Archive for the 'Organizational strategies' Category

Two reasons quality service can take you down

Successful customer service is the process of delivering value to customers in exchange for payment.

Surely this is the prime directive of any business. But that process isn’t truly successful unless the relationship can be sustained, and only quality produces sustainability.

But what kind of quality?

“Quality service” is a 20th century term that businesses use to declare a commitment to diligent customer support. But customers typically associate it with, and businesses too often tolerate it as promptly addressing a problem. Unfortunately, here’s what quality service often sounds like:

“We’re sorry we delivered the wrong size part. But we’re committed to quality service, so one of our trucks will be there in an hour with the correct part.”

It’s true. Sometimes quality service like that impresses the customer – and businesses even like to brag about delivering it. But while prompt attention is admirable, it’s not optimal because it has a negative impact on sustainability in at least two ways:

  1. The customer was inconvenienced by inaccurate service – you screwed up!
  2. Allowing an avoidable problem to occur is the worst kind of profit-eating inefficiency.

In the 21st century, successful small businesses have converted their problem-fixing “quality service” to the profitable and sustainable “quality process.”

Put simply, executing a quality process is serving customers correctly the first time. Accomplishing a quality process ranges from the very basic, accurate order filling, to the more complex, integrating into your operation only those vendors that share your quality process commitment. It shouldn’t be breaking news that your large business customers have been doing this for a couple of decades, to eliminate weak links in their supply chain.

The optimal goal of your quality process is sustainable customer relationships. That means 1) you did it right the first time; and 2) you made a profit and didn’t squander any of it on mistakes. Such sustainability is in evidence when customers return to find your profitable business still there, ready to serve them again with your quality process.

So why would anyone live with profit-eating quality service instead of managing with a quality process? Because cash is a drama queen and profit isn’t.

Delivering quality service is practiced by crisis managers. The crisis comes when you could lose a sale – possibly even a customer – because an order was filled incorrectly, creating a hit to your cash flow so quickly and dramatically that it takes your breath away: “OMG, get out there right now and fix this!”  Lots of drama for everyone.

Having a quality process is a commitment to profitability, requiring disciplined, long-view professional management. You’ll recognize it by the sound of no drama experienced by you or your customers … crickets.

Professional small business CEOs know that focusing on a quality process – doing it right the first time – takes a commitment to quality hiring, efficiency training, and a focus on what customers want, not just what they need. These practices produce sustained profitability and, in time, will eliminate your noisy cash flow drama.

Remember, the quality service you’ve been so proud of may seem admirable, but when delivered in response to something that was avoidable, it assaults profitability, threatens sustainability and ultimately will put you out of business.

Write this on a rock … Convert quality service into the more profitable – and sustainable – quality process.

5 year-end steps to take while you’re closing out this year

Fourteen hundred and forty - the number of minutes in a day.

Since we can make more money, arguably the greatest challenge of any small business owner is balancing the demands of the forces that compete for those minutes.

“What is the best use of my time right now?” is the constant management question on Main Street. And in no other part of the year are we more time-management challenged than in December, when we’re faced with allocating time to two very powerful management imperatives: The tactical focus on closing out the sales year as strongly as possible, while simultaneously taking strategic steps to set the business up for a fast and clean start on January 1.

In his book, Blue Highways, William “Least Heat Moon” Trogden said his Osage Indian grandfather once told him, “Some things don’t have to be remembered, they remember themselves.” It’s a natural law that the year-end sales push doesn’t have to be remembered, it remembers itself. But as we come to the two-minute drill in the last quarter of the marketplace game our business plays all year, committing precious time and energy to preparing for the future requires the discipline to remember it ourselves.

There are many areas to focus on this month to help you start the New Year clean and fast.  Here are five to get you started.

1. Throw stuff away

Even if you’re not a pack rat like me, you’ve accumulated stuff you don’t use anymore.  For example, one of the markers of a 21st century office is the digital graveyard. Unused or broken computers, monitors, etc., may have some value, so call a tech recycler and convert it into cash. If you can’t sell it, give it away or throw it away, because it’s in your way.

2. Empower producers - cut the dead wood

Year-end is also a great time to take stock of employees who’ve demonstrated leadership and engagement. Recognizing the performance of those individuals will motivate them to a fast start in the New Year.

The only thing worse than firing someone is letting an unproductive employee hold your team’s performance hostage for another year. A byproduct of identifying those who perform is it also shines a light on those who don’t. You owe productive people the most effective organization possible, which means you have to let the unproductive pursue their careers elsewhere.

3. Classify customers

Classify customers by gross profit into four groups, from the most profitable As to the least profitable Ds. Worship the As, cater to the Bs, encourage the Cs and teach the Ds about self-service. When the cost of a customer’s expectations encroaches on your profit margin too much, allow them to join your unproductive employees - elsewhere.

4. Purge inventory

As with customers, take a new look at your products and inventory by identifying the most profitable As to the least profitable Ds. Stock all the As, a few of the Bs and maybe a couple of Cs. But never let a D spend one night under your roof unless it’s paid for. Remember, profitable inventory management means just-in-time, not just-in-case. And write off obsolete and damaged inventory. Take the hit now.

