Globalization - For the Lazy?

While perusing through the IT Toolbox newsletter a link took me to the blogs there (http://blogs.ittoolbox.com) where a post named “Perspectives on Globalization” by Indranil Mukherjee caught my eye. With several of his colleagues Mr. Mukherjee put forth a premise that “the human race is basically lazy and whatever progress (or otherwise) in Civilization we have made so far has been largely instigated by our desire to exert less to achieve quantitatively similar or higher results.”

This axiom he then tossed out for comments from which most seem to focus on events in civilization that resulted in major changes in how life was lived.

The fact that people are lazy comes as no surprise. I resemble that remark if I can. But I have to stand opposed to the premise stated above. Globalization is used in a business context in this writing and it is intimated that outsourcing of IT services to India might be part of this process.

Outsourcing has nothing to do with lazy. It has everything to do with getting work done at lower cost. Nothing inherent about that says that there is less work!

In an entrepreneurial stage of my life I spent two years building business plans to raise money. The first plan raised $300K and added several people, the second version of the plan raised $900K and added a few more. The third version of the plan raised $1.2M and the fourth raised $1.6M which got us commitments for $45M in real estate and working capital lending which got us $22M in equity.

That was two years of work just to get ready to work. For once we had the capital we had to start the startup and operate the business which took another two years. The business was a vertically integrated international (multiple continents) supply chain for perishable food goods. That was some globalization which made progress in the industry we were in and no one got to ‘exert less to achieve similar or higher results’.

In fact the US for example, and most industrialized nations work hard to improve productivity each year so that they can increase outputs with fewer inputs and increase profits. As a business process practitioner I would not say that the result of those increase profits has anything to do with being lazy.

Eli Whitney’s cotton gin had nothing to do with lazy, it had everything to do with speed and quality. From one pound of clean cotton a day per person to 50 pounds per person with the cotton gin.

In closing, lets take about Mr. Mukherjee’s axiom and say that business is always looking for progress to ‘exert less to achieve quantitatively similar or higher results’ but laziness is not the source or intent of the action. It is productivity and the increase in the profit of the activity. Pure capitalism and entrepreneurship.

It might be interesting to ask the author of the premise to change it removing lazy and inserting PROFIT instead. Capitalism would also work. That is why people do things as necessity is the mother of invention (preferably with a profit motive behind it).

Those of us who have been or are entrepreneurs and are capitalists (in varying degrees) will testify that they are not working less (though many would LOVE to be lazy).

LivingTheDream

Bankruptcy: License to Steal

In last weeks CFO.com Members Newsletter, Marie Leone writes “Courts and Torts: Bankruptcy’s Perks” where she describes a company that is recovering from 9/11 and suddenly gets hit with a suit to return a $30,000 payment they received (and were due) from a company that had recently filed bankruptcy. (http://www.cfo.com/article.cfm/3640863?pcode=members_0210 )

Companies that file bankruptcy can claim a ‘preference’ on payments made to creditors for 90 days prior to bankruptcy. Preference is an interpretation by bankruptcy attorney’s that the payment made by the company was not in the normal course of business and can be recovered by the bankrupt company and sometimes the interpretation is pretty loose.

Fight the preference! You have as much right to prove that the payment was in the normal course of business as the other side has of trying to collect it back. In the particular case noted, where the debt owed was $60,000 and the payment was $30,000 it is hardly a preference. If the entire debt was paid that might be seen differently, but to pay down half should not be. Also the days the $30K was outstanding (longer than normal payment terms) means a lot to the court.

In a previous life I was appointed as DIP (debtor in possession) of several bankruptcies by court appointed trustees. The first one was my own company which I had walked away from as a rogue management tried to take over. That walk away and my previous business practices left my integrity enough in tact that the unsecured creditors agreed to appoint me as DIP. In that case the unsecured recovered more than $0.60 on the dollar by the time I was finished.

Due to that outcome, trustees began to call on me to come in and assess companies that filed bankruptcy and determine if they had a viable chance of recovery or they should be immediately closed and liquidated.

