Driving blind

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No sane personal turns off their headlines and attempts to drive down a road at night.

Cars have headlights for a reason:  to illuminate what’s ahead and help you get where you are going.  Mirrors and gauges serve similar purposes.

Businesses are no different. You need tools to help you understand how you’ve done, the health of the business, and what lies ahead.

Extending the analogy, mirrors are like financial and other reports that tell you where you’ve been.  They are backward looking.

Your speedometer, tachometer, temperature, and fuel gauges tell you about the current operating condition of your vehicle much like production numbers, quality control info, customer service data, and other KPIs tell you if your business is operating as expected.

And your sales pipeline, financial forecasts, and other leading indicators give you an idea of what’s ahead, just like headlights on a car or traffic warnings from your navigation system.

It is critically important that you have a set of metrics – financial and operational – to really understand the state of your business.   If you don’t, you are driving blind.

I’ve spoken with too many business executives who believe that as long as they can pay their bills, have some money left over, and production is getting product out the door that their business is doing fine.  Perhaps it is.   But maybe they don’t see warning signs of troubles ahead because they aren’t looking at the right gauges.  Trouble could be around the corner.

Hemingway says it best in The Sun Also Rises:

“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”

Don’t let your business slowly steer off course and force you to suddenly deal with simmering issues that may have been prevented or corrected if you had only known.  Make sure you are using the right metrics to understand your business and not driving blind.

If a fractional COO can help you with your metrics, CONTACT US or reach us at http://linkedin.com/in/cmatt.

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Organizational Clarity is Critical

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A lack of organizational clarity may be the root of many of the issues you face.

Without organizational clarity, you have no accountability.  Team members don’t know what is expected. They don’t know how their performance will be judged. They don’t know what the standard is.

When employees aren’t clear on expectations and outcomes, they operate in the dark.  Fear rather than confidence affects their decisions.

The results are confusion and inefficiency.  Money isn’t spent wisely.  Employees don’t feel the freedom to take care of your customers.  People invest energy creating cover for themselves in the event they are questioned.  Trust is eroded.

Remove doubt and the problems it causes by providing clarity.  Your company will not operate at peak performance until you do.

The question then becomes “how do I create clarity?”

Creating organizational clarity starts with leadership.  Make sure your company vision and values are known.  Create a strategic plan, making sure there are goals and targets that everyone understands.  Every group or department should have known and published key performance indicators so they know if they are doing the right things and doing things right.  Make sure best practices and processes are documented, shared, and enforced.

Clarity doesn’t come without effort.  You may even need outside help to guide you on the journey.  But it is worth it to have a healthy business environment and engaged employees.

If you need help creating clarity in your organization, contact us.  https://opalpg.com/contact-us/

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What is Operations anyway?

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Lee Iacocca said “in the end, all business operations can be reduced to three words: people, product, and profits.”

If you asked someone to define “operations”, what answers would you get? Probably statements ranging from “processes” to “getting stuff done” or “I’m not sure.”

Business books may define it as the tasks that produce the products or services a business sells to customers.  That’s not a bad answer, but it isn’t as succinct as Mr. Iococca and it doesn’t capture the whole of how I view operations.

For me, operation is the “collection of all activities required to keep the business running.”  That’s not entirely different from the general business definition above, but don’t stop there.

Operations has a purpose: to extract value from the resources of the organization.

Putting it all together, operations is the collection of activities that businesses perform to get the most of out their raw materials, processes, people, and capital in order to provide goods and services.

If that is correct, operations should focus on efficiently using the highest and best purpose of all resources while eliminating waste, ineffectiveness, low performing resources, and low value products.  Conversely, if operations are efficient, every person, every role, every tool, and every process have value to the organization.  And wouldn’t that be a great place for your business to be?

If you need help from a fractional COO to focus on improving your operations, contact us.  https://opalpg.com/contact-us/

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Are your employees engaged?

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According to a Gallup report, only 34% of US employees are actively engaged in their jobs.  Gallup defines “engaged” as “involved in, enthusiastic about and committed to their work and workplace.”

What about the other 66%?  13% are “actively disengaged,” and a whopping 53% are “not engaged” which means they show up and do their work but they aren’t connected to their work or their workplace.

Disengaged employees cost you money.  It is estimated that absenteeism, churn, and lack of motivation – signs of a lack of engagement – cost companies around $500 billion per year.

Writing for Small Business Trends, Victor Snyder, a business coach, says that business leaders should avoid these three things that cause employee disengagement:

  • Poor communication with employees
  • Ignoring your personal brand
  • Failing to develop leaders

If you make an honest assessment of your business, are you creating an environment that fosters engagement?

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Return on…Resources?

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We all know what Return on Investments, or Equity, or Assets are but they may not tell the full story.  You need to get all you can from all your resources.  What is your Return on Resources?

Return on Resources???

You started and built your business on an idea, and then added sweat equity and capital to bring it to fruition.  Along the way you added people, provided training, invested in tools and software, began marketing, and possibly many other items.  Collectively, those are your company’s resources.  Why do you have them?  Because you need them to maximize your profits and the value of the business.

