Category Archives: Manufacturing & Operations

How Do You Pursue a Market Expansion Opportunity? Three Points

Situation: A CEO is considering expanding market reach to include an additional specialty niche in the market currently served. He sees the opportunity to diversify the current offering, to make significant money, and to grow the company. The principal challenge is finding a person to build this capacity. How do you pursue a market expansion opportunity?

Advice from the CEOs:

  • Without a leader to build the new capacity, an individual who already knows both the technology and the market, it will be difficult to build the new capability.
    • Bring in a heavy hitter with a proven track record in the market to develop the new capability. Someone who can build a team to offer the same quality / delivery package that has been the source of the company’s success.
  • Once this individual has been identified and is onboard, gather top management and develop clarity on the company and its values – why the company is in its current as well as the new business and what the company does for itself and its clients.
    • From this exercise develop or update the values statement and a vision / mission statement.
    • Consider hiring a consultant with proven experience in the market to help develop the value statement, mission, and some of the strategic and planning capacity that the company has not yet developed on its own.
    • Communicate these openly and reinforce them frequently with staff. This will help them understand the company culture as well as the vision for the company. It will also help them to understand the decisions made to guide the company.
  • Is there another firm – or an independent consultant – with proven expertise in in the new field to work with the company on the proposals that are being submitted for the new market?
    • This will help to evaluate the market and to get a taste of what is involved in this work before making a major investment to support the new capability.
    • It will also speed the development of expertise to address the new opportunity. If it goes well, the company can consider either a deeper joint venture, hiring the consultant, developing its own capability with internal resources, or a combination of these options.
    • In the short term, this will impact cost and margin but will substantially reduce risk.

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How Do You Keep Your Culture in the Face of Rapid Growth? Ten Points

Situation: A CEO’s company is facing rapid growth. The CEO is concerned that the cordial team culture that he has carefully nurtured will be strained as the company adapts to this growth. The present culture is characterized by lack of politics and truthful, frank communications. How do you keep your culture in the face of rapid growth?

Advice from the CEOs:

  • The company currently markets its culture, complemented by a solid history of performance. Clients receive highly personalized service at a competitive cost. This combination attracts and retains clients.
  • The company’s employees are a happy, competent group that enjoys what they are doing. This differentiates the company from other firms all by itself.
  • Identify the key attributes of the company’s culture. This will simplify internal and external communication when discussing what makes the culture special.
  • Use one several tools available to develop behavioral profiles of the current employees. This will help to understand how team members interact with each other. It will also help to build profiles for ideal additional employees as the team expands.
  • Hire an expert do a formal evaluation of the team around individual and group dynamics, as well as bottlenecks in the current structure and culture. This will help determine how scalable the company’s current culture is.
  • Grow at the rate the company’s culture allows, not at the rate that salespeople bring in new business. With gradual, careful growth size will less of an issue as it would be if the company were to simply grow as fast as possible.
  • The more the company grows organically – through additional business from existing clients – the fewer additional clients the company needs to meet growth objectives. This means adding fewer new employees to maintain target client/employee ratios.
  • If the plan is to grow larger, consider growing around core groups of 9-12 employees, perhaps in distinct locations with good communication between the groups. In the military, operating groups are 9 to 12 soldiers; the more specialized and highly trained the group the more it tends toward 9 soldiers instead of 12.
  • There is a Zen saying that a healthy tree grows as tall as it can. Use this as your guide.
  • The key role of the CEO is as CCO – Chief Culture Officer!

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How Do You Change the Company Structure to Support Growth? Ten Points

Situation: A CEO is concerned that her current company structure may not be set up to support envisioned growth. She is not sure how to differentiate managers from developers. She also seeks guidance on how to evolve the CEO role. How do you change the company structure to support growth?

