Throughout my career I’ve focused on practical and objective business skills as I transitioned from an engineer to a program manager to a Six Sigma champion to a sourcing professional. However, as an executive leading from a strategic vantage point, I find that soft skills contribute more to success than reams of results and objective data. Aligning functions and establishing partnerships create an atmosphere for better communication, greater teamwork and, ultimately, greater success for supply management and the overall company.
Create a Positive Environment
However, coupling soft skills with transparency, alignment, partnership and accountability can be transformative for any organization. Following is an examination of the importance of those elements and the roles they play in successful leadership.
Transparency. Fear often is created by a simple lack of information. When direct reports are unaware of your goals or how those goals may affect them, the tendency is to “fill in the gaps,” which fuels worry and uncertainty in an organization. A leader should effectively and frequently communicate the goals and objectives of a change initiative, explaining how the change will affect and improve the organization. Transparency also has the added benefit of creating a better understanding of the need for change.
Alignment. Alignment speaks to the “what’s-in-it-for-me” thought process that most people share. Consider how large troop movements are conducted during warfare. The troops are aligned and move in a coordinated and synchronized manner. This concept can carry over to the business world. Aligning separate, functional elements throughout a company requires that each group understands how their contributions support the company and advance their own careers. There is a greater chance for success by finding and creating this “skin-in-the-game” perspective.
I have used the concept of “servant leadership” to help me meet this element. How to first meet the most important needs of others. When I joined a company with a highly engineered product line, I knew that engineering support was critical to our success in supply chain and cost reduction. In my first meeting with the VP of Engineering, I simply asked, “What can Sourcing do for you?” He responded with, “Please improve the turnaround time on quotes, it is way too high.” I employed transparency, tracked and reported on each and every buyer and their individual time to respond to quotes. Over the next three weeks, we went from an average of 60 days to nine days for response. When I recalibrated with him after a month, he was happy and excited and said, “That is the first time Sourcing has ever come to ask Engineering what we can do for you, and I like it.” Our relationship and our results have continued to grow using the same philosophy.
Partnership. True partnerships can only occur when the internal business units are informed and synchronized. For example, when a highly engineered product goes through a cost-reduction initiative, the project can’t be successful unless the engineering, operations, marketing and procurement teams work as partners. Several years ago, I was in charge of a project to reduce costs of a product line. More than 2,000 ideas were generated from staff, but were considered because a partnership among various functions had not been formed. Marketing, for example, rejected many ideas claiming that customers would never accept some of the suggested changes. The engineering department, which had to approve any proposed changes, became defensive about changing the original design plans.
Thus, the project was relaunched for greater success — only this time we changed the approach. Support from senior level management and all functional leaders was conveyed throughout the company. Functional leaders met weekly with their staffs, which kept visibility high and allowed for transparency and alignment. A clearly communicated mandate for cost reduction was issued by senior management. It also was decided the results would be scored by the finance department, which other business units considered an impartial function. We required that all ideas be judged objectively, and found that previously unacceptable ideas were harder to criticize. The result was a high approval rate of the same or similar ideas generated during our first attempt. There also was a better acceleration of results due to partnering and alignment of resources across all functions.
Accountability. Accountability, which includes tracking, monitoring and reporting successes and failures, is an area where many companies fall short. Too often, there is a lack of clear ownership of a task, project or initiative. We all know that “when everyone is responsible, no one is responsible.” That’s why I believe holding others accountable also requires us, as supply chain leaders, to hold ourselves accountable. Without accountability, it is difficult to achieve true success. In the cost reduction example discussed previously, a senior executive was selected to champion each project to be certain that someone owned the end result.
Trust Holds It Together. Transparency, alignment, partnership and accountability are important to successful strategic leadership, but the glue that holds them all together is trust. If a leader at any level in the organization has a hidden agenda or fails to be a true partner, none of the four elements will be effective because trust will have been lost. Ethical behavior and demonstrated consistency is critical for effective leadership.
I recall an incident when a senior procurement leader at a decentralized organization rolled out a purchasing card program to nine separate business unit presidents. He failed to mention the program included a 2% surcharge on the card’s use that would help fund the creation of a centralized procurement organization. When the business leaders realized they had not been consulted or given the option to approve the use of money from their operating budgets, the establishment of a centralized procurement department ceased and ultimately reversed. Because of a hidden agenda and an ethical lapse, trust was lost.
Strong, successful leadership involves many skill sets, and when those skills combine with a leader’s commitment to transparency, alignment, partnership and accountability, amazing results can follow.
A major reason so many small businesses go out of business is due to Cash Flow, even though they have a profitable Gross Margin. How can that happen?
If your business or part of your business is involved in buying or producing and selling products, then this article is for you. Keep reading.
Why are so many businesses struggling with Cash Flow issues?
The answer is in your Balance Sheet and how you manage your Working Capital. The definition of Working Capital is: Current Assets minus Current Liabilities. In simpler terms:
Working Capital = Inventory plus Trade Accounts Receivable minus Trade Accounts Payable
Every business that is growing will experiences growing pain for a simple reason. To achieve higher product Sales, you need to invest in more Inventory, which ties up part of your Cash. Your higher sales of products result in higher Accounts Receivable (A/R) and not all your customers pay in time, which ties up more Cash. On the other hand, your suppliers typically are insisting on timely payment, pushing your Accounts Payable (A/P). The result is a longer Cash cycle of invested money from the time you must pay your supplier to the point when you see the money back in your bank account.
The answer lies in efficient working Capital Management.
