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.

Why Should You Develop a Business Plan for Going Concern, How to Do It, and How Do You Convert the Plan Into Action?

Why Should You Develop a Business Plan?

For every startup the development of a business plan is a  required first step. It is so obvious – business schools have course on writing the business plan and it is impossible to get funding without one. Teams coalesce around the labor. So, every startup has a business plan.

For the going concern, the ones that are now three or so more years old, the business plan (also called strategic plan -really the same thing) is forgotten, only stumbled on when a move forces someone to pick it up and wonder, “Should I just relegate this to the dumpster?”

This is not a good situation. A business without a plan is like a boat sitting in a pond just waiting to sink to the bottom for nature to compost it. Or, if it has the fate to be afloat in a stream, it will be carried along willy-nilly until it bumps into a stone or dead branch or reaches the ocean where nature will also send it to the big composter.

Every business exists in a world that is changing and filled with opportunities and threats. Your business plan is your set of oars to provide the means to pull in the direction you want to go in, to avoid the rocks. You might even row to shore and portage around the falls, to move to an entirely new river.

But, many people, even accepting the wisdom of having a plan, find it a painful exercise, all too easily avoided. This may be driven by the idea that a business plan involves dozens of pages of writing, lots of spreadsheets with numbers they really don’t believe (sometimes don’t understand). Business plans, strategic plans, these are just the exercises one does in business schools. Or it may be the folk wisdom that business plans are not a useful part of managing and they always end up on the shelf or hidden in a file cabinet only dusted off for display when in search of a bank loan.

However, shift your thinking to view the process of building a plan as a value in and of itself, and adopt a simpler more flexible business plan model you will find that building that set of oars for your little boat is fun and productive. Continue reading

The 6 New Management Imperatives by Bruce Temkin – comments

Bruce Temkin has published a free book on his blog((1)), The 6 New Management six management imperatives bruce tempkinImperatives – Leadership Skills for a Radically Changed Business Environment. Mr. Temkin sets out to define a “new set of skills” for managers. These are the 6 new imperatives:

  1. Invest in culture as a corporate asset
  2. Make listening an enterprisewide (sic) skill
  3. Turn innovation into a continuous process
  4. Provide a clear and compelling purpose
  5. Extend and enhance the digital fabric
  6. Practice good social citizenship

Lists like this one are very popular. I have been known to make lists of key practices and the like. But for the practicing manager lists are frequently tough to integrate into day-to-day work. Mr. Temkin’s six imperatives falls into this problem category. Overall, the six imperatives are reasonable enough as they stand. But I want to take a closer look at each and then suggest a more global approach. Continue reading

Footnotes:
  1. experiencematters.wordpress.com []

Podcast – Why and How to Develop a Business Plan for an Ongoing Firm

Why you need a business plan and how to develop one that leads to action not the dust bin.

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This podcast is 13 minutes 10 seconds long.

A transcript of the podcast is available in PDF download format here.