Advice from the CEOs:

  • How do you differentiate and select managers versus developers?
    • Use an organizational development process to facilitate this selection.
    • First, outline the organizational structure that will evolve as the company expands. Share this with key staff and listen to their input.
    • Next, with key staff, determine the metrics. For example, what revenue or net profit before tax milestones will trigger the addition of managerial staff.
    • For each managerial position create a position description and a list of talents and skills that a candidate for that position should possess. Review these with staff and adjust with their input.
    • Let the company know the plans for the organization, and the positions that will be created as the company hits the milestones that will trigger growth. This will prompt anticipation of the opportunity and professional growth for staff that will accompany expansion.
    • Schedule a 1 or 2-day planning meeting with staff to discuss how to develop and improve both the organizational structure and operations. Continue this discussion in staff meetings at least quarterly.
  • The CEO’s role within the company.
    • The first question to ask is “what do you enjoy?” Is it being CEO, or is it leading the development teams? These are different roles.
    • Look at immediate needs. If the CEO is doing the books, it may be time to either choose or hire a COO – someone who can handle accounting, HR, and all the back-office functions.
    • Up to this point, the company has had a flat organization. The difficulty with this is that the first real crisis will take up so much CEO time that the company will fall behind in key areas currently overseen by the CEO.
    • Maturing the organizational structure is the right way to go. It will remove CEO from a “doer” role and allow the CEO to take the “leader” role – moving from working IN the business to working ON the business.

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How Do You Manage Succession Planning? Seven Considerations

Situation: The founder and CEO of company needs to find a successor. She is ready to reduce her role but wants to assure the ongoing operation and future growth of the company, as she will remain the principal shareholder. How do manage succession planning?

Advice from the CEOs:

  • Options for management succession and growth.
    • One option is to create an employee stock option plan (ESOP) to expand ownership of the company and to help recruit new managers to support growth.
    • A second option presented itself through a broker who has approached the company to help them find a buyer for the business. The broker suggests finding a customer who is a potential buyer and also the right fit.
    • A third option is to purchase a smaller company with a good CEO and then do an ESOP transaction to allow the CEO to reduce her role while providing new incentives for management.
  • Options for maintaining continuity of the business.
    • The CEO has identified an individual with the background to lead the company and identify the talent to fill key roles.
    • In addition to a leader, what other key roles must be filled? Look at the current and planned organizational charts. Determine which roles must be filled, the order of priority to fill them, and management succession plans for each.
  • When and how should the CEO’s plans and options be communicated to staff?
    • One approach is to say nothing until either a successor has been identified or an actual deal is in place. This will avoid unnecessary disruption that will accompany and news of the plans.
    • On the other hand, if an ESOP is the option, let current staff know early, along with anticipated specifics of the ESOP Plan.
    • It is best to be straight with staff once the timing has been determined. Complement disclosure of plans with assurances that the change will be good for staff and that there will be financial incentives for them to remain with the company.
    • Be sensitive to what drives and motivates staff – build this into plans to inform them of what is happening.

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What Are Good Metrics for a Service Company? Four Recommendations

Situation: A service company has been debating internally about which metrics they should use to evaluate company performance. This is important because it ties both to strategy, marketing, and bonus compensation. The CEO seeks advice based on the experience of others. What are good metrics for a service company?

Advice from the CEOs:

