Preparing for 2015 – Back to Basics

With the election season finally over, it is time to look toward 2015 for our businesses. While politicians seem to exaggerate with impunity regardless of the facts, businesses do not have that luxury. Customers see through the fluff in a product offering quickly, and choose their providers wisely in today’s connected society.

As business owners and management teams look to a fresh beginning at the start of every new year, it is important to place on the table the generic question, what needs to change? I am asked that question frequently and always address it the same way. The success of sales and market penetration initiatives are fully aligned with the strength of a company’s value proposition.
The Corporate Value Proposition

From the customer’s vantage point, it does not matter what is going on inside your company; customers could care less. What is important to customers, existing and target, is what is coming out of the company in the form of product quality, on-time delivery, lead times, communication effectiveness, and other service elements.

So the key question that needs to be addressed by owners and management is, what can we do to improve the value proposition of our company? For the answer to this question to have any meaning, a company must, and I mean must, be able to quantify all the elements of the current value proposition. This is where the rubber meets the road. Most companies have no measurements that frame the performance of their value proposition from the viewpoint of the customer. To not have metrics on the current performance level of a company’s value proposition severely compromises any initiatives for its improvement. With the cornerstone of any market penetration program being steeped in the power of its value proposition, to ignore the customer’s view of a company’s performance is disrespectful to both the market and the company’s employees.

The Role of Emotion

With emotion playing a key role in maintaining the status quo (the “we have always done it this way” syndrome) how does an owner and the management team approach the change process? The most successful companies that have negotiated the change curve are ones that have looked at their company as a series of integrated processes, taking much of the emotion out of the discussion.

Every internal corporate process, every process, is laced with inefficiencies. Take the quoting process for example. In most companies, the request for quote (RFQ) is handled by many people and corporate functions. Mapping out all the elements of the quoting process, including options if questions arise during the process, will reveal many parts of the process that could be eliminated or shortened. The ultimate goal is to compress the RFQ time without compromising the quality of the quote.

I have seen quote times for the more complicated quotes go from weeks to days. This type of improvement in RFQ response, being part of the value proposition, is particularly important because once the quote is complete, the sales department is back on offense.

Processes are processes, and emotion compared to measurement plays only a minor role. One only has to look at any element of a manufacturing process. These processes are all mechanical, designed to optimize time while maintaining the highest standards of quality.

While employee emotion regarding buy-in to the emerging process is important, emotion serves little value in the actual process itself.

Employee Involvement

Making a commitment to change using a structured and measured approach is most important. This methodology will fail, however, without the complete engagement of the employees, whose performance is responsible for driving each of the processes under review. If management decides to make changes, and drive these changes down the organization chart, this change will not be sustainable.

Employees must be the focus for designing and implementing the suggested changes, if these changes are expected to be a sustainable part of the emerging culture. Employee buy-in plays a very important role here because if they are involved in process development, they will most likely drive the emerging changes with enthusiasm.

Back to Basics

This is really all about process optimization leading to a value proposition that has real, and quantifiable, value. This is basic to any management approach to change. Improving the flow of material, paperwork and communication through a company has no downside.

Since most companies have a very small market share, efficiency programs should not be a threat to employee security, especially if the nature of the efficiency program is fully disclosed at the outset.

An improved value proposition will help to increase sales by capturing additional market share. Because the company is more efficient through these process optimization efforts, as sales grow, management will NOT have to increase the number of employees at the same rate. This will have a positive impact on the sales/employee and profit/employee numbers resulting in a cash flow model that will allow management to reward employees for their efficiency efforts.

Process optimization results in the basic win-win that all owners, managers, employees, and customers covet. Process optimization is simple, very visual, and provides the cornerstone for any corporate change initiative.

“Back to Basics” = “Process Optimization”

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