Tag Archives: Efficiency

What New Business Options Should You Pursue? Five Guidelines

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Situation: The CEO of a company observes that the business climate has been uncertain, but she hopes that it will improve soon. This will open up new options for her company. As these start to develop how do you decide what to do and what not to do? What new business options should you pursue?
Advice from the CEOs:
• Talk to your customers. What do they value about your current product or service and what is less valuable? Build on opportunities that customers value. What options are most consistent with the company’s strength and focus?
• Consider a customer survey – either online like Survey Monkey or by telephone. If there isn’t in-house expertise to design and administer a survey, look for knowledgeable outside resources. Assure that the survey questions will drive understanding of the company’s focus and potential.
• Get an expert to review the survey and administration plan. Before launching the survey to your full customer base, test it with a select group of customers. This will tell you whether it will produce usable information. If it doesn’t, revise the survey.
• Which opportunities will build sustainable recurring revenue vs. opportunistic or one-time revenue? Recurring revenue can be lower margin if the income stream is sustainable. Balance efficiency and utilization. For example, fixed fee service contracts that renew consistently.
• Judge opportunities against your “Hedgehog” as defined by Jim Collins in his book Good to Great: What you are passionate about? What you can be best at in your marketplace? What you can measure by a single economic ratio?

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How Do You Make the Most of People, Processes and Technology? Four Points

Situation: A CEO wants to improve efficiency and use of people, processes and technology. What have others learned from their experience? How do you make the most of people, processes and technology?

Advice from the CEOs:

  • One CEO gained new insights on the importance of details within the decision making process. She learned that details have had a much greater impact on the outcome of the decision process than her company had previously appreciated.
  • Cost reductions may cost more than they save. If the longer-term vision for the company isn’t considered a company may make short-term decisions that actually cost more in the long-term.
  • Difficult times equal opportunity. The key is keeping your head together and approaching challenges objectively, with an eye to long-term consequences of the choices made.
  • Always maintain balance in both choices, decisions and execution. There will be surprises along the path. Open eyes and balanced consideration will help to address these surprises constructively.

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How Do You Continually Raise the Bar on Personal Performance? Five Points

Situation: A CEO is continually focusing on company performance to improve results and efficiency. At the same time, she wants to assure that she is always raising the bar on her own performance as an example to both management and employees. What advice do you have for this CEO? How do you continually raise the bar on personal performance?

Advice from the CEOs:

  • Take a lesson from Marcus Buckingham’s book – Now Discover Your Strengths. The Gallup Organization is a leader in social science research on performance. Rule #1 is to focus on improving and sharpening strengths, not on overcoming or improving areas that are not so strong.
    • Look for ways that your strengths complement each other and build on these combinations. This will naturally raise performance and will also bring greater satisfaction.
  • Build personal objectives that will help to sharpen your strengths.
  • Conversely, develop work-arounds for those areas which are not as strong. Look for talent among the others in the organization that address areas where you are not as strong.
    • Have them assist you in work pertaining to these areas.
    • They will enjoy this work because it complements their strengths, and the company will gain the results that are needed. It also allows them to excel in areas where they are the strongest.
  • Take time to reflect and to recharge your batteries. Check your direction and make sure that you are heading in a direction that compliments your long-term goals.
    • Make sure that you are focusing on the right priorities for YOU.
  • Find a mentor – in or outside of your industry. Someone with experience who can provide you with guidance and clarity as you address both day-to-day and long-term challenges.

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 Optimize Your Sales Organization? Seven Points

Situation: A company currently has inside and outside sales teams, and coordinates efforts with SalesForce.com software. Their strategic initiatives are to double inbound leads, create a triage approach to new leads and to lower the cost of sales. How do you optimize your sales organization?

Advice from the CEOs:

  • When outside sales claims that they have limited band width, it is necessary to find how they are spending their time.
    • If they are not spending most of their time developing and closing sales, adjust the system so that they are concentrating their efforts in these two areas.
  • Decide what the sales teams are selling – set up the organization so that it complements the sales goals and objectives. Below are alternatives used by others.
  • One company has evolved “product managers” who are like sales engineers but more experienced. They are highly paid and highly skilled. They are business oriented, with good communication skills, well rounded, and have successfully closed sales.
    • In contrast, the role of this company’s “salespeople” is to follow up. Lower level salespeople are tasked with generating leads for the product managers
  • Another CEO observed that what the company has done up until now all has worked well. The question now is how to mature their system?
    • This company’s solution has been to use outsourced Inside Sales Support (ISS) based abroad to find prospects.
    • ISS personnel are teamed with and managed by the company’s salespeople. Salespeople develop their own system. The ratio is  1/1, but outside personnel are ½ time for each salesperson.
    • This allows the company to reduce services quickly if they become overwhelmed.
  • A third company uses a 3-tier system:
    • Prospect development.
    • Inside sales for lead evaluation.
    • Outside sales – get hot leads from inside sales, develop, close.
  • Consider this alternative: instead of a shotgun approach, target three accounts – Elephants. One company did this with an intense 6-month focus. The President and CEO drive these sales. The result: they have closed one, one is pending, and a third is likely to close.
  • Another CEO observed that the essential issue appears to be an efficiency problem.
    • Too much of the outside sales time adds limited value to marketing or the company.
    • Redirect their efforts to hunting.
    • Once an account is closed, sales is out of the picture. The customer transitions to the customer service organization for additional sales and service.

