For the last 22 years since leaving corporate life, I have worked at the intersection of Revenue generation, Operations and Performance improvement of medium sized manufacturing businesses.
My entry point is almost always sales and marketing. Businesses are struggling, and see the solution as more sales, so they look for someone who can wave a magic sales wand, and generate more revenue out of the ether.
Almost never happens that way.
Originally I studied to become an accountant. I got a piece of paper, that that never made me an accountant. Luckily, I realised my mistake before it was too late, and moved across into marketing, in the days before anyone had really heard of it. Mostly they still do not know what it is, but these days, at least they have heard of it.
I found it was easy, and I was very good at it, so had a corporate career starting in marketing and sales that covered all functional roles, except accounting, including general management with bottom line accountability for a substantial divisional business, reporting to the group MD .
However, I was a lousy employee, because while I got stuff done, made lots of money, I was a pest who would not play the corporate game of bullshit to the left, arse cover to the right, and never admit it when you may be wrong.
So, 22 years ago I hung my shingle as a contractor, intellectual capital for hire, wisdom on 2 feet, and promised myself, ‘no more corporate bullshit’.
I believe that unless we actually make stuff, physically produce the products others want to buy, because it adds value to their lives in some way, generally by solving a problem of some sort, we will be stuffed in the long term.
After all, how many baristas do we really need?
My corporate and subsequent experience in revenue generation, which is what I choose to call Sales and marketing, operations, numbers, logistics, and general management of manufacturing businesses gives me a platform of experience that small and medium manufacturers in this country are sorely lacking, for a range of reasons.
I look for 3 things when I go into a business as an advisor, contractor, saviour, and occasionally ‘head-kicker’.
When you go to the doctor for a check-up, feeling a bit off, he checks your blood pressure, temperature, looks in your eyes and down your throat, anything not within the normal range, he digs one level deeper.
That is what I do when assessing a business.
I look for three things:
- Business Architecture.
- Rhythm & Flow
Get these three things right, and aligned, and there will be superior performance.
A StrategyAudit business improvement project is all about these three things, and the manner in which they can be defined, analysed and brought together to deliver the improved performance required.
So, let me explain them, or at least my view of them.
This is where most people and advisors spend most of their time, where all the things you can get data on reside, so to some extent they are predictable, and as improvement is made, you can see it in the numbers.
It is relatively simple, but I see it as a pyramid, which I will explain.
Architecture is how the business is built, and managed. A business is like a building, it needs foundations, upon which the infrastructure of the business is built.
This pyramid broken up into the four segments reflects the sequence I follow to drive improvement programs.
This is the stuff that no matter what else you do, the foundations must be in place for success.
A lot of it is ‘underground’ as most foundations are, nevertheless, without a solid foundation, whatever else you build, it will not last.
Operational accounts: cash flow, P&L, Break even calculations, your ‘Why’, regulatory requirements, Business Model, Resource availability and capability, and CASH,
Different businesses require different foundation structures.
If you are going into child care, the regulatory stuff is very challenging, not so challenging if you want to be a business coach.
However, one is absolutely essential, the number one in every foundation, one word: Cash.
It is also true that the foundations wear out, become depreciated, and without renewal, which is a continuous process, you will still fail.
The advent of digital has changed forever a number of these elements and I would contend is continuing to change them. However, the reality is that the principals remain the same, it is just that the speed at which everything happens has accelerated at unprecedented rates, and continues to do so.
Marketing & sales by another name, which brushes off the silo mentality prevalent to date, and highlights the importance.
Everybody knows that no business survives without sales, but the key is to be able to generate revenue by creating value for someone else, at a cost that for them is less than the value they receive, but for you is greater than the cost to provide it.
You would be astonished to see how many businesses did not know their cost of sales, or used some ancient absorption costing method pushed by accountants that became redundant as Jesus moved to the Bethlehem first grade side.
Customer profiling, lead generation and conversion, NPD & C, customer service, Key account management, value proposition, advertising, market research, and the many other outward facing activities fall into this bucket.
Leverage & scalability
This is where the fun really starts.
Once the foundation is in place, and the revenue generation machine is humming along, you can realistically start to think about leveraging and scaling the successful operations you already have.
Leveraging and scaling existing operational and process capabilities into new markets, addressing the needs of new customers, and perhaps launching genuinely new products will deliver great rewards when done well. It is where mergers, acquisitions, and joint ventures become contributors to business value rather than consumers of value. There is still risk involved, but from a solid base, growth can be substantial delivering great rewards.
Sustainability occurs when the supporting three levels are working well, and working together. Most owners of medium sized businesses look forward to the day when they can take 6 months off, and come back to the business still humming along, not missing them at all.
The much touted ‘laptop lifestyle’ touted by get rich quick internet salesmen always allude to the day when you can be anywhere in the world with the laptop, and just check in, perhaps do a bit between sips of Pimms beside the tropical pool. This may be the objective, but it is rarely attained without the grind of building the business architecture.
Rhythm & Flow.
Rhythm & Flow is all about how the management processes work to facilitate the delivery of value to customers in a commercially sustainable manner.
The development and deployment of strategy, the conversion of a lead to an order, the operational processes that manufacture products, the Customer facing processes, and so on, are all optimised when the flow is even and predictable.
Business might be organised vertically, but the processes that generate leads, service customers, and build products are all horizontal, cross functional. Your customers are not interested on your structure, unless they want to see the CEO to complain. They are more interested on getting the product they ordered on time, in spec, and at the price they expected, all horizontal processes.
At the intersection of the processes and organisational silo boundaries, you always get interruptions to the smooth flow of information and product, and a bit like rapids in a river, the intersection creates a little pool of chaos, too many of them and all you have is whitewater.
You would all have heard of Henry Winslow Taylor, and scientific management. While Taylors views of the people involved at an operational level are absolutely wrong, his ideas on the standardisation and optimisation of the flow through a factory are absolutely right, and are the basis of all our manufacturing now.
Henry Ford did not invent the production line, he used Taylor’s ideas to streamline the flow through his factory. Look closely at the Toyota Production System, credited with revolutionising modern manufacturing, and you will see it has Taylor’s fingerprints all over it.
I seek to identify anything that interrupts the flow, creates a rapid, as in a river, which is just a small piece of chaos, and remove it, restoring a smooth flow.
Culture is where it really gets interesting.
Culture is the way we do things around here, the mindset of the business, as reflected in the way people go about doing their jobs, setting their priorities, interacting with customers, suppliers, and their co-workers.
Culture trumps everything else, and is hard to define, almost impossible to predict, and minor irritations in one place can have major ramifications elsewhere.
The butterfly effect.
Measuring culture in any short term way is a waste of time, but over the long term, the value becomes obvious.
It is a bit like motherhood.
We all know we individually benefit, and society benefits when parenting is done well, but how do you measure it?
You cannot over the short term, but the impact is obvious over the long term.
The way I do it is to engage at all levels in as many ways as possible, finding my way into the nooks and crannies that exist in every business, to really understand how it all works, what people think, why they think and behave as they do, and evolve some strategies for improvement.
This is not meant to be a comprehensive review, it just represents the headlines from which a StrategyAudit investigation starts. Every assignment is different, every set of recommendations is tailored towards the solutions for the specific problems and opportunities encountered during the investigation, and every change program tailored to the needs and capabilities of the organisation.
Cartoon credit: Hugh McLeod at Gapingvoid.com