5. A/R reality

Take another hit by writing off uncollectable accounts receivables now, so you can start January with a clean list. A/R write-offs are tax deductions this year, and if you wind up collecting them next year, it’s gravy. The only thing more troubling to a banker than uncollected A/R is a customer who doesn’t have the discipline to deliver a clean balance sheet.

Each New Year deserves to have the maximum opportunity to be successful, so don’t saddle it with obsolescence, waste and bad decisions. By taking these steps - and others from your own list - you’ll prove to yourself, your team you’re your banker that you have the discipline to make the critical decisions for which successful managers are known.

Write this on a rock … Have the discipline to set up your New Year for a clean and fast start.

Organizational special sauce: an intangible force

“Two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.”

You may know this line as the commercial jingle describing the Big Mac that McDonald’s created to compete with the Hardee’s Husky, which came with essentially the same condiments, including Hardee’s own special sauce.

Over the years, the term “special sauce” has been re-deployed beyond the burger wars, from condiment to handy metaphor. Management and organizational commentators, like me, have co-opted the term to identify a level of organizational performance beyond extra effort. Here’s how I’ve observed organizational special sauce in the marketplace.

Organizational special sauce isn’t a strategy or campaign, nor can it be achieved with a slogan or mission statement. No special sauce was ever the child of an algorithm, big data, or other amalgamation of ones and zeros. To the chagrin of Wall Street quants, organizational special sauce is an incalculable, unprojectable, and intangible force. It’s 100% performance leverage produced by a single active ingredient: human beings loving to work together toward something they all believe in.

This leverage kicks in like a turbo after quantifiable, tangible leverage reaches its RPM red line. Every business would like to have organizational special sauce but few ever do, because the elements that foster it are not easy to achieve, including, but not limited to:

  • Hiring the best people, who are then respected and valued.
  • Excellence as a non-negotiable performance standard assumed by all stakeholders.
  • Leaders demonstrate all the aspects that define the word: courage, integrity, morals, ethics, commitment, decisiveness, humanity.
  • People are not interchangeable parts, as if they were modules.
  • Corporate values flow to the organization’s last mile as a minimum expectation.
  • Delegation includes responsibility AND authority.
  • Corrective action first presumes shortfalls result from best efforts, and the first management step is redemption.

Here’s how organizational special sauce manifests:

  • Peerless products and services.
  • Industry-leading employee retention.
  • Prospective employees line up to join the organization.
  • Employees and partners are proud of and claim the organization’s excellent reputation.
  • Ethical actions and integrity manifest as devotion to the unenforceable.
  • Customers become the organization’s best salespeople.
  • Teams work harder than they ever did, while having more fun than they ever had.
  • And the classic marker: quantum leap performance.

You can’t demand, buy, or acquire the intangible leverage of special sauce, you can only foster an environment that gives rise to it. It’s an engagement sweet spot that produces results beyond expectations and projections – quantum leap performance.

Organizational special sauce is possible, but rare in public corporations, because it doesn’t conform to the analytical expectations of the Wall Street 90-day conference call. Our here on Main Street it’s more prevalent, where small business leaders know special sauce comes from the intangible resolve of their valued and respected employees.

Write this on a rock … Contributing to organizational special sauce is one of the hardest and most beautiful things you’ll ever do at work.

Do you value your soybeans more than your time?

Ever think about time as a commodity? Commodity: something in common use, readily available and virtually the same wherever you find it.

Time certainly fits that definition, doesn’t it? But so does a soybean.

Time may be the only commodity we haven’t synthesized. Until we do, it will continue to be unique among commodities and, consequently, our most valuable. And yet, as precious as time is, it’s an expensive irony that it’s the commodity we often waste the most, sometimes as if it were worth nothing. Meanwhile, we take extreme measures to protect every soybean.

So, what’s the solution? Organization – it’s the nexus between time and productivity.

We commit resources to acquire all kinds of stuff – information, materials, etc. – with the intention of accomplishing something, like a bid or a marketing project, which typically will need to happen within a predetermined period of time. But whether it happens as planned — including on-time —often depends more on how organized we are than our capability, or the information and resources we’ve acquired.

If someone stole your new $2000 computer, you would have them arrested. But how often has being unorganized cost you more than $2000 in an unsuccessful bid, loss of a contract or other opportunity? In the justice system of the marketplace, that’s the same as being arrested, indicted, tried, convicted and sentenced to some level of failure. So what does your organization “record” look like?

But let’s cut ourselves a little slack. It’s not easy for a small business to be organized when you have one person doing the work of three, or 25 doing the work of 40. Such ratios are one of the markers of a small business – doing more with less – especially these days. Consequently, a large project can be so intimidating that it creates the dread disease that’s worse than anything your soybeans could get: procrastination.

Professional organizers say cure procrastination with one critical practice: Break large projects into an assembly of smaller ones. Instead of thinking about a large project like it’s an elephant you have to eat all at once, split it into an assembly of smaller pieces and take them on one at a time.

