Top executives should be thinking about the direction and strategy of their company. Many executives spend an inordinate amount of time on the details of their business and often don’t put sufficient focus on results. Jack Welch once said that the two key roles of a CEO are to develop a vision and to find the people to implement it. Are you paying attention to the four dimensions of executive thought?
Financial returns are the first dimension of executive thought. Many companies try to implement new approaches such as Lean, re-engineering, Six Sigma, and others without asking the key question, “Are we getting a return on our investment?” In some cases, these efforts yield incremental improvement, but often, no improvement at all. Management should anticipate an ROI on these efforts and expect the improvements to be sustained over time.
To help set financial expectations on improvement efforts, executives can ask:
- Are the financial returns about to change due to market conditions?
- Is the regulatory environment about to impact your financial returns?
- Is the company achieving dramatic growth (rather than accepting two to three percent per year)?
- Is the banker satisfied with the financial returns?
- Are other stakeholders happy?
Do you spend time looking from the mountaintop at where your products/services and markets are heading? Non-financial returns are the company’s growth drivers, but they may not be immediately measurable in dollars. They include consideration of local and global markets as well as product and service diversification. What’s in your current portfolio of offerings to your customers? Do those offerings provide remarkable value? Are your supply chains set up to assure timely and economical delivery of your products or services?
Many companies are seeing disruptive shifts in their markets, which are leaving them behind. Think of cameras and music. Kodak and CDs were the immovable objects of the 1990s and now you hardly hear about either one.
Companies need the right people in the right positions to implement strategy. The best strategy unimplemented is worthless; it’s the proverbial notebook on the shelf that does nothing to accelerate profit and growth. Do you need more or fewer people? Should they be full time, part time or temporary employees? What skill sets should they have?
For more on choosing human resources to promote change, see my recent blog post.
What partnerships (both internal and external) should you be developing? As partnerships grow, you can expect exponential improvements in materials costs, inventory turns, customer order fulfillment levels and the ability to get new products to market effectively. Do you let supplier partners help organize your supply chain for profit and growth? Internally, partnerships can help prevent functional silos and encourage internal cooperation and strong teams.
Technology is moving more rapidly every day. Do you have the knowledge internally to determine whether technology is hype or high-ROI for your company? The Internet of Things, Big Data, SaaS, mobile devices and social networks are having dramatic impacts on your relationships with customers and suppliers. Can you use technology to increase speed throughout your value chain? Should your company be more or less dependent on technology? Can you implement it rapidly without disruption?
Many companies assume that automation is the solution to high labor costs, but automating processes renders them more difficult to change and improve. Before implementing new technology, executives should examine the process and determine if it can be eliminated or simplified. This way you avoid the time and expense of automating a process that wasn’t necessary in the first place.
While there are few situations where automation is more flexible than human interaction, repetitive and high precision tasks can often benefit from automation.
From the Flight Deck
As an executive, are you spending your time setting the direction and strategy for your company, or are you mired in details? Is there a shift in your markets, supply chain, regulations and resource availability? How will you accelerate profit and growth for your company, today, and a year from now?
© 2015 – Rick Pay – All Rights Reserved