Friday, December 10, 2010

What Script is Your Business Following?

I was speaking to a large gathering of business owners and was asked whether there was an inherent conflict between planning for growth and the more free spirited entrepreneurial-like approach - where you stay agile and react to opportunities as they arise (i.e., operate without a plan). This was a great question as it addresses a big misconception about planning - that it somehow hand-cuffs a business in any way.

To answer the question I asked the audience to imagine themselves accidentally walking onto the set of a movie production. Then imagine grabbing the megaphone and asking everyone on the set to freeze for a moment and to please hold up their script for the day. In this case, none of us would be too surprised to see that the cameraman, the director, the soundman, the actors, and even the caterers will all be able to produce a script for that specific day.  The cameraman will know which cameras he has to have ready and where they should be staged.  Because of the script, the actors will know the lines and the scenes they are expected to be ready for.  And the script will reveal to the caterers how many meals they have to prepare for and where they will be served that day. You see, a movie will never come together without a script.

Now take that same megaphone into your own business and ask your leadership team and employees to produce their script for the day. How will they react to this request? I suspect most will give you that “deer in the headlights” look.

There is not a producer in the world or investor that would pursue a movie production without a well written script. The idea is simply preposterous. Yet most of us will run our businesses without one.

The script for your company is a plan - a simple concise document which aligns your team around a common objective or end-state that is consistent with your vision and market conditions. And, like the script for a movie, there are portions written specifically for specialized roles. Sales, operations, finance, human resources, marketing should each have a script which defines the specific tasks they must complete (and when) to keep your “movie” progressing.

The script governing the day-to-day operations are process documents which describes how a product or service is produced and delivered within your company.

You will find that businesses that grow consistently year after year operate to a well vetted long-term (3 yr.) and short-term (1 yr.) plan. It is the plan they refer to BEFORE making a hiring decision, investing in capital equipment, or spending precious cash on marketing campaigns and website improvements. It is also the plan that will guide them when building and executing a sales strategy.

These same growing companies also recognize that the process by which they produce a product or service can impact competitiveness. By documenting critical processes they eliminate the risk of being dependent on any one person’s memory or contribution. It also gives them a foundation from which to explore innovative changes that will improve efficiency and thus increase profitability.

Now I hope I have convinced you that, like a movie, your business too requires scripting. Can you imagine actors, cameramen, and set designers coming to a specific location and then left to their own to interpret the verbal instructions of the producer’s vision for a movie. It would be chaotic at best with numerous costly ventures down one frustrating dead-end after another. Entrepreneurial or not, is this the atmosphere for a growing thriving business? No.

So, where is the script for your business? It is worthwhile to note that since 1980 over 70% of the winners of the Academy Award for best picture also received the Oscar for best screenplay – the script.

Wednesday, June 9, 2010

How to Stimulate Jobs

I participated in a small business round table discussion last month at the Metro Atlanta Chamber of Commerce with Dennis Hightower, Deputy Secretary of the Department of Commerce. He was traveling throughout the United States meeting with business leaders to gather ideas on additional steps the government can take to spur job growth. He clearly had another more important mission - to remind us, using a well rehearsed list of statistics about the amount of stimulus money the Obama administration has sent to Georgia. One message he heard in response to this, was all the money appeared to be going exclusively to large corporations. Little, if any, was trickling to small businesses.
One point Hightower made that I will wholeheartedly agree with is that jobs will return only when consumers and businesses start buying again. I added to his thought saying this will occur only when businesses induce customers to buy with relevant products or services they need and want, at a price they are willing to pay. This means businesses must adapt to the new fiscally conservative customer, not the other way around.
Hightower agreed and sighted as a success story a fiberglass molding company in California that used to produce interiors for luxury boats. At one point, the company employed more than 300 highly skilled craftsmen. But with the recession, the business suffered a drastic decline in sales and was barely holding on with just 30 employees. Hightower said they helped this company identify a new emerging market for its skill-sets – producing green energy turbine windmill blades - and now the company is growing again.
This is a great story, but I reminded the Deputy Secretary of the amount of resources (dollars/expertise) it took the owner to develop and implement the new business strategy and to retool the company for this new market. He admitted it was significant. I also reminded him that most small and medium sized businesses just do not have these kinds of resources – either the cash or the expertise.
I have seen first-hand how introspective business owners recognize the need and genuinely want sound strategic growth advice yet are so cash strapped they can’t and won’t pay for such services. So, on the one hand you have the administration wisely encouraging small business owners to change their product or service to meet the demands of the new cost-conscious shopper, while on the other hand many of these same owners don’t have the tools or resources to make such a strategic move.
This recession will be historic by its unique statistics. The net worth of the average American has dropped in dramatic fashion. At the same time, the debt level of most people has skyrocketed, as they are using personal credit to stay a float. The combination of these ingredients will slow the recovery as the first priority will be to pay off debt and recover wealth.
For business owners to be successful in selling to this customer, he must devise a strategy that will result in a product or service that is timed right and has overwhelming value and appeal. It is these businesses that will succeed and generate the jobs President Obama is looking for.
The Small Business Growth Council (SBGC) of the Metro-Atlanta Chamber of Commerce followed up Hightower’s visit with a letter addressed to him. In it we made several recommendations including the following for spurring job growth: Make federal stimulus money available to small-and mid-size enterprises to engage outside service professionals for the purpose of devising a new 3-year strategic plan and one-year actionable tactical plan to prepare them for the new fiscally restrained customer and/or guide them to an emerging growth market.
Though not an advocate of unfunded government spending, if Washington intends to spend the money anyway, the SBGC felt its recommendations will put those expenditures to better use and result in long-term, sustainable job growth.
Only through sound strategic planning and with an actionable script can a company transform itself with the right efficiency improvements to price its products or services in a manner that compels customers to start buying again or reveals and facilitates the move to new emerging markets (similar to the example about the new windmill blade producer) where customers and businesses are spending money.

