does yours fit the consumer definition of ‘Disposable?”

If so, what are you doing about it?

 

4 foundation ideas for business improvement.

4 foundation ideas for business improvement.

Having spent many years involved in one way or another in business improvement, as you may expect, I have some thoughts.

Primary amongst them is the dismay I feel when I meet another medium sized business owner  who has had a bunch of expensive Lean or Six Sigma consultants, or now coming to the fore, ‘Agile’ consultants in their business who have achieved little beyond mouthing clichés and scraping the coffers.

All these branded and marketed improvement processes are just toolboxes that contain a set of pretty common ideas that are dressed up to sound like the next coming.

There are no silver bullets, no easy solutions to difficult problems, no template that covers even a significant amount of ground. There are just tools that can work when used in the right context by people who know what they are doing, and/or are prepared to learn as they go.

However, in the fast moving world we live in there are a few foundation disciplines that go beyond the individual tools.

Identify the problem. Improvement comes from  identifying and solving problems. The identification and articulation of the problem to be solved should be the first, and continuing priority. No improvement project I have ever seen solves just one problem, there are always a series of smaller ones when you dig deep enough.

Collaboration.  Collaboration is the core of getting things  done that  ‘stick’. In other words, they change the status quo in some way that sustains itself, becoming the new status quo. Unless change is accepted by those affected, it will simply not last.

In parallel. Sequential change takes too long, and inevitably leads to unintended consequences that do not become evident until the damage has been done. Working in parallel offers the opportunity to improve and problem solve in real time as the project proceeds. The days of sequential improvement programs are gone.

Anticipate risk. Managing risks at the beginning of a project by anticipating, and allowing for them makes way more sense than just barging in. Once you get towards the end of a project, there are sunk costs, and often corporate momentum and egos involved, all of which are very hard, sometimes impossible, to shift.

Almost 20 years ago I worked with a group of fine wool growers frustrated by being price takers. They were on the end of a long sequential supply chain that delivered them no information at all on any topic beyond the price of their greasy wool on auction day. We gathered all the processing steps from sheep to the fancy suit around a table, and turned a 2 year opaque, price driven supply chain into a collaborative demand chain that took 15 weeks from the sheeps back to the suit on the rack, and delivered better margins to all players. That collaboration is still delivering returns to growers, by solving the industry structural problems in a way that remaiins almost unique. The inventory savings made through the chain were just the cream

Cartoon credit: Tom Fishburne

What does ‘Priority’ mean to you?

What does ‘Priority’ mean to you?

Most of us would say in answer to that question “the one most important thing”.

The thing that we just have to do first, in preference to all others.

Priority is singular.

However, in most cases I see the word used as a plural, ‘Priorities’. It seems this is a new word, spawned perhaps by our instinct to cover our bets and our management arses.

We all get what ‘Priority’ means, but how do we separate the ‘Priority’ from the ‘Priorities’.

In most management situations, we do not do that separation job adequately. We end up trying to do too much, compromising the outcomes of everything in front of us.

Pick one priority, and when done, move on.

In 1997 when Steve Jobs (don’t you get sick of examples from Apple and Jobs?) returned from involuntary exile back to Apple, the company he started was on the verge of insolvency, having just lost over a billion dollars. A year later, Apple turned a $309 million profit.

How did he do it?

He focused Apple on the priority: selling the core range of two products, the PowerMac 3 and PowerBook 3.

Most of the huge range of products were discontinued, revenue did drop, but overheads dropped even further, so they made money, and were able to reinvest in the follow up innovations that changed the world.

Italian mathematician Vilfredo Pareto coined what has become known as the 80:20 rule by observing a wide range of totally unrelated situations where 80% of something was generated by 20% of the generators. The truth of this principal was observed by pioneer management consultant Joseph Juran who popularised it as the Pareto Principal.

In 22 years of consulting and contracting, mainly to medium sized manufacturing businesses, I have only ever seen evidence that the Pareto principal holds. In some cases, it is more like 90:10, so the challenge is the same one faced by Steve Jobs.

Which 80% of what you are currently doing do you no longer do?

Never an easy question, there are always reasons for everything that is being done, but survival is often about establishing the priority, and doing just that one thing better than anyone else.