Manage Your Business As Processes

Many business owners and managers are frustrated by the poor results achieved by some portion of their business. They diligently track their business using metrics like sales, profits, customer perceived quality, on time delivery, etc. These are obviously some of the most important results any business needs to produce. Why doesn’t attention to these important metrics produce better results?
Unfortunately none of these metrics are actionable nor controllable as objects of management focus. No amount of teeth gnashing about inadequate sales will generate a single additional sale. No matter how intensely you beat on your operations to improve on time delivery will this lead to improvement.  
Why is this so? 
Let’s examine on time delivery as an example of the problem. On time delivery is an end result of a process, a series of ordered steps, activities, that are your production operation. This process may not be delivering adequate on time delivery to your customers. But, you cannot understand what is causing this process to be out of control without examining in detail, through what is commonly referred to as root cause analysis, the causes of this failure. Here is a brief list of some of the more common causes: 

  • Part shortages  
  • Machine down time for poor maintenance  
  • Production bottlenecks  
  • Poor part quality  
  • Lack of labor  
  • Poorly trained labor  
  • Poor scheduling  
  • Inadequate customer requirements specifications

The lesson here is that in order to improve on time delivery you really need to first determine the cause, second set improvement tasks that eliminate the cause, and third measure improvements in that function until you achieve a controlled state of adequate  
performance for on time delivery. 
The fundamental mind set is to see your business as a system of processes. Your task is to make sure the processes are well defined and operate in a controlled state to produce the desired results. The method for achieving in control processes is to determine the root causes of failure, set tasks to eliminate the cause, and track metrics that measure the reduction of the causative element.  
Now you might be in a service business and say to yourself, “My business does not produce widgets. How can this apply to me?” 
Services are also produced through a series steps. In many cases these steps are not well-defined and are further complicated by the frequent direct interface with, and frequently the participation of, the customer. It is not as easy to “see” the steps in services production as in widget production. You don’t have the machines and parts moving around with a sequence of physical transformations.  
Here is a list of typical causes of poor service quality: 

  • Bad service design  
  • Mis-managed customer expectations  
  • Inadequate information resources in the hands of the frontline service provider  
  • Poor training of the service provider  
  • Unclear decision making scope and authority for the service provider

Learn to see your business from a process perspective. Then, apply process control techniques to drive to better results in sales, profits, customer retention, and whatever else is important.

Managing Key Personnel – Do What Is Inevitable – evasion and self-deception will not work

Recently I was speaking with the owner of a financial services firm. She has 15 people in her organization which is now almost 18 years old. By any measure a successful firm.

She told me about one person who has been with the firm for eight years. The owner described this person as the most professional and reliable person in the organization. She performs all sorts of important customer-facing activities flawlessly. This employee is a key person in the organization. The owner went on to tell me about a recent conversation she had with this key person who confided that she did not want to be just an “insurance geek”. She was emphatic about this. The owner told me that this statement jived with other comments this person had made recently. She believed her and felt that her days are numbered.

The owner then went on to describe how she had begun to put together a job manual for all of the key tasks now under the wing of the key employee. This seemed to me to be just the right step. First, the key employee was cooperating in constructing the job manual. This is a great sign of continuing good faith. Second, the owner is testing out the manual to be sure that it really will be a solid platform for training a replacement. Continue reading