The bankruptcy process is a license to steal if you know what you are doing and that is your intent. Don’t get me wrong, the process is a good one for the right reasons, but it is not so difficult to run in to the wrong reasons.

The court and the trustees are really on the side of the unsecured creditors and will lean toward them heavily in most cases as they should. The problem is that the judge and the trustee can only argue and rule on what they know. If they are not fully informed as to what is going on much can go on that will bleed the already comatose business dry.

If you are an unsecured creditor like the CEO of the company noted in the article, you should immediately get on the unsecured creditors committee. You should have someone review the ‘cash collateral’ agreements that are put before the judge. Those agreements are weekly or monthly requests for the DIP to use the cash of the company to continue working. In those details can be found many items that add no value and should be excluded leaving more cash in the coffers.

Remember that bankrupt companies still have accounts receivable to collect and preferences to draw in and other operations to generate cash. What happens most of the time is the DIP keeps drawing the cash and keeps paying some salaries and some bills until all is gone and the unsecureds get nothing. That happens usually under the guise of generating a plan to save the company which burns too much time and all the cash.

My first experience with the ‘license to steal’ was when a DIP who was a former two time US Congressman used cash collateral agreements as a jobs program for his friends while selling off assets of the company (computers, equipment, furniture etc) out the back door for additional cash (something that is illegal in bankruptcy). All the while supposedly building a business plan and raising money to save the business and make everyone happy.

It was thievery of the worst kind and because the judge did not know and the trustee did not know and in the proceedings there was no one of standing in the case who knew the details that could put them before the court. Hundreds of thousands of dollars that unsecured creditors owned were squandered and nothing was done about it.

The cash of the business in bankruptcy belongs to the unsecured creditors and any of it that is misspent is theft pure and simple.

If you are an unsecured creditor, and the bankrupt company wants to try work through and come out of bankruptcy, have a consultant review the company quickly and give you an alternative opinion of its chances. If there is no clear view of what the plan is or where it is going in 4 to 6 weeks, push the trustee to remove the DIP and liquidate. DON’T WAIT. Every day some of your money is being spent!

For small businesses, the chance of pulling out of a bankruptcy is slim and none. There are a very few that make it. For medium sized businesses a few more make it, but again very few. For large businesses who can get financing there is much more opportunity to make it, but if you’re a creditor get involved. Shrink the timeline for the plan. Question the cash collateral agreements. Be an activist. Its your only chance on getting some of what you are rightfully owed.

I have made no comments about secured creditors who usually spend the most on lawyers to attend the proceedings and keep their interests protected. Keep in mind if you are unsecured, the secured creditors are not on the same team you are! They prefer liquidation and they can get their assets back (usually buildings and major equipment). They usually are not interested in what happens to cash and other asset items that are not owned by them and they are not usually confrontational with the bankruptcy representative (of the company) unless its about their assets.

I applaud CFO for giving some warning about preference payments and suits to recover them. Hopefully this post will give you some “how to” about protecting what you are owed or have already been paid.

LivingTheDream

Manners, Courtesy, Discipline & Racing

One more time to wrap up this thread for the moment. I was reviewing several blogs today while waiting for the rain to stop to let my friends and I go racing. (It kept raining all day)

If you are a regular to this blog you know that I believe in having some fun. Even at work, in fact if you are not having fun at work, stay home. Find something else to do. (See the post: “At Work, What is Important”)

There are priorities in life, and the NHRA Winternationals fit into that priority area. Life is too short not to take some breaks to just have some fun. Not to steal a line from a movie but, there is nothing like the smell of nitro-methane in the morning!

Recently there have been several posts about courtesy and manners and the lack thereof in customer service these days. (see the posts “What Does Business Need?” and “It’s Courtesy, Stupid”) I have even gotten one of the site readers, Ralph to comment several times (I thank Ralph for that) on the same issues and he has a wonderful perspective.

“Manners are indeed a problem. Mine are weaker and less principled than my parents (coming to adulthood in the 60's) and my sons are weaker than mine but more principled,” Ralph says.

