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Doing the Right Things and Doing Things Right…

Posted on 19 May 2009

Doing the Right Things and Doing Things Right

 

February 2009. Southlake, TX. Doing the right things and doing things right…may be a play on words, however, given the uncertainty in today’s rapidly changing marketplace there is little doubt both approaches are needed. What is needed is focus and the right approach to both.

There is a huge difference between these two approaches. One is strategic by nature (doing the right things), whereas the other has a focus on tactics (doing things right). Although both require the attention of the business owner “doing things right” appears on the surface to be easy. However, in reality it can be very difficult to do effectively. Doing things right is where the majority of all business owners/ entrepreneur, managers, and employees spend most of their working hours, days, weeks, and months. The reality is it is important to put out the latest “fire” with a challenging client, supplier, or employee.

Doing the right things, the strategic nature of business, often goes unaddressed until a time of crisis. Which in many cases can be too late.

Because there is a play on words, many businesses try to address both “doing the right things” and “doing things right” with one approach. This is a common mistake.

Doing the right things requires leadership and an evaluation of the business with a focus on  the direction needed. The business plan (if has been prepared) was prepared at a point in time with a set of circumstances and/or environment. The business plan should not be stagnate…placed on a shelf and collect dust. It should be a living document that is often reviewed and modified to address the ever changing marketplace. During one of my speaking engagements, I queried the audience, which was made up of business owners and entrepreneurs, as to how many in the audience had a business plan. To my surprise, less than 10% of the audience of 100 raised their hands. Upon further examination less than 1% of the 10% used their business plan frequently as a guide in the running of their companies.

To begin addressing today’s challenging economic downturn and the many other challenges which will be forthcoming, requires a change in how one addresses these challenges. “Firefighting” is a reality, but the question is who is going to lead the company into the future? In today’s business environment…doing things right or putting out daily “fires” should not require the owner or entrepreneur involvement if there are pre-defined business processes in place to handle these sensitive situations. During these turbulent times, it is imperative that the owner/entrepreneur seize the opportunity to evaluate and take action on both the strategies and tactics of the business.

Doing the Right Things:

Changing times demand innovative solutions…

What is a DMC to do? I am asked this question all the time. What are the answers? Truth is there are no magic answers. However, there are strategies to consider. To survive during this economic crisis requires a change in approach. It involves recognizing what worked in the past may not be the right strategy for today, next month, or next year. It will take courage to embrace new ideas or a different paradigm, as well as a lot of understanding and support from suppliers, vendors, business partners, and employees.

Where is my Business Plan?

Seems like a good question? Or, maybe a better question is…Do I have a business plan? Seems like an easy and quick thing to do, eh? Not so fast! A business plan, whether prepared on fine linen stationary and bound in a nice three ring binder, or on the back of a napkin, must address the direction of the company taking into account the present environment and conditions. As conditions and the business climate change, so must the business plan. Competitors come and go, and some even change their strategies and tactics midstream…so to must your approach in the competitive marketplace. Don’t forget your suppliers. The economy could be having an impact on them and having just one supplier to fill the need of a major program component could be catastrophic.

There are client and industry trends that need to be understood and addressed by your company. It is an imperative that every facet of the business undergo an unbiased scrutiny…without prejudice. If you feel you are unable to accomplish this scrutiny then hire a professional that can bring knowledge and experience of your industry, the clients you serve, as well as successful business benchmarks.

One of my favorite quotes is “if you do not know where you are going, any road will take you there”. A business plan must be your roadmap in gaining strategic competitive advantage and success in the markets you serve.

Business Planning;

During business planning many factors must be considered. First, the voice of the customer must be a key ingredient in developing the business plan. Next, business considerations, i.e. operational Issues, financial Issue, previous business strategies, human resources issues (do I have enough? are they the right ones in the right structure?), branding issues, etc.

With these ingredients considered then the hard work begins…formulating the key business objectives. This is not a…”I want to increase revenues” objective. It involves a great deal more detail… for example, from what segment of the market…direct or via third party. Why is that segment important to your business? What is your competition doing in this segment? These are but a few questions that must be answered in developing each business objectives.

Once all the key business objectives are developed, key service indicators (KSI’s) must be developed. After which, both the business objectives and KSI’s must be deployed and operationalized (more about this in the section “doing things right” of this article).

Strategy, baloney!

One can only observe the Automobile Industry to see the effects the business considerations (i.e. lack of consumer credit) has had on Ford, GM, Chrysler, their unions, and suppliers. Where are their business plans? When asked recently by Congress to see   their plans for survival…the response was “we will get back to you on that request”.