Wednesday, March 31, 2010

What Sets You Apart From Your Competitors? - A few words on Core Competency

I attended a gathering of a select group of small business owners who were runner-ups for the “Small Business Person of the Year”. During the event each owner was asked to stand up and briefly state what they thought made his/her business so successful. One of the owners stated proudly it was his employees - he felt he was able to attract and retain good employees. That was his “secret”. Later, I had the opportunity to privately ask him what made his employees “better” and how was he able to attract these better employees.
“Are your employees more qualified than industry standards - have higher degrees?” I asked.
“No”, he replied.
“Do you offer better benefits or pay and thus can attract better employees?”
“Uh, no.”
“Do you offer performance incentives or shares of company stock?”
“Is your work environment any different than others in your industry?”
“More vacation time, gym memberships, or other perks?”
“So then why then do you believe it was your employees and your ability to attract them that sets you apart from your competitors?”
He hesitated, gave a puzzled look, then said he didn’t really know.
The sad fact is this company president didn’t know what attribute made his company successful. Most likely his employees are no more or less qualified than other in his industry. And because he doesn’t know, he is more likely than not to stray away from it or unknowingly allow it to waste away. Once this happens, the business is gone.
This owner did not know or understand his company’s core competency; the unique thing they do or process they employ or value they add to win business that would be difficult for their competitors to imitate. Your company’s core competency is the foundation of your business and therefore you should know how to identify it, nurture it, and exploit it if want to successfully grow.
Let’s take a moment to discuss, as an example, the core competencies of two well known businesses, Dominos Pizza and Honda.

Dominos made its mark by guaranteeing a quality pizza delivered to your door in 30 minutes or less. Their core competency was the “process” they designed starting with the how they selected the store locations and ending with the delivery method. It was this value added benefit (a warm pizza delivered quickly) that drove their customers to choose their product over the plethora of other pizza restaurants. Dominos continuously invested to refine that process (their core competency) and keep it as a discriminator and a method for growing their business beyond pizza to now include hot wings, pasta, etc....

Honda’s core competency was building high quality, reliable, light weight engines; first for motorcycles then later small cars and the rest is history. Their continual investment in engine technology is a reflection of how well they understood what made their product the preferred choice regardless of whether it was in a weed whacker, a lawn mower, an ATV, a motorcycle or a luxury automobile.

What is your company’s core competency(ies)?

By the way, it is very rarely “our customer service” or “our people” as this is considered a prerequisite for participation or an expected standard of most businesses.

Investing in your core competency will ensure it continues to provide you with the competitive advantage necessary to grow your business.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Mike has helped companies large and small, international and domestic, plan and execute their growth strategies. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement.

Going International! - The Fundamental Rules of Business Still Apply

Over the past year I have met with several small and mid-sized international businesses that have chosen Metro Atlanta as their launch site for international growth into the U.S. market. Our high consumer spending rate, low relative business cost, and significant service industry focus makes America a prime destination for foreign companies who choose to grow their business through international expansion.

Germany, France, Israel, Brazil, Ireland, and the UK are the home countries of some of these businesses and in most cases I was thoroughly impressed with their product or service offering - it was unique and I could quickly see the value proposition. But their venture in the U.S. was not succeeding. I suspect some will soon give up and return home - having spent thousands of dollars on office space, computers, staffing, advertising, corporate legal fees, and travel.

So where did they go wrong? Some of this may surprise you.