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How Do You Train New Employees? Five Suggestions

Situation: A young company is in the process of hiring new employees. Good customer service, including excellent communication skills and empathy are the most important qualifications. Good follow-up skills are more important than educational background. How do you train new employees?

Advice from the CEOs:

  • Training new employees may be putting the cart before the horse. The first task is to solidify the company’s business model. The next task is to determine what roles and positions fill that model. Only then can the company determine how best to train employees.
  • Build an organizational chart for a $1 million company.
    • Who will the company serve?
    • What are the positions and roles?
    • This is future that the company will be building and determines how to select and train people to fill the positions.
    • Suggested Reading: The eMyth Revisited by Michael Gerber – a guide to envisioning the future of the company and how to build it.
  • A word of caution. As CEO, you don’t want to be training people like yourself. This is both difficult and risky. You may be training future competition. 
    • As an alternative, think of a series of distinct roles or functions that make up the business, then select and train different individuals to handle each role. It’s difficult to find people who can do it all. It’s much easier to find people who can bring in new clients, establish and nurture relationships with partners, network to develop a referral base, or counsel new clients on alternative solutions to fit their needs.
    • Organizing this way means training and creating experts in segments of the business, but nobody knows the full business the way that the CEO does.
  • Each position within the company will need individualized objectives and performance evaluation criteria. What are the key metrics for each position? This helps to build efficiency.
  • Think about both one-time and recurring income models. This may call for different employees or at least a different sales activity to build each business segment.

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Does Your Company Have the Right Focus? Three Alternatives

Situation: The CEO of a specialty service company is curious about whether they have the right internal focus to drive their business. Their internal focus statement is to the most competitive, most responsive company in their market with high profit per job. One school of thought calls this focus the Main Thing driving the company. Does your company have the right Main Thing or focus?

Advice from the CEOs:

  • Look at the tie between your Main Thing and your financials.
    • Determine an appropriate measure of efficiency – for example, billable hours per field worker per day.
    • Look at cost per field worker versus efficiency.
    • Ask what will generate the profit to grow to the level that the company has established as the revenue target.
    • If you can boost the gross margin on services, this provides far more benefit than merely cutting expenses.
    • Look for market niches that support higher prices without a parallel rise in either expense or risk exposure.
    • Do leadership and staff have the right skills and talents to support growth objectives? What can be done to enhance skills and talents?
    • Consider the following – By increasing efficiency and margins from 16% to 20% on $10 million of job revenue, the company can increase the operating margin by $400,000. If certain staff cannot work within a more efficient structure, you may want to move them to jobs that are less critical to the business. Having the right staff in the right seats is critically important to bottom line results.
  • Look at the company’s customer selection criteria. Using the 80/20 rule – 20% of customers generate 80% of revenue and/or profits. How do you improve customer selection?
    • Rank all customers on measures of profitability of their business, payment time, and most importantly future business potential. Focus on customers with the highest scores, and “fire” low scoring customers.
  • Focus on cash flow: Look at early pay options or discounts to speed payment from large customers.
    • Incorporate a schedule of values in all contracts as an addendum to prompt earlier payment.
    • In proposals, include a payment schedule and finance the receivables through a factoring company – particularly in the case of slower paying or less desirable customers.

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Do You Launch a New Brand or a New Company? Six Suggestions

Situation: A company is launching a new service – using existing technologies to address a new market. The CEO is curious as to whether it makes more sense to create a separate firm or corporation, a division within the current structure, or a new brand to take advantage of this opportunity? Do you launch a new brand or a new company?

Advice from the CEOs:

  • Because you are utilizing an existing process in a new market, don’t create the additional conflict or complexity that you might by splitting this into a separate entity just yet. Utilize the collaborative talent within the company to create a new brand rather than a new division or corporation.
  • Adding the additional overhead, accounting and other complexities of a separate entity is overkill – start it as a division or a brand.
  • Use this as an opportunity to grow your overall company brand. Create a series of icons to represent the company’s various capabilities. The icons will also help you to describe the range of capabilities of the company to prospective clients.
  • The market which you are addressing is early stage. By developing this new market as a new capability of your current well-respected brand, you have the opportunity to become the category leader.
  • When another CEO created new capabilities as extensions of existing technology he followed the following route:
    • Create a sub-brand as you develop and start to develop the new capability;
    • If it is successful and grows, develop it into a division;
    • If the capability grows to the point that you attract and decide to take outside funding to accelerate growth, create a separate company so that you don’t give away ownership of the parent company.
  • Think “effective vs. efficiency.” Start with efficiency. Add effectiveness (dedicated people) as opportunity proves itself out.

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