What if the “Big Three” had taken seriously the initiative of producing energy efficient automobiles and not succumbed to their old “paradigm” of producing gas guzzling SUV’s, Crossover vehicles, Hummers, and the like? Would they be facing Congress for bailouts? What if GM would have been “doing the right things” and cut the number of “brands” they offer consumers? Today, GM has a mismatch of brands which cannibalize one another. What if GM had eliminated some of the dealers in its dealer network in order to make both the dealer and GM stronger? One has to question these strategies…or lack thereof. GM is now looking to jettison Saturn and has filed bankruptcy proceedings for Saab…after Sweden refused to bail out GM/Sabb.

On the other hand, Ford Motor Co is not seeking an emergency loan but has asked the government to consider a standby line of credit it could draw upon if its own position worsens more than expected in 2009 or if Chrysler or GM were to fail. Ford has taken the steps to reduce their product lines by selling off Aston-Martin, Jaguar, and Land Rover. It is now looking to sell another brand…Volvo.

As part of their business strategies…all three must look at their dealer networks to evaluate the proper number that can be supported during these tough economic times.

What is this “optics” stuff?

Optics is the perspective a person may have of facts that may or may not be present. Optics can be a public relations nirvana or nightmare!

The largest “optics” fiasco of recent times was when all three of the automakers converged upon Capitol Hill in Washington, D.C. flying in on their corporate jets looking for a financial bailout. If this wasn’t an “optics” fiasco…then why did all three drive one of their energy efficient cars from Detroit to Capitol Hill on their next visit?

In the Financial and Insurance Industry, examine Lehman Brothers, Goldman Sachs, Bank of America/Merrill Lynch, Citigroup, AIG, and other institutions to see the impact the housing crisis and financial catastrophe has caused this sector. Observe what happened with the “optics” that confronted AIG with their incentive programs after receiving a taxpayer “bailout”. Management of AIG had the courage to follow through on a prior commitment to independent agents. However, the court of public opinion did not agree with AIG management decision, and the uproar persisted that AIG was insensitive to the taxpayer bailout which had occurred just days prior. This is and was a public relations nightmare that could have been avoided. No one took the time to asked how much it would have cost to cancel the program! What would have been the trickledown effect on hoteliers, DMC’s, bus companies, activity suppliers, and other small and medium businesses if the program was cancelled? What could be the unemployment impact if more of these type programs are cancelled or postponed? Since it was at such short notice, the cancellation fees could have been just as high as running the program. No one asked how future business opportunities could have been affected if the program was not followed through for AIG’s high performing independent agents.

The fallout from the “optics” of a besieged AIG has caused many other financial and insurance institutions to seriously evaluate their meeting and incentive programs as they do not wish to be next on the front page of the Wall Street Journal. In my humble opinion, like it or not, this is a “herd” mentality.

Of more concern is no one from the Travel Industry has taken the time to explain to the news media that should corporations cancel their meetings and incentive programs…many small and medium businesses (including DMC’s) will be impacted! It is known fact that small and medium businesses are the engine of growth in the United States.

Beware…some have suggested the Home Building Industry will be the next group to face Congressional inquiries for a taxpayer “bailout”. Home Depot just announced the shuttering of all 34 of their Expo Design Centers the layoff of 7000 in staff. If this spreads to others in the sector, look for suppliers of their products and services to be impacted just as the Automotive and Financial sectors have been.

I feel safe, my client is not affected by the downturn!

If true, I would suggest that given today’s depressed economic conditions, that you sleep with one eye open at nights. Do you have much of your business aligned with one client or industry? If so, you should begin a serious evaluation and focus on realigning your sales efforts. Placing all of your “opportunities” within a single industry or with one client can be catastrophic if both the industry and the client are impacted by the economy. I am reminded of a DMC client who had 75% of their revenue stream tied to ONE customer. Needless to say within two years the percentage dropped to 55%…still high but moving in the right direction.

Given today’s depressed economic climate, the old paradigm of 20% of your customers produce 80% of your revenues, whereas 80% of your customers produce 20% of your revenues may be just that…an old paradigm. This one size fits all approach does not appear to apply any longer.

Hire now? Are you NUTS?

During an economic downturn, companies often overlook the importance of a recruitment strategy. Most companies are looking to downsize. This is not a time to become complacent. An effective team can be an important weapon in a fight for survival.

As a result of the downsizing which is happening… a growing pool of qualified, talented people will become available in the marketplace. These individuals will arrive with industry knowledge, operational experience, and a shorten learning curve. This will allow them to be more productive and easily focused on their work “processes” within your companies.

DMC’s have the opportunity to thoroughly screen and evaluate potential candidates to ensure appropriate skill level and culture fit. Identify the key competencies you require within your team. Define your requirements, include multiple behavior interviews, and rigorously conduct reference checks.

