7.2 Customer-Focused Results Archives

Crisis Management & how to overcome it

May 3, 2018 by Uwe Wetzel Leave a Comment

Here is an interesting story I want to share. Back in my past as CEO of an injector manufacturing plant there was a phenomenon for several weeks. Every Friday at 3:00 pm we were in crisis mode. At that time, we were working seven days, three shifts and at 3:00 pm on Friday, the assembly manager indicated that we need to shut down the assembly line on the weekend due to inadequate parts supply. The logistics manager struggled to get the parts from the fabrication department or outside suppliers, which had to produce the parts by working overtime and expedited shipping cost.

Shutting down the assembly line would have had a dramatic impact on the supply to our customer as we were one of their just-in-time suppliers. We would have shut down their production line with a huge financial penalty. We were in crisis mode every Friday for a couple of months.

Finally, I called all managers involved in the supply and production process into a meeting to discuss the constant crisis mode on Fridays. After lengthy discussions and analyzing the root cause of the shortages, we agreed to meeting on Thursday mornings, everyone providing information about demand and supplies for the weekend production. We were now able to prioritize and adjust production where needed. Within two weeks there was no crisis meeting on Fridays any more. Problem solved. We were able to reliably provide the necessary quantity to the customer.

Conclusion: Unless you find the root cause of the problem using six sigma methodology and eliminate the issues in the process, you will not see improvements in your processes and production output.

Dream of Selling

October 31, 2017 by Chris Scherer Leave a Comment

Every business owner thinks about exiting their business. Some hope to sell. Others may have plans for somebody to ‘take over’ (e.g., next generation; partner/co-owner; employees via employee stock ownership plans; etc.). Maybe the plan is to step away slowly and continue to take an income or profit. Regardless of the plan, the success of each is largely contingent upon the health of the business.

Any buyer will want some assurance of continuing revenue, as well as the ability to continue operations at a profit. The likelihood of recurring revenue lessens when the ‘Selling CEO’ exits and there is no team in place to drive sales. Let’s assume there is a sales and marketing team to drive revenue. Is there an operating system with the accountability in place to execute on delivering the products and services sold? Does the system measure the effectiveness of those responsible? Do you have trusted relationships with suppliers? How well documented are your systems and processes?

It might seem counterintuitive, but a good test of this happens with a passive CEO. What happens when you (the owner/CEO) take time off? Imagine taking a two-week vacation with no access to your phone or computer. Would the business thrive or would you come back to a firestorm? Take it a step further. Does your management team have a clear direction for the next 3-5 years? Are your vision, values, and goals clear? Would they share the same view of that long-term goal in your absence?

Based on our collective experience in leading Peer Advisory Boards (Mastermind Groups) and one-on-one executive coaching, if the answer is ‘no’, it’s unlikely the team will be able to provide strategic direction, much less daily tactical direction.

The following article shares similar guidance. Please tell us about your experience, as you dream about exit and begin to move closer to leaving your business.

Why Many Small Businesses Cannot Be Sold (NY TImes)

Picking Up Girls

June 10, 2017 by Chris Scherer Leave a Comment

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

June 2, 2017 by Chris Scherer Leave a Comment

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?

The Operations Playbook

May 30, 2017 by Chris Scherer Leave a Comment

A Systematic Approach for Achieving and Maintaining Operations Excellence

We’re almost half-way through 2017. Are you working on your business or simply reacting to fires? Do you have a playbook for operations?

More than two-thirds of middle market companies (defined as annual revenue of $10 million to $1 billion) feel they “have trouble making improvements stick.” Based on experience and data (survey of 400 C-suite executives), The National Center for the Middle Market shows that companies do better, “when they approach their operations as systems, with parts or subsystems that can be fine-tuned both individually and in concert.”

Their guidance is simple:

Manage Operations through Governance of the following subsystems:
- Strategic Alignment
- People Development
- Daily Management
- Problem-Solving.
Stay Close to the Work through leaders (managers) who are “visible and engaged” to your operation, resulting in:
- Faster problem-solving
- Better understanding of customer needs.
Choose an Operations Method that Works by having a formal method that is comprehensive and systematic.
Share Your Strategy such that everyone’s work aligns with your mission and vision.

Each of the subsystems require attention individually and works in sync with the overall operations system:

Strategic Alignment guides employee action by setting priorities based on a clear understanding of the overall strategy. This starts from the top down and requires that leaders check in with employees to review priorities and challenge processes.

People Development enables employees to address customer needs in the operation by building their capabilities and skills. People must understand their roles and be able to perform them. The EOS (Entrepreneurial Operating System) Model sums it up this way: they get it (their role), they want it (they like and believe in what they are doing), and they have the capacity to do it. Once the people are in place, the key is building a learning organization (we will post more on this shortly).

Daily Management allows leaders to identify issues and/or gaps to get the right work done. The first step is to have visual controls to track progress and coordinate across functions. The second step is accountability. This requires knowing what each person is responsible for at any given time. The third step is “leader standard work” or “management by walking around”, which means routinely checking that the work is getting prioritized and completed.

Problem-Solving ensures that people can quickly address problems when they occur. This first requires having some system to report the ‘problem’ and then prioritize what to address first. In this process, it is critical to identify the Root Cause of the problem, a skill-set which may require training. Often, the solution may involve working across functions and levels within the organization (i.e., teamwork with transparency into roles and responsibilities).

Finally, operational excellence requires Measurement. In the survey, they identified the following metrics to judge operational excellence: Customer Satisfaction, Profit Margin Changes, Productivity Changes, Employee Satisfaction, and Employee Training Hours.

In conclusion, while middle market companies may struggle to make improvements stick and may be less inclined to formalize an operations method, they do have some advantages over larger companies. Typically, they have greater focus on customer satisfaction, and senior leadership is more involved in operations than at larger firms. Ultimately, good governance is the key to operational excellence. Know what your company is all about. Share that from the top down. Have a formal operations method and stay close to the work. Make sure your subsystems are in sync.

We encourage you to take the Operational Excellence Questionnaire at the end of the report.

Read the full report here.

Courtesy: National Center for the Middle Market