“Operations” are often wrongly viewed as the unglamorous part of a business – not strategic, not lucrative, no real intellect required, and, let’s be honest, a bit….grubby. This view is not just totally wrong but ignores the fact that companies that successfully build lean processes will be more successful, more valuable and much, much more profitable.
“Operational excellence” is not well understood but generally combines three aspects where the business operations:
The most successful companies have mastered the operational processes making it easier for the customer to do business with them. It’s no accident that Amazon’s “1 click” button is helping the cash flow in – customers are over 20 times more likely to repurchase where it is low effort to do so. Equally when businesses get it wrong, it can jeopardise performance – consider the brand impact of United Airline’s recent disastrous removal of a passenger from an overbooked airline.
Anticipating a few days break, a number of business owners have asked me what they should be doing ”usefully” during their time-off. The obvious answer is “nothing at all” – really they should be putting their laptops away and learn to relax, however, this answer is seldom sufficient.
“Well, if you have to do something, why not consider what your business’ purpose is? Why does it exist?”
The standard retort is “to make money, pay the bills….”, or something similar. However, in my view, these are outputs of their purpose not the purpose itself and the better they are at defining it, the better they will perform in achieving their financial goals.
The underpinning rationale for defining the business purpose is compelling. Without a defined purpose, every business risks drifting - being swept along in the flow. Research by PWC, suggests that for millennials, one of their key considerations is their connectedness with the organisational purpose. Separately, team motivation is shown to be much stronger when there is a cause that unites. Simon Sinek famously referenced the importance of “The Why” in how great leaders inspire action – have a look at his TED talk.
Governments, Banks, Investors… they all yearn to know the secret that turns companies from steady state to fast growth – a beguilingly small proportion of all businesses that have a disproportionate impact on global wealth creation and employment levels.
Spotting the gazelles and backing them is the stuff of dreams but is remarkably difficult to do because of the cocktail of ingredients that contribute.
Typically though, the successful menu can be boiled down to just 7 key areas, albeit each one requires a lot of thought to implement effectively.
When I meet business owners for the first time, they usually tell me that their business is suffering from difficulties with “marketing”, “process issues” or sometimes even “our staff”. However, when I spend time with them, it is usually abundantly clear to all that what they thought was the major issue was not the entire answer.
”For every complex problem there is a simple solution. And it's always wrong” - H.L. Mencken
As humans, it comforts us to simplify complexity but in business this can lead you down the wrong track, creating unnecessary change, costing valuable cash and, even worse, not resolving the underlying issues. I find the answer usually lies in a number of areas and, particularly, their relationship with the overarching business strategy.
The best businesses, regardless of size, have a clear business strategy, which sets out a direction and focus of the company – ideally described in words of one syllable. Critically, this strategy needs then to be aligned and in sync with all the supporting organisational structures and processes, including sales, marketing, IT, operations, procurement, finance, HR, customer service, staff training, everything….
“Interns are a waste of time and energy.”
In my recent placement, I was shocked to hear this sentiment on more than one occasion from business owners who think that students will do anything to gain ‘CV fodder’ and be nothing more than a drain on already overstretched resources.
However, I believe, that with the right approach, interns can provide a real boost to your business. Bringing fresh eyes, bright ideas, and often a sense of possibility, the benefit can be profound for both parties.
Even the most partial observer cannot fail to have been impressed by the inexorable rise of the South West rugby team, the Exeter Chiefs.
Over a decade that I have supported them, the club has risen from relative obscurity to being Premiership finalists, an achievement that has baffled the rugby cognoscenti, expecting a more predictable “boom and bust” result.
The fact is that business has much to learn from the Chiefs, who despite another highly successful season, will be continuing to plot and plan improved performance for the next season and, indeed, the ones after.
Often I meet highly competent professionals who are between jobs and “in the perfect world” would start their own business as consultants, passing on their invaluable knowledge.
They tell me that they are clear that’s what they want to do but they are reluctant to fully commit as they are the main breadwinner, they have a big mortgage, or “want to see how it goes”.