A key component in a business plan is an exit strategy. With the amount of talent that will become available, keep a vigilant lookout for succession planning. This opportunity does not come along often, so it should be important to develop an exit plan…now.

Why is that yellow light on?

Do you mean that CAUTION light? A key consideration as companies move through these turbulent times is to not allow today’s cost cutting measures destroy future business opportunities. All too often, companies form judgments, make miscalculations, and/or destroy future opportunities because they do not take the time to understand and evaluate the actions about to be taken. I am reminded of the company who reacted to this downturn in the economy by downsizing. Their thinking was to downsize those individuals with the highest salary. The problem was, they were considering terminating their best salespeople. A BIG mistake!

Doing Things Right:

During the “doing the right things” phase, it is very important that the owner/ entrepreneur take the lead in developing realistic strategies, goals, and objects within their business plan. They should include stretch objectives for those key service indicators (KSI’s) which will enable the company to succeed during the difficult times we are experiencing today and for the foreseeable future.

A general observation is most owners/ entrepreneurs focus on the daily task of “firefighting” (the effect), but not business processes (the cause). My opinion is if they did focus on business processes, there would be less “firefighting”! With the lack of defined business processes, there also is little or no integration of these same business processes. This is where it becomes costly to the company in terms of efficiency and effectiveness. Inefficiency and ineffectiveness     has a negative impact on the organizations ability to deliver excellent customer service.

In conversations with customers of travel programs, the one thing I hear often is they want and expect consistency! Planners and implementers alike want and expect consistency in everything a supplier of programs/meetings provides whether directly or indirectly (i.e. through                vendors/suppliers). Be it in terms of proposals, contracts, delivery of services, billing, and/or accounting. In addition, and most importantly…customers want DMC’s who can take immediate action and rectify problems. In other words, empower their organizations to make decisions and not waste time and money.

Market factors are changing very rapidly, how do I keep pace?

Ok, Ok, enough already… I’ll develop a business plan with defined strategies, goals and objectives! How do I ensure they are communicated to my organization and receive the critical focus needed (remember in doing the right things earlier…we said we would address how to)? One effective tool is Business Process Management (BPM). BPM is where the owner/entrepreneur aligns their organization with the wants and needs of clients. A tool that is often used to ensure the wants and needs of clients are built into the business processes  is the customer/supplier model.

Pay particular attention to the flow/direction of arrows in Figure 2. The diagram starts with pyramid to the right…”Your Customer”. Although it is position on the right, everything starts with the voice of the customer. Business processes must take into account the requirements of the customer. These requirements must be effectively communicated to suppliers. Most breakdowns in customer satisfaction occur when the customer requirements are not fully understood and therefore incorrectly communicated to the business process and/or supplier.                               

How do I align my organization with the wants and needs of customers? It begins with the reengineering of the business processes (“business process” in Figure 2) within your company. What is reengineering? Let me start by stating what it is NOT. It does not mean starting with what already exist and making incremental changes hoping it leads to higher organization efficiency and effectiveness. Reengineering is not patchwork…it starts anew with a focus on ensuring industry best practices and benchmarks are understood, evaluated, and considered in the development of new business approaches, tasks, activities, and workflows. Databases and data flows are critical to the reengineering of processes.

Think of it this way…if you were re-creating your company anew today, given what you know about the current depressed economic climate and business conditions, and preparing for what you expect the industry trends and issues to be in the not too distant future, what would your company look like? Reengineering means tossing aside old paradigms and starting over. It involves starting with a clean slate in defining new business processes.

Reengineering isn’t about making marginal or incremental improvements but rather about achieving quantum improvements in performance...it may mean your company’s survival during these turbulent times.

 

Ok, what is a business process?

A business process is a collection of related, structured workflows or tasks which produce a service or product (output in Figure 2) that meet the needs of a customer. Business processes are a set of related work activities which make your company efficient and effective. In the DMC world these would be the business functions of sales, marketing, product development, proposals, pricing, operations, vendor management, billing and accounting.

The most effective way to develop a business process is through the mapping of its work flows, activities, forms, databases, inputs and outputs. Mapping is very hard work. It should involve everyone in the company! In the 20+ years I have observed and participated in reengineering efforts, there is one misconception that prevails… an owner/entrepreneur and his/her most loyal employee(s) can sit in a conference room and in a matter of hours do this work. This is not realistic. Developing business processes is very hard work, and will require time and energy to consider the most efficient and effective process that will lead to higher customer satisfaction and strategic competitive advantage in markets served.