How small is small? How about small enough to complete while you’re waiting on hold? Not with the IRS. Much shorter, like with a customer.

Break big projects into bite-size pieces to help you work smarter, not harder; increase your competitive advantage; and use that most precious commodity - time - more efficiently.

Write this on a rock … Value your time like you’d value a load of soybeans.

Are you asking the Outsourcing Power Question?

Biutou Doumbia lives in a tiny village in Mali, in western Africa. She and her family live in poverty, very close to the line between survival and, well, you know.

Oh, one more thing: Biutou is a small business owner. She makes and sells peanut butter.

In Mali, as reported in a Wall Street Journal article, peanut butter is made the same way African women have made other staples for millennia: by grinding the seeds on a rock with a wooden pestle. You might say Biutou’s operation is vertically integrated: She grows the peanuts, then manufactures, sells and distributes her product.

Over two centuries ago, in The Wealth of Nations, Adam Smith explained how markets are made by the division of labor. And free markets created capitalism, which Ayn Rand called, “the only system geared to the life of a rational being.”

Biutou doesn’t know Smith or Rand from a warthog – she’s illiterate. But she is one of Rand’s rational beings. And as such, she recognized the division-of-labor efficiencies offered by a diesel-powered grinder/blender when it became available. Now for 25¢ and a 10-minute wait, the sack of peanuts Biutou carries to the central grinding location turn into better peanut butter than she could make pounding all day with a pestle.

So Biutou now practices outsourcing, a division of labor process which is the employment of contractors to create efficiencies. Outsourcing is a valid business strategy, as is its opposite – you guessed it – insourcing, the process of removing vendor layers, usually to get closer to customers.

These two strategies are as different as chocolate and vanilla; but, like ice cream, choosing one doesn’t mean the other is wrong, just different. When Biutou practiced insourcing she didn’t have a choice. You have many choices; but are you choosing wisely?

One of the things every 21st century small business must do is focus on core competencies: what you do that makes your business valuable to customers. Everything else, theoretically, can be performed by a specialist in your non-core activity.

Take a look at your own operation to see if – like Biutou – you can find efficiencies and recover time through outsourcing. Ask yourself and your staff Blasingame’s Outsourcing Power Question: Must this task be done in-house? The answer will come from these three questions:

• How much control do we lose, and can we live with it?
• What impact will our decision have on customers?
• How much of not using outsourcing is about ego?

Remember, any decision to employ outsourcing – or not – should be driven by the desire to seek efficiencies and improve customer service.

Write this on a rock … Blasingame’s Outsourcing Power Question: Must this task be done in-house?

How to prevent your small business from being the next named disaster

Ever since World War II the U.S. government’s weather service has given official human names to tropical cyclones (hurricanes and typhoons). Everybody knows that. But am I the only one who didn’t know we were anthropomorphizing winter storms?

It turns out the Weather Channel has unofficially been naming winter storms since 2012. “Jonas” was the most recent winter wallop by Mother Nature, and it earned a moniker due to the magnitude of forecasted disruption. We now know the forecasts were pretty darn accurate: record snows, hurricane force winds and up to 60 million people impacted. Sadly, there was loss of life, and the yet-to-be-determined economic impact will surely be great.

But we knew that storm was coming. Almost 13 years ago a single outage in the electric grid cascaded across eight northeastern states, putting 55 million people and thousands of businesses in the dark for days. The Great Blackout of ‘03, was a catastrophic reminder that we’re all one nosy squirrel in a transformer away from an instantaneous, put-you-out-of-business event.

As business owners we can be forgiven if we aren’t hip to how storms are named. But shame on us if we don’t prepare for disasters like Jonas and the ‘03 Blackout. Sadly, surveys reveal most small business owners believe they will have a business interruption event in any given year, but way fewer say they’re prepared for one. If the latter group sounds like you, use these tips as a starting place. Start now.

Operational: What would you do if your building became unavailable to you or your customers?

  1. Instead of desktop computers, purchase laptops with docking stations that allow key employees to work and connect remotely, both internally and with customers. Make sure the laptops have Wi-Fi and a mobile modems in case your broadband connection goes down. This costs a little more, but it’s good connectivity insurance.
  2. Adopt applications in the cloud as alternatives for any installed programs that may become unavailable.

Financial: Most small business working capital is tied up in operating cash flow. What would happen if your cash flow was interrupted?

  1. Purchasing a business interruption rider on your property and casualty insurance policy that will pay you cash upon the acceptance of a claim. Be sure to read the fine print - all policies are not created equal.
  2. Maintain a close working relationship with your banker so you won’t have to introduce yourself to the person you’re asking for a disaster loan.

Data: More of your assets are now in digital form and less physical. Are you prepared to protect your data as comprehensively as your building, equipment and inventory?

  1. Assign one person to be in charge of keeping all computers enabled with proven digital security and keep it current on all units.
  2. Regularly copy critical data from your hard drives and store it offsite, plus protect your data with a cloud-based data backup and recovery firm.

Don’t become the next named business disaster.

Write this on a rock … The only people who never experience a business interruption event are those who don’t have a business.

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