Boy do I resemble that remark! Spot on. Our young people do have strong principles, in some cases the right ones, and in some cases the wrong ones. Which is which? I believe determined by people like Ralph and me as parents who have been involved or not.

Again Ralph hits it on the nose with, “My sons have a strong sense of right - particularly their right but not a strong sense of a right way to do things (courtesy and manners). They reject anything formal or specifically defined.” My two sons and one daughter are the same but I have never been able to put it quite so eloquently.

“I look at the public graciousness that used to be common in America as a golden time. My sons see those times as rigid and formal - not human and personal.” concludes Ralph.
There is wisdom in those comments. It is not that the young and the younger don’t have any sense of right or wrong, but they struggle with how to actualize that in their lives.

What brings this thread up once again is an article that says “Forget Self Esteem and Work on Self Control” by Roy F. Baumeister a professor of psychology at Florida State University (http://www.deseretnews.com/dn/view/0,1249,600109781,00.html) and the same article titled, “The Lowdown in High Self-Esteem” from the LATimes. There was also a post on Charles Colson’s site named “Forget about Self Esteem” by John Fischer (http://www.pfm.org/AM/Template.cfm?Section=BreakPoint1&Template=/CM/ContentDisplay.cfm&ContentID=15329) that refers to Professor Baumeister's article.

Dr. Baumeister has studied self esteem since 1973 and now concludes that, “In short, despite the enthusiastic embrace of self-esteem, we found that it conferred only two benefits. It feels good and it supports initiative.

Those are nice, but they are far less than we had once hoped for, and it is very questionable whether they justify the effort and expense that schools, parents and therapists have put into raising self-esteem.

After all these years, I'm sorry to say, my recommendation is this: Forget about self-esteem and concentrate more on self-control and self-discipline.

Recent work suggests this would be good for the individual and good for society — and might even be able to fill some of those promises that self-esteem once made but could not keep.

High self-esteem doesn't prevent youngsters from cheating or stealing or experimenting with drugs and sex. (If anything, kids with high self-esteem may be more willing to try these things at a young age.)

Self-esteem doesn't predict who will make a good leader, and some work (including that of psychologist Robert Hogan writing in the Harvard Business Review) has found humility rather than self-esteem to be a key trait of successful leaders.”

All this comes to mean in the words of John Fischer, “high self esteem doesn’t make you any better, it only makes you think you are better which in the end, makes you worse.”

Now, lets go back to Its Courtesy, Stupid. Its manners, its discipline and it is a lifetime of learning how to apply them to the people we interact with. Self control and self discipline and taking responsibility for your actions and your words.

Hopefully this will help us all wake up and smell the roses. They still smell wonderful, but getting them from the store in the right packaging, with the right change from the cash register, with a smile and a good attitude is something we all need to work on.

LivingTheDream

Business Needs Automated Workflow – Lets Be Careful!

(Let me start by saying that as a business process oriented person, workflow is critical to the success of any business, but not in the context about to be discussed. A future post will begin the subject of business process management and business process modeling.)

In his article “Businesses Need Automated Workflow” Will Kriski writes in a newsletter that regularly drops into my in-box called the IT ToolBox ( www.ITtoolbox.com ) that;

“…to get my work done on a day to day basis I frequently require information or tasks to be performed by other people. Options to communicate these needs include email, phone calls and in-person discussions.

When deadlines are looming and stress is high I usually find that it’s very difficult to get people to respond to my email questions or directives in a timely manner (or at all). …I think an automated approach would help.

Instead of emailing someone and having them read it and forget about it you could register a task in a workflow which notifies the party and will track if they respond. After the time expires, their manager could be notified for example.”

Mr. Kriski closes by saying, “…what I have been thinking about lately is how poorly email and other methods fail to achieve the desired result”.

How poorly email and other methods fail to achieve the desired results. Interesting statement given today’s levels of technology, email, flex-time, disbursed work forces, with scope and scale that spans the globe. Technology for everything, … except people.

Think about email for a moment. It consumes a large amount of everyone’s work time and is misused and abused in the worst kind of ways when it comes to business effectiveness. In a study done not long ago (spam is excluded) it was found that 1/3 of the email a person gets has absolutely nothing to do with the work going on. The second third is ‘nice to know’ information but adds no real value to the work at hand. The last third of the email actually has something do to with the job and getting it done.

As well, people have not learned reasonable email protocols. As has been previously posted just common courtesy would make email more productive. How many of you have had arguments with people by email?

Technology has allowed us to avoid personal contact and has grown a culture of detachment. Technology has brought us great enhancements but it has also depersonalized the workplace. This detachment has been growing long enough in some places to have become a tradition and traditions harden companies, employees and customers into a culture of remoteness and indifference.

My suggestion to Mr. Krinski is to pick up the phone. Walk over to the other person’s office or cubicle and speak to them about what is needed. To have someone do something for you, you need to show some interest in them and they need to know that what they are being asked to do has value. It’s the human need to ask WHY? and as managers we have a responsibility to answer that why!

Some workflow automation that will notify someone’s supervisor that they did not respond to a task on time is NOT the way to get the outcomes that are needed.

There is no substitute for “face time”. At a minimum a few minute telephone call would work. This used to be called MANAGEMENT. Let’s not think that we can actually manage people by email and other technology. Technology can be part of our management toolset but they are only successful when mixed with large helpings of personal interaction, ‘face-time’ and telephone conversations.

A couple of interesting other references give some perspective to this subject, one is a class syllabus from CCSU (www.ccsu.edu) from the department of English (somehow I missed the class title but Professor Barnett teaches the fate of ….culture in the era of digitalization, the crisis of virtual culture and the ‘presence of absence’ which I believe says well what business is calling detachment.

Another good place for learning about this issue is reading “Human Performance Technology: The End of an Era” by Fred Nickols (http://home.att.net/~nickols/perftech.htm) where he says that “Democracy is on its way into the workplace.” Human performance needs the answer to why, and the leadership, management and mentoring to deliver.

Next time the email you received ticks you off, don’t fire one back, pick up the phone and you will probably find what you read in to the note is not what the writer intended. Or better yet, go see the person and find that they are on the same team you are and want to work together. Don’t let your relationships be based on the emails you send to each other and don’t let your work be known by the technology used, but by the personal interaction you had.

Now, turn off “Reply to All” …

LivingTheDream

It's Courtesy, Stupid!

In my post "What Does Business Need" a few days ago, Ralph was kind enough to drop some comments back. It seems that Ralph is involved with customer service at an electric utility and has to deal with customers who are not quite on time with paying their bills.

You have to love people like Ralph who go to work knowing that he will have to draw the line on some of the customers he will speak with today and still maintain his professionalism while trying not to crush the self worth of the customer AND collect the money that is due. (Forgive me Ralph if I have assumed too much here).

After the initial comment, Ralph asked if I thought that some people dont feel like they deserve good service? Great question! It has stuck in my brain since it was posed and I have not been able to get past that.

First let me say that Ralph is a better man than I am already just for doing what he does for a living. I have to say no to customer's from time to time when they ask for more than they are willing to pay for, or for something we cannot do, or for something that is not in their best interest but that is not the same by any means. Hats off to you Ralph.

Now, its courtesy, stupid!

Customer service hell as described by Vince in a response on the weekly gripe (www.weeklygripe.co.uk/a45.asp) speaks of customer perception and his opinion that top mangement does not have a clue of what the company is doing beyond their revenue and cost spreadsheets as service and rudeness go on and on.

In describing American table manners www.cuisinenet.com says that there is not much call for a complete working knowledge of table manners any more as families only meet together about once a year for a formal meal and restaurants are so casual that most anything is acceptable.

Teaching children good manners is the subject of www.lhj.com/home/Manners.html with a more important follow up that asks "Do You Mind Your Manners". What kind of example are you?

From the Polite Child at www.politechild.com to Raising polite children in impolite times by Wendy Burt at www.partnershipforlearning.org the trend is clear.

