When you look at your business, can you say, “It is good?” In the creation story in Genesis, as God created the various elements of the earth, God looked at what he had done and said, “It is good.” Things were working the way He designed them and He enjoyed His creation. As a business owner or executive, can you say the same about your business? What would it take for you to enjoy your creation? How do you know that it’s working the way you intended it to?
Is It Well-Designed?
The business model encapsulates a company’s design, laying out how the business will make money, who the customers are, the products and other revenue sources, along with the details of financing the business. The design includes the vision, which provides a statement of what you want your business to be in the future. Having a clear vision provides focus and the “why” of your goals. It helps employees understand their role in reaching those goals and keeps them heading in the right direction.
A strong design includes an operations strategy that aligns with the business strategy. Not only does this create the lift your business needs to get to new heights, it also generates competitive advantage through speed, service, quality and cost advantages. A good operations strategy includes a set of objectives or business outcomes for operations (including supply chain), the measures you’ll use to keep score, and a timeline for execution.
Is It Working?
How do you know that the design of your business is working the way you intended? The first place to look for the answer is your results – are they the business outcomes you want? Many executives focus on activities such as sales, lean, team building, and new product introduction, but as a leader, your responsibility is results. Activities are your management team’s realm. Focusing on results helps drive the performance that will take you to your vision.
Measures provide the feedback that you and your team need to stay on track. One of the most useful tools is a simple daily flash report. Usually an Excel spreadsheet, this report lists items that are key to your success, such as daily shipments, accounts receivable over 90 days, and inventory levels.
A past client was experiencing too much overtime, and when they started measuring it on their daily flash report it quickly dropped, while they still met their shipping goals. This resulted in 2% of sales dropping to the bottom line, contributing to a very profitable year and a nice distribution to the owners, managers and employees.
Other measures might include shipped on time, returns, cash flow, quality and so on. Your company’s measures will depend on your business and operations strategies and should be identified as part of your strategy development process.
Another way to know if your business design is working is to ask if it’s providing benefit to your stakeholders. In my book 1 + 1 = 100: Achieving Breakthrough Results Through Partnerships, I explain that the stakeholders of the company include internal and external parties, including owners, employees, suppliers, customers, and the community. Remember, a rising tide lifts all ships. By focusing on benefits for all stakeholders, your business can maximize its results.
Do You Enjoy Your Business?
In my work with business transitions, when I ask owners why they’ve decided to sell or transfer ownership, they often say they’re tired of dealing with problems and the day-to-day trials of trying to grow their business and make a profit. Pressure from the board, the bank and other owners takes the fun out of the process. After we rapidly improve the value of the business in preparation for a sale, their work becomes fun again, and some owners enjoy running the business so much that they postpone the sale.
Can you say, “It is good” about your business? Is it well designed? Are you enjoying what you created? If you’d like to improve the stewardship of your business and begin to enjoy the work again, give me a call.
© 2016 – Rick Pay – All Rights Reserved