That’s where your operations come in.  Operations includes ALL the processes to keep your business running.  It’s not limited to how you deliver your products and services.

The goal of your operations is to extract value from every resource in your organization.

Let that sink in.  You only add people, equipment, processes, or services for one reason: to make more money.  Every employee, every tool, every asset, every decision should be contributing to reaching your goals in some way.  If not, it’s dead weight on your organization or consuming time and money that could be better used elsewhere.

Ask yourself if the value you are receiving from your resources is what you expected.

  • Do you add more people rather than look for ways to be more efficient?
  • Do new hires get up to speed and become productive quickly?
  • Are there products, services, or processes that add little value and should be modified or eliminated?
  • Have tasks, routines, products, or even employees been added slowly over time without a good top-down review to see if they are still needed?

If you aren’t making the most of your resources, let OPG help you maximize your return.

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Your business strategy is incomplete. Or just wrong.

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Let me clarify — wrong for YOUR business.

Your strategy should be as unique as you are.  If you can delete just a few key words and your plan is unidentifiable as yours, it may not be the strategy you need.

Strategy doesn’t begin with deciding what steps you will take to meet your goals.  It starts well before that.  It begins with your company DNA and an understanding of why your customers do business with you.  Without those foundational elements, your strategy misses the mark.

Company DNA

The company DNA is the combination of the core purpose or passion – the reason your business exists – and the values inherent in the organization. DNA drive everything in your company and it sets you apart from your competition.

Your position in the marketplace

Your customers choose to do business with you.  What is it that compels them to select you over others in a crowded market?  If you don’t know, there is one sure way to find out – ask them!

Understanding your strengths and weaknesses as well as the opportunities and threats you face help round out your market niche and how you can leverage your unique position.

Armed with the info above, you can better define the products and services you provide with clarity which allows you to sharpen your brand and target your audience.

Now plan your strategy

Your strategy will set the goals you are trying to attain along with the steps you will take to achieve them.  They should leverage your unique purpose, values, and niche.  Every goal and action must be specific nad have owners responsible for driving them.

If your strategy isn’t more than a list of goals, doesn’t capitalize on the elements that make you unique, and and doesn’t leverage your strengths, it isn’t the right strategy for you.

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Let’s talk about Process

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Process is the most basic element of operations.  In a nutshell, it is how you deliver your products or services.  You probably have several processes that define the steps your teams perform the essential tasks that produce revenue and drive customer satisfaction.

But it doesn’t end there.  Your business has many other processes that you may not think about much or realize they even are processes.

Your sales process is one of the more obvious ones.  Your sales team should have a structured way in which they uncover leads, develop customers and opportunities, and communicate the closed deals to the rest of your team.

Other processes include invoicing your customers, for example.  How you hire and onboard new employees are both processes, and how you separate them from your organization when the time comes is a process too.
Why Process is vital

To start, well-defined processes make your business more effective and efficient in several ways:

  • Adds clarity – Everyone understands their role and how it fits into the bigger picture.  They know their deliverables and how other teams use their output (the “knowledge assembly line”) to serve your customers.
  • Saves time – It keeps people from expending brain power on re-inventing the wheel over and over and allows them to focus their energies on delighting your customers and preventing or solving problems that inevitably arise.
  • Reduces waste – Documented processes remove ambiguity and help prevent re-work.
  • Enables training – Defined processes and best practices can and should be used when training new employees so they can contribute to the organization quicker at the level you expect.

Having defined processes contributes directly to the bottom line.  If they are optimized and everyone is using best practices, you may save time, materials, or even do more with fewer people.

Beyond that, employees thrive when they know what to do and have the tools to do it.  Knowing what is expected can improve morale too.
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Is your company healthy?

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Employees long to be part of a healthy organization.  Business owners and executives reduce wasted effort and lost time by creating environments where their employees can perform their best.

There are two aspects to a healthy business:  organizational health and operational health.

Organizational health deals with the environment of the company.  Hallmarks of an organizationally healthy organization include:

  • The company values are known and exhibited by employees at all levels of the organization.
  • People are hired, fired, and rewarded based on the company values.
  • There is open communication in the business – between different departments, teams, and levels.
  • Challenges are discussed with transparency and are solved, not allowing them to fester and get worse.
  • Employees believe in the company and its mission and values to such an extent that they hold themselves and others accountable.

Operational health focuses on how the company performs the tasks to deliver its products and services.  An operationally healthy organization can make statements like:

  • Our processes are documented and understood by everyone.
  • All team members know how their roles and the roles of others fit into the big picture.
  • Company and departmental goals are published, and everyone knows if they are being met.
  • Tasks – and even products and services – that don’t add value to the organization are eliminated.
  • The company’s structure supports timely, consistent, and informed decision making.
  • Waste and inefficiency is eliminated whenever possible.

For your business to thrive, it must be both organizationally and operationally healthy.  Only then can it effectively execute its strategy.

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