 No plan – As big a deal as it is to go international not one of these companies had a strategic plan in which expansion into the U.S. was a critical and important element. In each case, the owner either arrogantly felt they had succeeded sufficiently in their own country and/or had some international success to declare it was time to expand into the U.S. market. Some, on the other hand, were “encouraged” to make this move by their prime global customer (i.e. we are doing business in the U.S. and we want our suppliers here as well.) Regardless, it was clear that little time was spent studying the business climate, understanding and defining the short and long term opportunities, the competitive threats, and how best to take advantage or minimize their relative strengths and weaknesses in this pursuit.

 They sent their best salesperson to launch the business … who quickly found themselves making critical operational decisions such as where do we best locate the company, what size and type of office space do we need, what accounting and law firms do we retain, what are our computer hardware, software and network requirements, phones, banking, our staffing needs and the appropriate compensation and benefits, etc…. This poor person whose skill-set is sales is forced to make significant and long lasting business decisions better suited for a COO or CEO. Worse yet, that salesperson has little time remaining to pursue critically needed sales.

 “Englishizing” their marketing material and sales presentations – If the message worked in Germany or France then, when translated (by our German or French marketing firm), it should work in America, right? Wrong.

 Poor/excessive fiscal spending – Rather than preserving capital these companies spent lavishly on office space and furniture, homes, office staff, new computers and networks. Sadly, several followed poor advice or purchased higher priced products or services than needed from supposedly trusted companies of similar nationality who they later discovered did not necessarily have their best interest in mind.

 Bad local hiring decisions – No written job descriptions with qualification and expectations clearly outlined was used when hiring their American leadership or sales staff.

 Poor support, if any, from the home office – There are few experiences more deflating than when calling the home office in Europe, looking for assistance, only to find everyone has gone home for the day.

Going international is a legitimate growth strategy whether you are a U.S. company or one from Germany. But the fundamental rules of business apply. First and foremost it starts with a plan.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement.

Accountability - A dirty word or a must for business?

Recently we watched President Obama accept full responsibility for the multitude of opportunities by the different federal intelligence agencies to “connect the dots” and prevent the “Underwear Bomber” from boarding a flight to the United States. Throughout his speech the President used some variation of the word “accountable” yet he never stated how he intended enforce accountability within his administration.
Does this word not have any teeth any more? Has it been relegated to the same politically incorrect or overused under-enforced trash heap of words such as “deadline,” “delivery date,” “fixed price,” “trust,” and “customer service”?
I contend that if your business has any ambitions of growth and long-term success then enforcing personal accountability is a must.
My experience in government, corporate America, small business and non-profits has taught me that mediocrity begins the moment leadership fails to hold their people accountable for not achieving specific goals and objectives on time. The message sent when this occurs is viral, spreading with firestorm-like intensity and speed throughout the company or organization. And, like a firestorm, the damage can be overwhelming and take years to overcome.
So what does it take to create a culture of accountability in your business?

1) A Plan - First and foremost it takes a written plan. Operating to a well thought out three-year strategic and one-year tactical plan is one of most important characteristics of companies and organizations that grow consistently in good times and bad. But, just having a plan is not enough. The plan has to be shared which allows every member of the team to know his or her role in its execution. Just as a movie cannot be made without a detailed script for the actors, cameraman, director, etc., a business owner cannot hold his or her employees accountable for completing their “movie” (tactical plan) without first giving them a script.

2) Written Job Description - The relationship between an employee and employer is a contractual one. As far as the business is concerned it should be nothing more. In return for a set amount of compensation and benefits, an employer expects you to have a certain level of experience and education, work a scheduled number of hours and be held accountable for defined responsibilities. With both a plan and a written job description in place, an employer has taken the steps to remove the excuse of “I didn’t know” as a means for employees to fend off accountability.

3) Resources - You cannot hold someone accountable unless you have given them the resources to do the job you’ve assigned. If, for example, you expect someone to build a widget in a certain timeframe, then you must ensure the employee has the materials, tools, instructions, and the proper environment to complete the task. The same is true for your salesmen. You can’t hold them accountable for meeting sales objectives unless you have first given them the value proposition, a clear understanding of the competition and other tools necessary to uncover prospects and close the sale.

4) Implication for Failure - Finally, and most importantly, there must be consistent repercussions associated with failure. A plan or job description is useless if you don’t hold the individual and leadership accountable for fulfilling their responsibility and meeting specific goals and objective. Tying bonuses or a portion of base pay to objectives is one method. Private or public rebuke when a deadline is missed is another. This is clearly a personal decision, but whatever the repercussion, it must be doled out with consistency.

Maintaining a strict culture of accountability does not, as some believe, negatively impact morale or performance. On the contrary, this culture takes away ambiguity and ensures each and every individual knows what is expected of them and as a result keeps them focused and comfortable knowing that if they perform they have a long future.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement.