Category Archives: Manufacturing & Operations

Where Do You Focus to Build a Strong Company? Four Considerations

Situation: A company has just hired a new CEO. Historically the company has focused on high quality and good customer service but has lacked good financial management and has experienced financial difficulties. As a result, they could not support their staffing needs. Where do you focus to build a strong company?

Advice from the CEOs:

  • Critical areas where the CEO should focus:
    • Quality – assuring that the company continues to produce high quality products.
    • Customer service – assuring that the company continues to offer excellent customer service.
    • Quality and customer service must remain one and two, though they can be in either order.
    • Financial soundness; but not so focused on the bottom line that either quality or service suffer.
  • How do you achieve or maintain focus on these areas?
    • High quality and good customer service are already well established.
    • What has been lacking is sound financial management. Evaluate whether the right people are in place, and what financial and financial record systems are in use. If expertise is needed, bring in an expert to evaluate both personnel and systems and recommended changes that need to be made.
  • What other important factors should be the CEO’s focus?
    • Ethics – particularly when evaluating the company’s financial system, assure that both people and systems support a strong and reliable department. This may result in some hard decisions that are necessary to turn the situation around. If this is the case, be determined but fair.
    • Sustainable business practices – assure that any new practices that are instituted are sustainable. Look at case studies of similar companies that have turned themselves around.
    • Fun – an enjoyable workplace as far fewer issues than one that is difficult. It is important to build strong teams, and to give them the autonomy necessary to do their jobs well without overly taxing team members.
  • Build a company that has a good balance between the first 3 critical factors. When new hires are necessary look for people with an established track record and business background who also have strong ethics.

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How Do You Add a New Capability? Four Approaches

Situation: A CEO reports that customers frequently ask whether the company can deliver a service that isn’t current in their portfolio of capabilities. In a substantial number of cases, the ability to offer this service is a key factor in their choice of vendors. The company’s experience with outside consultants offering this capacity has been disappointing. How do you add a new capability?

Advice from the CEOs:

  • Reevaluate the company’s needs and assess whether these can be better meet by bringing this capability in-house, or by restructuring how the company works with contractors. Determine whether the latter is just a negotiation and contract / payment problem.
  • Take a closer look at how the company contracts and creates incentives for outside contractors. Do they have performance objectives written into their contracts that reward them for meeting contract commitments? Can they earn bonuses for beating contract deadlines or exceeding design requirements? Are there penalties them for missing key deadlines?
    • Is it clear whether contractors are missing deadlines because of the “creative process,” because they don’t use their time efficiently, or because they have other commitments that take precedence at the company’s expense?
    • If the answer is either of the two latter situations, then contract adjustments may work. Similarly, if they have an incentive to be more creative faster to meet a bonus deadline a contract adjustment could also work to the company’s benefit.
    • Another option in working with independents is to make it clear that the company is generous, but if the contractor does not meet deadlines, they go to the bottom of the list for future opportunities.
  • An option is to hire one specialist and challenge them to grow a practice within the company. This may mean that they have to do all tasks early on, but the potential win will be the opportunity to grow a significant business and hire a team to do the lower-level work under their direction.
  • Another option – bring on a creative problem solver with appropriate experience who can support the existing team, but who will have more flexibility than a pure specialist.

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How Do You Expand into a New Market? Four Points

Situation: A company is interested in expanding into new market. The CEO notes that they have little experience in this market, but it is lucrative, and they believe that their technology has effective applications in this market. How do you expand into a new market?

Advice from the CEOs:

  • If the new market is technical it is important to identify the standards that govern production in that market. Examples include ISO 9000 processes and 13485 ISO Medical Standards. Start work on these now to assure that the products and services under development meet market standards.
    • While it will take effort to become ISO compliant, this investment will bring significant benefits in terms of regularizing all the company’s processes and procedures.
    • There may be some early resistance, but the long-term benefit is worth the pain.
    • Being ISO certified helps the company to sell its services. Many clients will not consider the company as a serious vendor unless it is ISO certified.
  • Pull in an outside consultant to do a quick gap analysis between where the company’s current procedures are and where they need to meet the standards.
  • Will ISO certification provide a competitive advantage?
    • It will never disadvantage the company and may provide a competitive advantage with customers.
    • Use Blue Ocean Strategy to create a new advantage for the company around ISO certification.
    • Industry will eventually require vendors to increasingly become ISO certified. If the company is already there it will be ahead of the curve and may be able to gain a premium price for its products and services by being there ahead of others.
    • European and International companies increasingly insist on ISO certification – they are ahead of the US.
    • Create a Market Road Map. Identify the markets that the company could serve. Look at the requirements for doing business in these markets. It may be possible to find additional leverage in ISO certification that will allow the company to enter additional markets with minor incremental additional cost.
  • Will ISO certification add an additional cost structure to the company’s services?
    • Under ISO, a company can have both ISO and non-ISO projects. Company standards will simply identify which projects are which and when non-ISO standards apply. Standards can be changed under ISO as new non-ISO opportunities arise. It is just a matter of updating procedures.

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How Do You Sell an Onsite Business? Five Perspectives

Situation: A company has several locations for its operations. One is onsite at one of their principal customers where they perform services for the customer. The rest of the business is pursuing a different direction, so the CEO wants to sell the onsite business and focus all efforts on the main business. How do you sell an onsite business?

Advice from the CEOs:

  • Do onsite business (OS) personnel identify themselves as part of the company or the customer’s company?
    • The older personnel themselves as part of the parent company; the new engineers see themselves as tied to the customer which is far larger and enjoys broad and positive brand recognition.
  • Now may be the time to sell from a price perspective. Companies are hungry for revenue sources and experienced personnel. The price that they would pay for the OS business is small change for them.
  • The decision comes down to price – can the company get the right price at the right terms?
  • Consider this alternative – break the OS off into an independent entity. Make it a separate company with own managers.
    • This allows the sale of the OS to be set up with its own operating rules and incentives, independent of the company’s other operations.
    • This move queues the company up for whatever is possible – ongoing operation or possible sale to a buyer. It also simplifies the sale scenario as OS would be a stand-alone unit, with its own personnel and management structure. There may be some shared infrastructure services with the company’s other locations, but these are services that would be taken on by the buyer using their own systems.
    • An option is to give stock to the managers of the OS – a piece of the pie to encourage them to stay on.
  • Given the company’s strategy and direction, investing additional funds in the OS doesn’t make sense. Selling and keeping the money makes more sense if the company is ready for this and feels that there is little or only a limited future for the OS business.

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How Do You Boost Intensity and Accountability? Five Solutions

Situation: A CEO is concerned about the intensity and accountability of her team. An employee stock ownership program is in place, and employees are rewarded with bonuses for meeting or exceeding objectives. HR reports that there is a lack of decision-making; employees just sit and talk instead of moving forward. How do you boost intensity and accountability?

Advice from the CEOs:

  • Does the current bonus structure include revenue growth? If revenue growth is not part of the incentive program, then this won’t be the focus.
  • What happens when the CEO is away?
    • Assure that the #2 who’s in charge has the same sense of urgency as the CEO and has the confidence to make decisions.
  • The company is at the point where it needs seasoned professionals to run key operations and functions.
    • Ideally this would be an internal promotion, but if there is no internal candidate look to hire from the outside. Hire two new managers – for different teams. Watch how they do with each of their teams to determine whether one can run the whole outfit.
    • This can ignite other employees – those who will catch on to what the new manager is doing and will now get the message.
  • Another CEO empowered people and explained how it worked.
    • They have had to swallow some poor decisions but have learned that they can’t come down on those who make mistakes – it discourages them from taking the risks needed to make decisions.
    • They’ve organized strategic teams to develop the empowerment program with minimal input from top staff. Teams are required have to report on their results 2x week – no exceptions.
    • The CEO hired two key hires who are hard hitting with deep resumes and experience – individuals who have shaken things up.
    • The new managers started in a sheltered situation where they could learn the organization and the people. This was done before they were put in their eventual positions.
  • What are the potential downsides to making this kind of change?:
    • Some sparks will fly.
    • Some will get upset.
    • Be patient with this process – let it happen.

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How Will Your Personal Plans Impact the Company? Six Points

Situation: A CEO, for personal reasons, is planning to move to another state. While he will remain CEO, he is concerned about the potential impact of this decision on the company, particularly the fact that he will not be present personally to handle matters that arise. What can he do to alleviate this concern? How will your personal plans impact the company?

Advice from the CEOs:

  • Put a stake in the ground. Set a date for the move and work backwards to see whether this is attainable.
  • Have a discussion with the company’s key managers.
    • Empower them to challenge the date.
    • Discuss this as a brainstorm to plan the future and what must be done to get there. Once a plan is established retest the timing.
  • Consider this as a gradual transition. Start 3 weeks here / 1 week there, and gradually transition to 1/3. This will help you to determine how the company performs absent the CEO’s daily presence.
    • Move family but keep a small place here. Start the transition now and figure out balance. Do what is necessary.
  • Have the key managers transition their roles before initiating the move.
    • This will provide confidence that they can handle this transition.
  • As part of the process, look at areas where the company can use more support. For example, is HR up to snuff? What about information services or financial management? Prior to initiating the transition take steps to fill any gaps.
  • Does the company have a formal metrics structure?
    • If not, establish one and in preparation for the transition see how the two managers manage this.

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How Do You Beef Up Talent to Drive the Company? Three Questions

Situation: There is no secret that hiring is more challenging now than it was two years ago. A CEO is finding it difficult to attract and bring in the right talent to achieve her growth objectives. What are others doing to bring in new talent, especially high performers who will help to bring in new accounts and work with key customers to develop new business. How do you beef up talent to drive the company?

Advice from the CEOs:

  • What has worked best for others?
    • Hired low and developed home grown talent. This means building the capacity to train new talent to meet the company’s needs.
    • This may not produce entrepreneurs like the company’s founders but can produce solid performers.
    • Some sectors are by nature risk averse. Individuals are not dollar driven as much as by security with an acceptable salary. Good candidates who are hungry for growth are more likely to be found outside of these sectors.
  • How do you hire to match the company’s objective?
    • The objective is rapid growth – the mold of the original founders who were risk-taking entrepreneurs atypical of the sector.
    • Look for candidates who are driven by growth. The right candidate will jump at the opportunity to take a $5M book of business and grow it to $10-15M in 3 years with appropriate corporate support and compensation.
  • What has been tried or investigated in the past?
    • Looked for successful smaller businesses similar to the company as possible acquisitions. The challenge was that the people running these companies liked their independence and didn’t want a boss.
    • Looked at individuals from corporate backgrounds in the same sector. Some worked, some didn’t. Frequently, these people were not entrepreneurs or builders.
    • Talk to private equity companies. Ask who they have bought or sold in this space. Gather names of drop-in CEOs and key staff who turned companies around and did well.

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How Do You Refocus on Growth? Four Points of Emphasis

Situation: A CEO wants to refocus his company on growth following a difficult two years. Employee absences and stress due to the pandemic have had a significant effect on performance. The objective is to rally the team and excite them about future prospects. How do you refocus on growth?

Advice from the CEOs:

  • Focus on the top goals for the company: revenue, customer satisfaction, product quality and delivery, and strategic positioning.
    • These have been company strengths in the past and will form the foundation for new growth and opportunities.
    • This is the time to be the head cheerleader. The company has a strong past and will be even stronger in the future.
  • Key points of communication to the company:
    • We have a strong Good News/Good News story – the company has survived the last two years, has an aggressive plan and a strong future, and will do even better as conditions return to normal.
    • The company is focused on an important and growing sector and is positioned for strong growth as customers refocus their companies.
    • Start this aspect of the communication this week – then keep on repeating it to reinforce optimism as the company repositions itself for new opportunities.
  • Communications to customers to support the strategy:
    • Tell clients that the company is healthy and well positioned to continue to meet their needs better than any other alternatives available to them.
  • Allow a few months for employees to regroup.
    • Staff will be exhausted, physically and emotionally, following the last two years – give them time to regroup and refocus.

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How Do You Develop an Employee to the Next Level? Four Points

Situation: A CEO has a key employee who wants a higher level of responsibility. Currently this employee is primarily focused on business development. He’s good at this but wants a higher level of experience. The CEO agrees. How do you develop an employee to the next level?

Advice from the CEOs:

  • If you ask this individual what needs to be done, what happens?
    • Revenue is number one. This is where he is focused, but he wants more than this from his role.
    • If this is also the CEO’s primary objective then the CEO needs to back off and direct him to split his time between closing high level opportunities and training his direct reports to be able to close lower-level opportunities on their own.
  • To the CEO – thinking about your own experience, how did you mature to a higher level when you had primary responsibility for business development?
    • Answer: I built and trained staff to do this and delegated these responsibilities to them.
    • Allow this individual and other key managers within the company to do the same thing, and coach them along the way.
    • Empower this individual to build his staff and enable them to take on more of the functions that he no longer wants to handle himself. Allow him to prioritize his time to focus on: hiring and training of his key staff and coaching and supervision as they grow into their new roles.
  • Consider this solution as a larger project manager role. Take a key product and empower this individual to design, build and manage the organization to deliver this product.
  • To frame this solution short-term, start with a 1-on-1. Ask about his vision – what he wants as his role and how he sees building this.
    • Follow by laying this out in terms of the company’s objectives – be specific as to what this looks like.
    • Look for a win / win reconciliation between the CEO’s and the employee’s visions that meet both of their objectives. Get on the same page with this individual, so that this fulfills both of your needs.

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How Do You Create Larger Deal Sizes? Six Options

Situation: A company has good deal flow, but the CEO finds that margins are significantly increased with larger deals. Larger deals reduce the overhead component, much of which is the same regardless of deal size. The company is dominant in their market and can provide multi-site and multinational services. How do you create larger deal sizes?

Advice from the CEOs:

  • One company with multiple consulting contracts has found that bidding for RFPs on larger projects has opened the door to larger contracts..
  • Another company has looked at cost of sales and its contribution to business wins. .
    • Under 6% was ineffective and over 12% did not generate significantly more business. Their target win ratio is 30%
    • Factors that positively influenced win ratios were positioning the company as the preferred bidder up-front, and avoiding sham RFPs which are already slotted in favor of a competitor that helped to spec the RFP:
  • When bidding on RFPs, if the company will not be the low bidder it is important to identify the critical non-price parameters where the company will offer a differential advantage.
    • Focus on large multi-site or international RFPs which are more likely to be larger dollar RFPs.
    • Look at supply chain management opportunities.
    • Offer to warrant results in exchange for a higher price.
    • Look at system-type opportunities where the company can offer a more comprehensive solution based on its depth and experience.
    • Look for situations where the company can develop an advantaged position.
  • What are the implications of these strategies?
    • It will require retraining the inside sales force to research and qualify RFPs.
    • It will shift the focus to project vs. outsourcing opportunities. The latter are more price and availability driven and don’t play to the company’s strengths.
  • Explore channel sales through the existing partner network.
    • Offer a referral fee to regionals for referring opportunities outside their scope. In return, hire them as subs on the project.
  • Take a look at the big engineering firms who work multinational contracts, and handle their mitigation matters with small teams.
    • Offer them a comprehensive approach that is less expensive, more consistent, and more visible than their current self-service approach.

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