Typically, they start off with best intentions, by taking on a part-time employed role and aim to develop their business in the remaining available time.
They are embarking upon, what I call, the “I can have it all strategy”. Which, by the way, is doomed to failure.
“There is only one boss. The customer. And he can fire everybody in the company from the chairman down, simply by spending his money somewhere else.” Sam Walton, Founder of Wal-Mart
Too often I hear organisations saying how the customer is everything to them but then find that the real experience is several light years away from what any discerning customer would value.
These same organisations don’t seem to appreciate that most of us, even when the service is low cost, would not choose to:
As a consultant, it is one of life's joys to visit an organisation where there is that palpable sense of unity and purpose, evident from the point of entering the front door, clicking onto their website, or speaking to the company helpdesk. Their consistent messaging is a reflection of the company ethos, and is understood and exhibited by all its staff.
And when it's not quite like that?
Of course, in most organisations, it isn't like that. Staff are often recruited at speed, rarely inducted well and are usually left to get on with it, without much feedback, until they make the inevitable mistakes. Organisations usually measure the outputs of their staff members' endeavours, often pedantically, but rarely do they expressly define how they should perform the task. This leads to a world where disappointment, blame, and tension become endemic, the cultural collateral of focusing on the wrong thing.
Having a clear description of what "a good job" looks like is critical - it can underpin induction, training and performance management.
The importance of the "How"
The thing is, although measuring the final outcome is important (after all you need to understand the progress is being made) only through measuring the "how" can sustained and consistent performance occur. Called organisational behaviours, together they combine to create powerful levers of change, and standards by which staff, suppliers and, of course, customers measure the organisation. Arguably, they can be the standard through which reputations are made or lost.
What was it like, the last time you had to complain? Were you treated like a nuisance or were you listened to and treated with respect? All organisations make mistakes, but how they deal with them reflects their focus on the "hows" - their staff's attitude, demeanour and behaviour.
“Going portfolio means exchanging full-time employment for independence. The portfolio is a collection of different bits and pieces of work for different clients. The word “job” now means a client.” The Portfolio career, popularised by Charles Handy in his book “The Empty Raincoat”, 1994
First, the gloomy news. The idea of working for the same employer year after year is dead. Whether we may like to think of ourselves as indispensable, no one is and all employers are constantly reviewing which staff are core and which are, well, surplus to requirements. This means that those of you that are employed are either working excessively hard because your skills are in short supply or working excessively hard to prove your worth.
Bethlehem Steel Works, a watercolour by Joseph Pennell, depicting Bethlehem Iron Company in May 1881
Whilst we canter towards the time of pudding, parties and wrapping paper, it's worth remembering the Bethlehem story.
No, not that Bethlehem.
I'm talking about the Bethlehem Steel Mill story which might help us identify how we will pack all those tasks in before the world around us grinds to a halt.
You see, Bethlehem Steel Mill was the site of one of the apocryphal stories of time management, when a chap called Ivy Lee persuaded Charles Schwab, the CEO of the Bethlehem Steel Corporation, that he could increase his company's productivity by over 20% if his managers adopted his system for over 30 days.
“I don’t do politics”
In my previous careers, I genuinely believed that I wasn’t a political animal, just a straight talking chap, making his way in the world. However, in retrospect, I now realise that I was highly political, even Machiavellian.
It could be said that working in contrasting but highly structured environments (commercial banking and public sector education), office politics were essential skills, if you wanted to advance your career. Accordingly, armed with an insatiable desire to progress, I could schmooze, intimidate or manoeuvre around any barrier I perceived was blocking my path.
But is this a problem? Aren’t these the essential tools that knit together the organisational fabric?
With the luxury of now viewing organisations from the outside, it becomes crystal clear just how much time is wasted through office politics. In a world where we all have too little time, too much information, too little energy – this component can often be the straw that breaks the camels back, causing good people to leave and creating a culture where trust and collaboration are left outside the front door.
