If your business didn’t make as much money in 2013 as you would like to have made, then don’t do business in 2014 the same way you did business this year.
As is often said, “Insanity is doing the same thing and expecting different results.”
Focus on What You Can Control
You should focus on what you can control, and not attempt to control what is beyond your reach.
Nevertheless, you might be surprised at what is within your control (while you have, perhaps, long assumed that such things were beyond your control).
Many think that “costs” are within their control, while demand and prices are not.
However, in working with many companies over the last several years, we have found that the greater part of their costs are, in fact, not within their control. They have already reduced internal costs as far as they dare (and sometimes beyond). And, as for external costs, most of their suppliers have also already cut costs to the bone and are in jeopardy if they offer lower prices.
But, let’s look at some factors that are within your control as an executive and manager in your company:
- You are in control of unlocking the tribal knowledge within your company and your employees
- You are in control of leveraging tribal knowledge and creating from it innovative solutions that can help you reduce lead-times, increase Throughput, and hold the line on operating expenses while allowing your company to grow 30, 50 or even 100 percent
- You are in control of discovering the real—sometimes, hidden—needs of your customers (and customers you don’t even have, yet)
- You are in control of creating radically different “Mafia offers” that are so good that you customers cannot afford to refuse them and your competition is unwilling to match them.(Please don’t think this has anything to do with price-cutting and starting a price war. That is anything but “innovative.”)
- You are in control of how much effort and innovation you put into helping your key supply chain partners remain stable and even improve, so that both your profits and theirs increase as you become partners for success. You are in charge of cultivating durable, mutually-profitable relationships with both your suppliers and your customers.
- You are in control of uncovering the great treasure trove of success-provoking knowledge that is stored in the minds and intuition of your employees who have been working in your industry and your company for three, five, ten or more years.
- In short, you are in control of finding innovative ways compel customers to buy from you and dramatically increase your market share.
Leverage What You Can Control for Growth
- Every time you reap the benefit of having unlocked tribal knowledge, reduced waste in a process and, simultaneously, increased your capacity for producing Throughput, you liberate cash-flow for growth.
- You should have a plan for a next step. You should have in place a
POOGI—a process of ongoing improvement
Making the most of the benefits reaped from one incremental step in a POOGI means taking a long-term view that is not haphazard nor based on guesses. The return on investment (ROI) for each incremental step should be calculated on a “approximately right, not precisely wrong” basis. (If you don’t know what that means, leave a comment and we’ll get back to you.)
Many companies have discovered that it is possible double, or even triple, their Throughput while holding operating expenses and even investment relatively constant.
Create a Compelling Vision for the Future
Create lasting success and maintain a durable advantage over your competition by creating a vision that resonates with your employees. Make your employees feel valued and let them know that their ideas are really heard and taken to heart by your managers and executives. (Please don’t think this means you need a “suggestion box.”)
Get to the place where everyone understands the roadmap to the firm’s success and growing profitability. Communicate and train until workers on the production floor are able to translate—and articulate with some precision—how their specific actions contribute directly to making more money.
Help individuals, functional units and departments understand how they can—indeed, must—work together as a unified system. Managers and executives must do away with old, outdated KPIs (key performance indicators) that sometimes tended to make one function work at cross-purposes to other functions. In place of these old KPIs, institute new KPIs that measure the productivity of the entire enterprise—the whole system—and its ability to produce Throughput and profit.
Watch for Part 2, coming soon!
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