I say hard work, primarily due to individual paradigms developed over time which must be discussed and considered, but certainly not allowed to take precedence during business process mapping. I am reminded of another one of my favorite quotes…”Insanity is defined as doing the same thing over and over again and expecting different result”. (Albert Einstein)

How do I measure the performance of my Company?

What I find interesting is most owners/ entrepreneurs use top line revenue and/or overall profitability to measure the performance of their companies. While both are key measurements, managing below the top line is equally as important. How long is the billing cycle? How accurate is billing? How long does it take to get a proposal out the door? How long is the sales cycle? How to measure brand/identity penetration? These measurements (albeit not inclusive) of business performance become key service indicators (KSI”s).

 Performance management of a company is the process of assessing progress toward achieving predetermined business and organizational strategies and goals. There are three indicators of measuring the performance of a business process; 1. Time, how long does it take to execute the process. 2. Money ($), how much does it cost to execute the process? and, 3. Defect rate, how many errors does the process create or eliminate. Establishment of targets in one or all of these indicators will provide the owner/entrepreneur another means to measure the performance of the Company. One final way to measure the overall performance of the company is by customer satisfaction results.

Geez, is that another caution light?

Yes. As I mentioned, reengineering business processes is hard work. It will require both dedication and commitment from the owner/entrepreneur. It should allow the owner/entrepreneur a means to discover efficient use of their resources; financial, human, and material. At the onset, huge improvements, progress, and successes will be made. The challenge for most owners/entrepreneurs is to stay the course. Once performance improvements begins to slow…so does the attention, desire, and commitment of the owner/entrepreneur. Continuous improvement will be needed, and will be discussed in a follow-on article.

There is a methodology to doing all this reengineering. Can I do this by myself? Sure, if you stayed at a Holiday Express last night! Seriously, my best advice is to seek professional help. My 20+ years of experience in reengineering business processes and consulting (including the last 12-years with DMC’s) tells me most owners/entrepreneurs require an outside facilitator who has the experience and knowledge of how to do this work.

How long will it take? Don’t be in a hurry. Experience with DMC’s whom I have worked with in their reengineering efforts, indicates you can expect to spend a week per business function (five to six weeks of hard work), and a week or so of business process integration. This is following an extensive review of current conditions in the enterprise.

Lastly, and most important, once completed, business processes are the work product and intellectual property of the owner/entrepreneur. Treat them as such. Most DMC owners I have worked with in this area treat them as the “scrolls” of their businesses.

In summary;

I wish there was good news to report regarding the economy. Unfortunately, we have not seen the end of the financial and economic tsunami the global economy has experienced so far. The problem is there is a backlash that is beginning to occur. The goods and services sectors are seeing the impact of the credit crunch by the reduction in discretionary consumer spending. These sectors are feeling the plight of the consumer which will cause them to further evaluate their spending…both capital and operating expenses. This slowdown will have a trickledown effect to other sectors and businesses in general. Unfortunately, this will affect the travel industry significantly over the next two years. Is there light at the end of the tunnel? Maybe the tide will turn by year end 2010, but our economic stars must be aligned for this to occur.

Unfortunately, the end to postponements or cancellations of 2009 company meetings and incentive programs is not over. Companies are struggling to balance their financial health, the “optics” of shareholders and policymakers, along with their own priorities. Major corporations are making very difficult business decisions in an effort to sustain their viability. Downsizing by these corporations will cause unemployment to rise which will bring about both opportunities and distress to an already anguished credit market.

To prepare for the future, DMC’s should consider taking immediate action suggested herein to ensure their viability and long-term success. Time is of the essence.

Doing the Right Things;

               A critical evaluation and unbiased evaluation is a necessity

               Develop and manage a Business Plan including an owners Exit Plan

               Develop business objectives with key service indicators (KSI’s)

               Evaluate your customer base and ensure the voice of the customer is included

               Look for potential critical hiring opportunities

               Be careful not to destroy future business opportunities with decisions made today

Doing Things Right:

               Embrace business process reengineering

               Communicate company-wide objectives and key service indicators (KSI’s) through business                processes

               Develop and integrate business processes

               Monitor and measure business performance; Time, Money, and/or Defect Rate

               Seek continuous improvement

               Strive for consistency, consistency, consistency, your customers are watching

© 2008 The Cypress Group – All Rights Reserved

 

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This article and its contents are the property of The Cypress Group. Because it contains confidential information proprietary to The Cypress Group, no copies may be made whatsoever of the content herein, nor any part thereof, nor should the contents be shared with any party without the express written consent of The Cypress Group. This copy must be returned to The Cypress Group upon request. The Cypress Group reserves all rights to ownership, use, reproduction, distribution, and publication of this document and the intellectual property therein. Some parts of the document are reprinted from other sources.

 

              

 

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