British Telecom, a great British Institution, market capitalisation of £50bn+, providing telephone lines to over £28m of the UK population, helping us to be connected, be complete.....
Love them or hate them, BT has to deal with some significant issues, massive volumes, an ageing and stretched infrastructure, and, worst of all, rising customer expectations that demand immediate, fast and reliable connectivity. BT is also facing significant competition from multiple global players, all trying to access the profitable parts of their marketplace.
So when things do go wrong, against this backdrop, you would have thought that even this leviathan would be interested in addressing it effectively, after all customers do pay the bills…?
No. Unfortunately, judging by my experiences, you’d be wrong.
"Darling, I’m a publicist of some repute and we really want Harry to be in this film. No not Prince Harry! Your Harry….”
Well she might be excused if it were her plan, after all she was, she says, a publicist (of some repute, no less) but I wonder if she realised that all the passengers of Coach C of the Plymouth to London Paddington were hanging onto every word she bellowed out.
Now I’m also not a One Directioner (no honestly, I’m not) but the news flash that Harry Styles could be playing a part in a certain film was of moderate interest. How, I wondered, would the wider world react and, more importantly, what would they do with that information….
Picture the scene. You are in charge of managing the relationship with one of the highest profile customers your business has and you have just received the phone call in which they tell you that the relationship is finished. Ended. No more.
Tragically for the Met Office, the world's most famous weather forecasting agency, this scene wasn't imagined, but became an unwelcome reality last week. A relationship held since 1922 with the BBC appears to be, notwithstanding some last ditch attempts to resuscitate it, all but dead. True, the Met Office will continue to provide some services (including, severe weather warnings) but the bulk of services, representing £3m of annual income, will be put out to tender, opening the door to global competitors.
Setting up and then growing a business can feel like a white knuckle ride - full of expectation and adrenaline, with the highs and lows that punctuate every turn. The experience can be exhilarating, exhausting and transformational.
One of the reasons that the business' development feels this way for those involved is because, consciously or subconsciously, they are riding one of nature's oldest predictive models - the S Curve.
The S Curve and business
The S curve, also known as the logistic curve, plots the growth of one variable against another. The relationship between the two variables follows this pattern because they are constrained by a limiting factor which determines the S shaped trajectory. Whether it's cell growth, economic forecasts, international development, stock market performance or, most famously, the product innovation cycle, the S Curve has been helpful in predicting future outcomes.
In the development of a business, the S curve is typically used to describe the performance of a company or a product over a period of time, often with cash, turnover, market share or profit as the quantum that defines success.
We are all aware of the idea that through only 6 consecutive contacts we can reach anyone else in the planet. A 'degree of separation' is a measure of social distance between people. You are one degree away from everyone you know, two degrees away from everyone they know, and so on.
What about the quality of the contact?
Logic would suggest that the closer you are to knowing the contact personally the more helpful it would be. However, emerging research suggests that when it comes to influencing others, it is not your contact that matters, or, indeed, their contact but the conversation that happens one stage further on.
So if, for example, you were looking to encourage someone to buy your product or service, then your immediate sales discussion will apparently have less influence than the advocacy of your customer’s contact. Or put it another way, the conversation might go like this:
“I’m looking to get some financial advice – do you know anyone?”
“ A chap I know always raves about a company called XYZ Ltd – you might want to give them a try?”
Thomas Cook, the UK Tour Operator, is a significant company with c£9bn of revenue and over 22,000 employees. Operating in a difficult sector, heavily impacted by global economic conditions and the relentless move of customers towards online booking, its Executive are used to wrestling with difficult decisions, charting a safe course through the choppy waters of the travel industry.
It's worth asking then, in the case of the tragic deaths of 7 year old Christi and 6 year old Bobby Shepherd in a Corfu Hotel, how could the company have got it so wrong?
Those of you who thought that scanning the future was the preserve of psychics, PHDs and futurists will be surprised to know that the future of work is already here and if your business fails to prepare and adapt, it will suffer.
Suffer? Yes, “suffer” in the very real sense that you run the risk of:
Isn’t it Just about Technology?