  • For a service company the key goal is delivery of a consistent quality product/service to the customer – as a company rather than as individual performers.
    • Instituting regular activities or meetings to infuse the company’s “special sauce” to projects will help assure consistent quality of service delivery.
  • To generate support and consensus within the company, ask employees what they would do to develop metrics to assure delivery of quality.
    • Have a clear view in mind of what the metrics should achieve – the result rather than the fully detailed process – before initiating this exercise and articulate this result as the desired objective.
    • Remain open to ideas from the group.
    • Use the exercise to establish a shared vision and to generate the best possible set of metrics to support the desired result.
  • Once both the metrics and a methodology for delivering the result have been selected – for example, weekly performance review meetings if this is the answer – then institutionalize these. It may be best to start with a “trial process” to refine details of the process.
    • An efficient regular process review meeting may save the company more than the 3 hours that it takes (preparation + travel + meeting) for this process.
    • If there are many “islands” of employees working at different company locations, consider organizing meetings into geographically convenient archipelagos.
    • Establish, within the service review process a “patented” company process that focuses on quality delivery. Publicize the existence of this process (not the details) when speaking with existing or potential clients. This is a key part of the company’s essential differentiation and “value add”.
  • Establish a definition of quality for the company.
    • Develop this as the company’s vision.
    • Develop the methodologies to consistently deliver this quality.
    • Long-term, drive this to professional training systems to consistently produce this quality.

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How Do You Add More Discipline to Quotes and Pricing? Four Points

Situation: A CEO faces challenges with clients. The first is vague customer specs because they don’t understand the product. Second is misunderstandings as to timelines. Third is insistence on strict timelines while simultaneously demanding revisions to previous work. How do you add more discipline to quotes and pricing?

Advice from the CEOs:

  • Is the company’s technology strategy aligned with its capabilities? Currently the company is trying to build advanced solutions in multiple international markets with a small staff. There does not seem to be the technology or development discipline to convert current capabilities into a sustainable market advantage.
  • For near term focus, because of commitments and milestone payments due from the key customers, focus resources on finishing the last piece of these projects. Once this is done, step back. Look at options and determine the company’s technology strategy moving forward.
    • The key challenge is to define ONE beachhead on which the company will focus and which they can dominate. The objective is to leverage existing engineering creativity to create a sustainable competitive advantage.
    • As this exercise is designed, start with a clean slate. Don’t burden the process with a lot of restrictive assumptions. Consider using an outside facilitator to help facilitate this process.
    • Until this exercise is completed does it really make sense to seek additional work or to commit the company to the next phases with current customers?
  • Once the company has selected and committed to a technology strategy, the decision process becomes different.
    • The objective is to develop laser-like focus on the technology. Minimize distracting the team with other opportunities.
    • It may be OK to lose money on development projects if this work will significantly impact or accelerate the development of the company’s core technology.
  • How does the company justify asking for payment for development for future projects?
    • First, determine and clearly state the company’s technology strategy. Evaluate all future development projects and decisions in terms of their alignment with this strategy.
    • Second, if a particular project is completely aligned with the technology strategy, the company may waive the requirement of payment for development. This, ideally, will be the only exception.
    • Ask for a limited time/scope project to jump start and define new projects. This provides proof of company capabilities and establishes its credibility.
    • If is it necessary to negotiate or bid, start high and bargain down to but not below the best estimate of the cost of development.
    • Remember that deciding what NOT to do or quote is often harder, but just as critical, as deciding what to quote.

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How Do You Improve Internal Processes and Procedures? Five Approaches

Situation: A CEO’s company has experienced margin erosion due to designs that did not transfer well to manufacturing, and inefficiencies in the transfer process between design and manufacturing engineering. He wants to transform the culture without losing technical performance while meeting cost targets and delivery timelines. How do you improve internal processes and procedures?

Advice from the CEOs:

  • Reinventing the culture of a workforce is an organizational design challenge.
    • The heart of the challenge is understanding the motivations and desires of the individuals involved – particularly the natural leaders within the groups.
    • Learn this is by speaking with them one-on-one, either as the CEO, or through individuals with whom they will be open and trusting.
    • Once their emotional drivers are understood, design accountability and incentive solutions that will align their personal reliability and accountability drivers with their emotional drivers.
  • Tailor the language of communication with the organization so that it responds to the emotional triggers discovered during the 1-on-1s. For example, if there is a negative reaction to sales within the engineering teams, use a different term like client development.
  • Expose the designers to the “hot seat” that gets created when their designs produce manufacturing challenges. The objective is for the designer to see the manufacturing group as their “customer.”
    • Involve manufacturing engineering in design architecture meetings. Do this early in the process so that they can communicate the framework and constraints under which manufacturing occurs and suggest options that will ease manufacturability.
  • Shift from individual to team recognition on projects. Instead of recognizing the contributions of the design component or the manufacturing component, recognize the contributions of the team of design and manufacturing engineers that produced a project on time, on budget, with good early reliability.
  • To kick off the new process:
    • Identify some of the waste targets.
    • Involve individuals who are known to be early adopters.
    • Have them look at the problem, develop and implement a solution.
    • Deliver ample recognition/rewards to these individuals.
    • Next use these people to mentor the next level of 2nd

