Situation: A company has a network of regional offices, operating under loose oversight from the home office. Increasingly, large customers are asking for national service agreements, but the company struggles to coordinate uniform national service delivery. How do you shift from independent regional to coordinated national operations?
Advice from the CEOs:
If you want to act like a national company, then organize like a national company. Create a national account office which will take the lead in negotiating national contracts. That office will then coordinate with the regional offices to assure that service delivery occurs according to contract.
As the national office is built, it will be important for them to understand how service delivery may vary between states because of differences in state regulations. This will require a manager who is experienced and knowledgeable in your field. This may be a promising current regional manager or an outside individual from your industry.
You will also want to define customer categories which will enable you to classify current and prospective customers as regional or national accounts. You may want to consider three customer categories, for example Regional, Emerging National and National Accounts.
The key to success will lie in your incentive and professional development structures.
If region managers receive their incentives and promotions primarily for developing regional business, then this is where they will focus.
If you want the region managers to shift their activity and priorities to creating and servicing national contracts, then bias both your incentives and professional development programs accordingly.
For region managers, continuity of business will be a top priority, as this enables them to maintain region performance. To come on-board with the new program, they must perceive a value for both themselves and their customers.
Once you have determined your structure, look for high profile wins that drive the structure. Reward and promote those who produce these wins.
These producers will become your champions for change.
The message will spread quickly across the organization.
Situation: A company has a high-powered Board of Directors. This Board is focused primarily on company strategy. The CEO wants to create a separate Advisory Board for technical and business development. How do you create and leverage an Advisory Board for technical and business development?
Advice from the CEOs:
Be clear on the role and compensation of the Advisory Board.
Create a clear set of expectations to initiate the process, and refine these expectations in early meetings of the Advisory Board.
Early stage companies often pay out of pocket expenses for attending Advisory Board meetings, plus stock options. When business development is the focus, you may want to add a percentage of any new business brought to the company by the member.
More mature companies may add a stipend for Advisory Board service.
Not all Advisory Board members may be compensated equally, particularly if members receive a percentage of business that they help to create. You may also choose to compensate members differently based on their experience and influence.
Choose Advisory Board members carefully.
Go beyond personal contacts of the CEO and company officers. Look for individuals who are known and respected within the industry. You also want individuals who have exceptional contacts and who will agree to use them to benefit you.
Look for individuals who are highly positioned within target companies – for example a VP of Operations or of Business Development. Also look for individuals who have excellent relationships with personnel in target companies
Be open and clear about your expectations of individual Advisory Board members. Celebrate success.
Establish metrics that the members are expected to fulfill.
Record commitments made by Advisory Board members and include updates against commitments as part of Advisory Board meetings, as well as updates against metrics that expected of members.
Celebrate successes of Advisory Board members and note individual and team contributions whenever the Advisory Board meets.
Situation: An early stage company needs to move from an engineering/R&D focus to a production focus. Cash availability and business plans dictate that this must happen very rapidly – within 4 months. How do you coordinate a rapid cultural shift from R&D to production?
Advice from the CEOs:
You will need an experienced VP of Operations.
Operations and production engineers are a different personality type than R&D engineers. The latter are creative and seek new and more effective ways to solve problems, while production engineers thrive on perfecting a process and getting it right every time. You will likely have to adjust the team to assure that you have both types.
Reorganize the current engineering team into R&D and Production engineering teams.
A core R&D team reports to the CTO.
Another team reports to VP Ops and will cover product manufacturing, process improvement and logistics and QA.
What are the most important steps to take first?
Have a heart-to-heart conversation with the individuals who you have assigned to production responsibilities.
Get back together in small groups or one-on-one with your production group and explain that to meet the company’s objectives – and everyone’s long-term financial objectives – there must be a change. Explain the cost in stark dollars of what the failure to make this change means to the company and to the team. Challenge them to assist you in developing solutions that will allow you to meet your corporate objectives.
Allow some learning opportunities to arise. Let team members make the occasional mistake and use these as coaching opportunities for the group to show what happened, why it happened, and why it can’t be repeated.
Separate standard and special order production into two groups. Each group will have to meet their own performance objectives and metrics – but all objectives and metrics must support the company’s objectives.
Early on you may want to require CEO sign-off on production sheet changes, but within a system that allows you to easily determine material from non-material changes.