Technology has been an extraordinary enabler and a catalyst for many of the changes that will determine your business’ success. Mobile technology, artificial intelligence, 3D printing, robotic technology, the internet of things….the list goes on…all are having seismic impacts on underlying business models. With the number of active mobile phones outstripping the global population and 30% of the world actively using social-media, the world is more connected than ever.
However, there are wider themes that will have as profound an impact on your business. These are themes that could combine to fundamentally impact your business and the people who work in it.
Many of the owners of the businesses I work with recognise that they do not have all the skills they need to support continued growth. They often have specialist advisers working independently but do not benefit from having differently skilled expertise working together to deliver a coherent strategy. In these circumstances, I suggest that they consider building an advisory board that will help them to achieve their aims.
I emphasis that this is an important step as by involving others you need to be open to others' ideas and be willing to trust them - often up until this point they have been successful following their own intuition - dogged determination underpinning their success so far.
Unlike a formal board of Directors, an advisory board is assembled and brings together the skills that the owners requires. The advisers have no formal accountability but will need some incentive to be involved and usually have some empathy and insight into the sector of the business. Their role is not to be a replacement MD but to provide wise counsel, supporting the owners/managers to make the best decisions to achieve their business goals.
Easily forgotten, but at your peril - for those customers who have shown the foresight to adopt your fledgling products and loyalty to stick with you, are crucial for the continued success of your business.
It's worth remembering, that when it comes to business these are the key facts of life:
Fact 1. It costs between 4 and 10 times to attract a new customer than keep an existing one (Chartered Institute of Marketing).
Fact 2. Unhappy customers will tell 8-10 people, whilst satisfied ones will tell only 2-3 people (White House Office of Consumer Affairs).
Fact 3. Recommendations from people we know is the most influential form of marketing (Neilsen, "Under the Influence" Report, 2013.
Fact 4. The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% (Marketing Metrics).
Fact 5. A 5% reduction in the customer defection rate can increase profits by up to 95% (Bain & Company).
As we hurtle towards another election, am I alone in feeling increasingly frustrated with the political choices available to me?
Frustration doesn't cover it - a form of incredulity perhaps?
Politicians have seemed to transform into an amorphous mass, not distinctive, open or willing to listen.
The irony is, of course, that business is often pilloried by our politicians as a den of iniquity, amoral and closed to scrutiny. Whilst this may have been true in some cases (see Tesco and Banking blogs) even the most partial observer can't have failed to recognise that the House of Commons has a disproportionate number of cheats, liars and lawbreakers amongst its members.
For some, the thought of plunging headlong into an environment where they are surrounded by strangers with whom they appear to have nothing in common is worse than frightening, it's the nightmare scenario. "What will I say to them?" and "what if they don't like me?", I am often asked.
Along with the development of social media skills, mastery and confidence in networking are probably the crucial capabilities required by entrepreneurs who are looking to make a mark amongst potential customers, backers, supporters and advocates. Sadly for those afflicted with an inability to mingle, although social media expertise may get you to the front door of an important relationship, unconfident networking may ensure that the door is kept firmly locked.
In my time as a Banking Director during the dotcom crash, it wasn't difficult to identify some common features of those start-ups that failed to transition into growth: ambitious and over-engineered business plans, high running costs, and an inability to react to changing market conditions. Later experiences as an operational excellence practitioner, deploying lean six sigma, helped me appreciate the need for start-ups to to treasure their cash and harness their enthusiasm in a more informed way.
As another year draws to a close, and as you prepare yourself for the inevitable frenetic return of the work-life treadmill, you might allocate space for some deep thought. Not about others, your work, your family, but yourself. You.
Organisations of all shapes and sizes love to use staff appraisals to ensure that performance, engagement and motivation is optimised, supporting the achievement of corporate goals. So why not use an appraisal yourself to help realign your own individual success, health and, most importantly, happiness?
Chris Lorimer is an
experienced consultant who has helped many organisations to grow through his unique 4 Ps approach.