As we would once say, get em young before they grow teeth! There is never a child to young to be taught manners. However, today there are many adults who are without them as well.

Getting back to Ralph's question, do people think that the might not deserve good service I think it all comes down to this..... WORK.

Our parents generation and ours (not everyone mind you but many) were and are so self interested and so self indulged that the amount of work it takes to teach your children manners is just too much. No time, no interest, and the kids are so smart they will figure it out as we flip the channel.

Time outs and day care have replaced the work that parents once did or churches or schools. Now a days if you think of looking at a child in discipline or displeasure you may end up in jail or be derided for ruining their self esteem for life.

Its so hard that some of the sites listed and links therein are capitalists that will train your kids for you if you pay. Maybe its just outsourcing eh?

The same is true at work, good service and courtesy is work. Not as many as used to care about the customer perception that Vince longs for above. The new workers expect to be vice presidents in 3 years and want the first raise in 3 months and think they deserve it. Its all about work and what has happened to the work ethic that we once knew?

The upside is that business has a way of continuing its ways and conforming to the best in cycles. People who think they are the cats meow usually get a surprise when they get shown the door and those who just get by usually learn goodbye.

Courtesy and manners dont cost much, they dont take much time, they can make your day and that of your customer if you just slow down a bit and use it liberally. Yes, you will find that some dont know how to react to it and some will think less of you for it.

But just keep on pushing... the right will win and the manners will be what makes you and those who need to realize it will. So be yourself, that one who opens the door, who says thank you, and is quick to listen, slow to speak and slow to anger.

LivingTheDream

Business Process Optimization- How To Start?

As I have mentioned in previous posts, the second half of my career is dedicated to business process management (BPM).

Now, before you think that my early life was logistics and my current one BPM, let me stop you there and explain that as a systemic thinker my whole life is process improvement and supply chain/logistics has always been process management. So the two are current and in harmony and that is “Living The Dream.”

In this weeks “Business Process Trends Email Advisor” from (http://www.bptrends.com/), Paul Harmon wrote an article, “Centralizing Control in a Decentralized Company” where he speaks to companies that are opening offices, plants and sales presence in more geographies as globalization impacts their markets. In that mix is outsourcing, contracting and the overall desire to improve efficiency.

As this trend continues companies are “struggling” according to Harmon, with the decisions of insource, outsource, offshore, governance and accountability across the enterprise which used to be nice and simple in one or a few places. In one city or two states but now is increasingly complex landing in multiple countries and/or on multiple continents.

As referenced several times within posts on this page, optimization and sub-optimization are important to understand in normal situations, and become critical in distributed organizations where the path of least resistance is to optimize each location. As described in the article “In traditional, departmentally focused organizations, department managers tend to optimize the work of their departments to achieve the kinds of goals that their traditional mangers assign them. …When an individual department optimizes to achieve its goals (and its managers bonuses), the overall effect is the sub-optimization of the organization as a whole.” My parenthesis.

Supply Chains have failed or succeeded by the optimization or sub-optimization thereof. Let me use one of my favorite logistics stories of sub-optimization for those of you not as familiar, and those of you who are financial types, especially CFO’s.

A traffic manager is told by his VP operations that she must reduce transport spending this year by $450,000 to achieve their department’s goals and for her to make her bonus. For the sake of making the math easy, lets say that this company costs $2 million per day to operate (the entire company, not just the operations department). Today, the cash-to-cash cycle of the business (cash for materials until they get paid for the products they produce) is 80 days.

The traffic manager calls all the carriers and says they have to reduce their rates by $0.50 per kilo. All the carriers agree and the traffic manager reduces the spend by something north of $450K. Now comes the fun part.

While reducing the cost of the transport, the carriers now have to lower their costs and so they hold the freight for a day or two longer, or don’t use team drivers and deliver with singles. All this adds up to adding 3 days to the cash cycle (these are all assumptions). That costs the Company $6 MILLION DOLLARS, to save the $450K. The CFO and treasury people cannot figure out why the working capital is reduced and they struggle with cash flow, but the operations department saved their target and they all got their bonuses.