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How Do You Transition to a New CEO? Four Strategies

Situation: A company founder was advised by her Board to help them hire a CEO with more experience to run the company. This new CEO is now in place. As the founder gains more experience, the Board has indicated its willing to consider her as CEO. How do you transition to a new CEO?

Advice from the CEOs:

  • Become the fire hose! Build a tight relationship with the new CEO and together build the future strategy that will enable you both to win.
    • Others will focus on past issues. Keep your approach and advice positive. Position yourself as a partner, not an adversary. Emphasize your supportive and collaborative capacities.
    • Become the new CEO’s go-to person: trustworthy, objective, knowledgeable, reliable. Nurture the development of chemistry with the new CEO.
    • When the new CEO asks what needs to be done, produce the plan. Leverage your knowledge and expertise to become his greatest resource.
  • Enlist the CEO’s support of one or more of the focused strategies that are already in play within the company. Build the support of the Board and focus on boosting company value to 2x sales. The Board won’t forget who produced the original initiatives.
  • You have more power than you imagine – both with the Board and the new CEO – due to your knowledge of the marketplace and the business. Use it wisely.
    • While there is a new CEO, the company has already been profitable and company operations are clean. The Board will remember this.
  • How do you boost the chances to eventually be named CEO by the Board?
    • Tie yourself very closely to the new CEO – be this person’s more important resource. Build and cement your position as his most important ally within the company. It will help you to gain his support for implementing your ideas.
    • Segue your relationship with the Board members to become the company’s next CEO.
    • At the same time, grow your successor within the company so that you will be ready to move up to CEO when the opportunity arises.

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How Do You Develop Current Managers to Support Growth? Six Suggestions

Situation: A CEO is concerned that the current management team is not mature enough to support planned growth. Sales skills are necessary to start an office, but there is a wide range of business acumen and people skills among the managers. How do you develop current managers to support growth?

Advice from the CEOs:

  • Company policy requires manager candidates to demonstrate competence in at least three of five areas: sales, technical skills, customer management, customer management, and business acumen. A coaching or mentoring process from senior management would be beneficial.
  • A minimum number of clients is required to start an office. There are important differences in the skills needed to grow and sustain an office. More evaluation of the managerial skills of manager candidates will help.
  • Another CEO shared story of a regional office with a manager who was technically competent but had poor business development skills. This created a growth issue. Clear, mutually agreed upon, written goals helped. Office growth requires good administrative performance as well as technical or sales skills.
  • Frequent group meetings with managers and a deliberate agenda help. There is merit in allowing the field people to contribute to the agenda, having a “round table” type of review, and peer dialogue. In addition to current individual weekly telephone conversations and quarterly operations reviews, there is an opportunity to modify the format.
  • Sometimes there is a double loss in taking a good individual contributor and making them a poor manager. For example, of a good salesperson may turn out to be a bad sales manager. The transition may not play to the person’s strength. A more rigorous selection process will help.
  • Another CEO shared a story of one of his plant managers who reached the limits of his competency and could not continue to grow the plant. He was moved to a support position and a new plant manager was hired. The former manager found new satisfaction in the support role and was successful sharing his knowledge and skill with the new manager and a broader audience within the company.

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