The facts are of course, that in our role as discerning and demanding consumers, it is us in the shops, supermarkets and online that are contributing to this cost down dynamic. Of course, increases in fuel, raw materials, labour costs and the squeeze on lending have all helped compound things – but we’re very much complicit in what we’re seeing and experiencing.
Smart businesses have and will continue to invest the time and energy into working out exactly how they plan to mitigate this and in doing so, avoid compromising their earnings, remaining relevant and indeed, taking advantage of the situation.
This is when – what previously might have been dismissed as throwaway corporate non-words such as; ‘Change’, ‘behaviours’ ‘transformation’, ‘remodelling’, ‘repositioning’ and others come into play and into their own.
The fact remains; there’s no shortage of advice and opinion out there on the need to stay in the game in such a way that it’s worth your while. Lots of ‘what’ IE: the theory – what I’m sharing here is some much needed ‘how’ – the actual approached applied to my own company in 2009. AT the time everything (eroding margins, lowest common denominator business development mentality, cashflow issues, tension in the boardroom etc) was telling me that the party was almost over the numbers were the cue to become something very different – very quickly!
Getting to the numbers – as a result of exercise – the business:
Achieved a 440k cost reduction
Increased margins by 8%
Improved earnings by 38%
Increased profit per employee by over 40%
Suffered a zero loss of key clients
Operationally became a low maintenance/high yield business
Maximised value for shareholders in an eventual, successful and planned for trade sale in 2011
6 Of The Best – A Recipe for a Better Business…
1) Re-evaluate your people in the context of the new reality and the challenges that come with it.
Constantly ask the question of the business; ‘if we were to set up a business today – knowing what we know – what kind of people would we need, what, as a minimum would they be able do and achieve?
We ranked the whole business population as A’s, B’s and C’s – assessing everything from capability, productivity, ability and appetite to change, energy and capacity to learn.
C’s were managed out, B’s were invested in and managed up and A’s were put in control, protected and locked down.
2) Take a long and critical look at your clients.
Many businesses can too often become seduced by having clients for the sake of having clients – losing sight of the all important value and exactly what resources/costs are deployed to realise this value.
We’ve all heard of and probably fallen into the trap of ‘analysis paralysis’. On this project; we kept it simple and agreed a few simple definitions:
A list clients = high value, high loyalty, secure or growing sector/low hassle and low maintenance
B List clients = easy to service, good payers, of strategic importance as a door opener/credibility through the association, secure sector.
C listers – high hassle/low return, low loyalty, cost down agenda, vulnerable sector.
I’ll keep this bit short – we effectively abandoned the C listers along with the costs and resources that went with them and redeployed our time, effort and energies into our A and B list customers.
3) Challenge everything you do, how and why you do it with a view to getting lean and agile.
The problem with creative and idea packed businesses, is that they can often pile idea after idea, innovation after innovation and revision after revision onto the business – before engineering out the activities, routines and procedures that add little or no value. Very quickly, the business becomes cumbersome, slow and confusing place to be.
Critically reviewing end to end workflows with a view to identifying where and what adds value whilst recognising obsolete, over engineered and irrelevant processes/actions and activities is central to the business becoming lean and mean. NO sacred cows, NO pet projects – it either adds value or it doesn’t see the light of day again.
4) Engage your clients and other stakeholders in the change process.
The psychology’s simple – if clients have the opportunity to help shape and influence what the business becomes based on the clients’ and market needs and expectations – by definition, it’s got to be pretty near the mark! That aside, ‘clients’ are of course human beings – most human being have an instinct to help (we’ve all picked strangers up off the pavement (very day occurrence where I live!), handed a wallet back, held a door open…..) – most clients will actively work to help you become a better business and by doing so, have a better and more productive experience.
5) What gets measured – gets done!
Work with the business to identify and agree reliable performance benchmarks, milestones – and hold the business to account based on what it has agreed reliably informs it. Continue to challenge anything that looks, smells and feels like the kind of thinking, behaviour and ways of doing things that led you to thinking something’s got to change. P&L’s need to become contracts – they need to be honoured and respected.
6) Become a better leader.
“The first rule of Leadership – everything’s your fault’
By all means delegate tasks and actions – never delegate responsibility. Make the distinction between people and their actions/conduct and performance – avoid personalising issues.
Set guiding principles – a framework of understanding that everyone can adopt and respect. The following and others – helped align the business as far as values and common purpose was concerned:
‘Everybody contributes’
Not one of us is better than all of us’
‘We work to get over the bar – never bring the bar down to what’s easy’
‘When you challenge an idea – be sure to have a better one’
Communicate often, create transparency to head off conjecture, speculation and hearsay.
Praise and acknowledge the things that you once took for granted.
Undertand how change affects behaviour, recognise the behaviours and make it your business to know how to manage it and the situations that it will create.
Create a vision of how it can be – work as a team to undertand the action that will need to be taken to make things happen. Equally, be clear about the behaviour, types of thinking and action that will obstruct, frustrate or impede progress towards the goal. Sell this vision often – look out for and listen for signs that this is what people are seeing and sharing.
Finally, never lose sight of the need for people to have fun and enjoy the process where they can – stayed focussed, have resolve and remain disciplined.
Make this approach part of what the business goes onto do intuitively and often.