This is a simplified example of the problem, but in reality it happens a lot. Think about your department’s priorities and objectives and view them in the light of other departments or the corporate objectives. Too many times they are in conflict. In the logistics business we see this kind of sub-optimization every day.

In creating a distributed organization the departments, functions and processes have to be deconstructed and reconstructed. The article refers to Daniel Yellin of IBM Research and a presentation he gave on Industry Deconstruction and Enterprise Reconstruction (http://domino.research.ibm.com/comm/www_fs.nsf/pages/index.html) that shows the transition process that businesses are seeing or should see in globalization.

Mr. Harmon notes, “If senior management creates a distributed organization and outsources processes but is subsequently unable to control the resulting organization, it is doomed to failure. I believe that for many who have attempted to go global and failed this is the primary problem.

Whether a company insources or outsources, adds an office in Poughkeepsie or Dusseldorf or Beijing, where must it begin? How do we start? The article takes us to a high level business process architecture to have an overview of all processes to make and deliver the products of the company as the starting point.

I agree that all companies should have just such knowledge in a high level business process architecture, but I don’t think that is the starting place for a distributed business. For regular readers I apologize but here it comes again.

The place to start is the one place of value in your business, your customer’s order (please see post Rules Part 1 and others). If you process flow your customer’s order cycle (which goes across departments and maybe several geographies) you will be sure to be designing a distributed process that takes care of priority number one! THE CUSTOMER

Let me close by saying that whether you are going global or are staying on Main Street you should have a process map of your customer’s order cycle. Too many managers, owners and senior executives THINK they know what happens but they don’t KNOW THAT THEY KNOW.

Your subordinates don’t know either and they will tell you what they think should be happening, another dangerous scenario. (No one likes to tell the boss that things are not what they think they are, not trying to say bad things about anyone, but not many managers are in the details enough to know these days).

There are great tools out there to do business process modeling. I use a particular tool, first introduced to me as visio on steroids. If you don’t have a tool, get one.

If you don’t want to get one, hire a consultant with one and get your customer order flow modeled and once it is you will find opportunities to make it better, to make it cost less, and to make it easier for your customer to do business with you and you want that no matter where or how many you are.

(should you want to know what I use, please email me)

LivingTheDream

Adjacencies & Business Going Forward

Another of the several periodicals that should be read is CFO Magazine. I, like most of you am not a Chief Financial Officer, but once past the pure accounting and treasury articles that are too technical (some are ready for the non-CFO to read and absorb) there are good insights to be gleaned from this publication. As many publications do as the new year begins, they do a recap of the best of the prior year. The following post is from one such article.

In the last five years as economies slowed, stagnated, and have given us short spurts of activity in specific sectors or geographies. During this time businesses “slashed spending on new factories and equipment, salaries and bonuses, technology, benefits and travel to mitigate their risks during the times of uncertainty. They have exited unprofitable businesses and sold off non-strategic assets. They have downsized, outsourced and offshored.” said Joseph McCafferty in his March O4 article in CFO magazine “Going for Growth”.

Companies now are changing gears and positioning for growth as the economy is recovering and making progress. Mr. McCafferty references management consultants as saying that for many companies who are investing in growth there will be disappointing results. “When you look at a lot of markets, the functionality needs of those markets have pretty well been met” says Adrian Slywotzky of Mercer Consulting and author of How to Grow When Markets Don’t.

Is there a growth crisis? Where is all the budgeted growth to come from?

Chris Zook, a consultant at Bain & Co. and author of the book, Profit From the Core says that to grow companies have to move systematically to adjacencies. Products, services, geographies or customer segments that are related to the companies core business.

Mr. McCafferty then decides not to review the books, but to go out and see if what the books teach when applied works. The problem is that the choice of companies he reviewed to see if adjacencies work, are not the picture of typical companies in the real world. They are real companies, but not regular for the most part.