You get your first clue by looking at your Balance Sheet and whether your Inventory and Accounts Receivable have grown. Have you invested additional Cash in Inventory and A/R in the last few months or compared to last year?
If the answer is yes, stay tuned, as we will show you how to improve your Cash Flow through Inventory Control, A/R and A/P Management.
Mastering the Follow-Up
Everybody would like a one-call close. However, 99% of sales calls do not close in one call. You have to master the follow-up process.
At Josh Turner’s session on “Follow-Up Funnels” at Ascend 2017, he showed this graphic from a Microsoft study. Take a moment to absorb the graphic.
The Key Takeaways from this study are:
- 85% of sales people give up after the second contact with a prospect
- This is interesting because it typically takes up to five contacts to even become a factor in your prospect’s mind
- By contact number eight, you are most likely the only person to make eight contacts with this prospect (i.e., you’ve officially out-worked the competition)
- By contact number nine, you have a 90% chance of being the one who is called when your prospect is ready to buy
- On average, it can take 12 touchpoints to turn a prospect into a client.
What are you doing to master the follow-up, out-work the competition, and turn a prospect into a client?
Treat Prospective Clients Like a Future Spouse or Friend
Getting clients is (not) picking up girls…
After spending some time discovering, understanding, and applying solid principles of any good methodology, you notice they are actually quite familiar and also very simple, at the same time. As with anything of value that lasts, they require a FOUNDATION and some ONGOING attention.
If you are looking for clients and struggle to convert and retain them, remember what you’ve learned from seeking a life partner or friend, for that matter. Sure, it’s easy to meet people, strike up a conversation, have some fun, and move on. Any relationship that lasts requires time. You know something about each other. You share something that differentiates you from everyone else. You have some common interests. You keep in touch. At some point, they know, like, and trust you, and the relationship has a reason to continue over time. This means you can do more stuff together that you probably wouldn’t do on the first, second, third, or 10th interaction.
You’re more likely to find a lasting relationship if you know what they’re like. If you live in The City and don’t like country things, it probably doesn’t make sense to find that special person on a farm. Similarly, you wouldn’t seek someone in a retirement home if you want to start a family. You have a PROFILE of the person with whom you want to connect. This same process applies to finding a prospective client. You need to define the demographic, the psychographic, the title/position, the industry, the location, the revenue, the maturity. It’s no different than finding the right person. You’ll know when you come across it.
At some point, you need to POSITION yourself to that prospect. It might work to walk up to them and just ask them if they want to do something, but that’s less likely to last. Wouldn’t it make more sense to somehow differentiate yourself from everybody else? What makes you special? Better yet, how do they know you’re special? Now, some people are fortunate and have special differentiators. A-listers, billionaires, models, Nobel prize winners, and professional athletes come to mind. Good luck with that. If you plan on having a lifetime relationship, you’ll probably spend considerable time demonstrating how you’re different and why you deserve their attention. You build some level of authority and are a leader to them…somehow.
Unfortunately, not every ‘attempt’ (even with time) pans out. You have to play the numbers and PROSPECT. This isn’t Andy Griffith, where you can just pick up girls and see how much they weigh. You might have to properly introduce yourself. Maybe meet a couple times. Learn something about each other. Have coffee. Go somewhere they like to go. Meet the parents. Make sense? You need to understand where they hang out and you might even need to meet more than one such person.
Let’s pretend for a moment we’re talking about friends here. We all have best friends, but things happen in life where even best friends move. It’s a good idea to have some other friends. This requires time and attention to CONNECT and BUILD the DATABASE of prospects. All of this foundation is regular and ongoing. In a business, it doesn’t stop until you exit.
Now that you have your foundation, you have to keep the relationship. You want the prospect to know, like, and trust you, so that they will pick up the phone when you call them. MESSAGING never stops in a relationship. You’ll always have communication to reinforce that trusted connection.
While it may not be as simple as ‘picking up girls’, it is as easy as:
Profiling, Positioning, Prospecting, Connecting, Messaging
Before Selling or Exiting
Most business owners hope to exit at some point. Typically, this means you, as the owner (President, CEO), are no longer there or are not there as often. Whether you plan to sell, pass it on to the next generation, or be a helicopter-CEO, there are seven things you need to do before you step away. The bad news is that you should have started this process from day one. Yes. From the day you started the business.
The good news: you are actually reading this and thinking about the steps. Your mindset (1) is the first step. If you only work ‘in’ your business and never work ‘on’ your business, then you are the business. In this scenario, when you step away, the business loses its greatest asset: You.
You have this great idea (a business), now what? If you step back and think about how you direct others, the answer is clear: processes (2) and procedures (3). Your people need some rules to play by and it is your job to provide that direction with constraints. If you fast forward to your ‘exit’, you may know exactly how everything in your business works, but you won’t be around to ensure that same outcome. Now is the time to provide guidance.
Once you actually have some traction, you will need to continually build efficiencies (4). Hopefully, you are focusing on what to improve and how to make it happen. When you’re gone, will this continue to happen?
Now that you have a business that is focused and improving, it is critical that you have the right team (5) to keep the business growing. Remember, you will be gone at some point. You’re better off building and testing your team when you’re around, and gradually step away. As your team develops, you can work from home, take a day off, and maybe even take a vacation.
As you can imagine, business owners expect profit (over time) and they don’t like surprises. Any prospective buyer (or CEO) will look at your finances (6). This is more than your balance sheet and P&L. Buyers will want to peel back the layers and look around corners.
While you may have guessed the last item, we encourage you to be diligent (after all, you will encounter due diligence) and read the full white paper.
If you are really serious, answer 20 simple questions to assess: is your business ready to be sold?