Selecting UPS, Cardinal Health, Reynolds & Reynolds, and General Motors allows for easy pickings in the world of adjacencies due to the momentum and capital capabilities of each of the company’s core businesses. Reynolds I am not familiar with so it may be an exception.

The stories of these companies and their growth successes are really like most companies ability to swallow an elephant. Most companies cannot do what UPS, General Motors and Cardinal Health can do.

When the article ends, the real reality begins as Adrian Slywotzky says that new sources of growth can't be simply bolted on to a weak business. "The tricky thing about creating new growth is that you don't get to do it unless you get an A or an A+ in what you already do."

So, lets look at the reality for most of the rest of us who still have to grow to make our budgets.
Lets say you’re a B or B+ in what you already do. Take those growth investments that the article would say need to be in adjacencies, and drive them into listening to customers, deepening relationships with customers, improving productivity to create capacity and the contribution management of your customer list.

Keep your current sales organization out working for new business, but put some emphasis on optimizing your markets and customers and productivity.

For many customers the ball game is changing fundamentally as they turn to speed and convenience rather than functionality. Take your account and customer service managers and get out and see your customers. Listen to your customers and those who you want to be your customers.

Are your core competencies relevant to them? Are your strengths continuing to evolve with the strategies and directions of your customer base? Do you know? If you think you know, but are not sure, your customers may be planning their futures without you and you may not know it.

Talk to your customers, face to face and engage them in their strategies. Work with them to create and execute the tactical and transactional requirements of those strategies. They will not forget you and you will be with them as they grow.

You have leaned out your business in the days of uncertainty and have left yourself with limited capacity to handle growth. Are you growing productivity to create capacity?

Productivity improvement means being VERY good at the basics. Usually that means modeling and analyzing your work processes.

Have you done that already in the cost cutting days? Implemented by department or plant or vertical? Were you systemic and horizontal? Are you traditional in structure meaning vertical or are you horizontal?

Process improvement that optimizes inside the departments or divisions and also usually sub-optimizes across the business.

I don’t want to sound like a broken record, but repetition is good when something is important so, remember that the one item of real value you have in your business is your customer’s order. (see Business Rules 1 post)

That means that your process analysis and improvements must be horizontal across that flow and that flow only. Anything not on that flow must be look at and evaluated as to its value.

Optimizing the customers order cycle will bring productivity to the company and an ease of doing business with you for the customer. It will also create the capacity you need to grow and not have to add resources equivalent with the growth.

As for contribution management this one requires some work, but yields great results. Do you know the cost to serve your customers? Do you know the profitability of each of your customers? If so, you are ahead of most companies.

If not, the general rule is that around 20% of the customers you have are not profitable or marginally profitable. That is a huge drain on cash, resources and financial outcomes.

Grow based on upselling those who are profitable, grow based on pricing up those who are not profitable and don’t grow your competition when those who wont pay higher prices go to your competitor who is not measuring profitability. They will think they are growing while their resources are being eaten up with customers you don’t want.

Now, you will find your approaching A and A+ and you know that you know what is going on with your customers and your processes. Now you can plan adjacencies. So go out and grow!

LivingTheDream

What Does Business Need?

What does business need? A pretty broad question that can inspire answers from across the spectrum. Can you think of it? What does business need? Bake it down to two things if you can. What would your two be?

Lets see, training, diversity, technology, communications, and dozens and dozens more.....

Here's mine. Honesty and courtesy. Do what you say and be polite. We all can live with people who are not the best trained and do. We all get by with products that are not quite what we expect. But we should not get by with rudeness and deception.

Recently I have found the lack of honesty, doing what you say in a car dealer, a mortgage provider, a doctor, a cell phone provider. The cell phone company also provided the most rude experience I have had in a long time.

I have also found a few that did exactly what they say in the gas company, the church, and an insurance company. I also found courtesy at the grocery store that I did not expect.

Its too bad that business will have to teach people ethics and manners but it appears that people do not naturally bring them to their jobs. Its not everyone mind you, but the problem is growing.

Lets all try to be good customers, but when we work, be good to our customers.

LivingTheDream.