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“It’s tough to make predictions, especially about the future.” ― Yogi Berra, famous baseball player

Business forecasting is difficult. Most of the time, projects take longer than planned, cost more than expected and are full of surprises. Even if the project exceeds forecast and sales are higher than planned, unplanned success can bring its own set of problems, like cash flow, materials shortages, and poor customer experiences.

How well equipped is your team to lay out what the future will hold, and to stay committed to that path?  It is not enough to have a great team who can get the job done and a marketplace ready to buy. (Executives must predict the future with enough specificity to plan in detail, so they have what they need, when they need it.) 

Effective forecasting also provides the opportunity to strike bargains with other people or companies we will need for success.  This includes investors, public markets, suppliers, contract manufacturers and others.  If we want to gain their trust and access their resources the next time we come to the table, we must deliver on our promises this time—and hit our targets on plan.

If we are likely to miss our forecasts, we must reserve more cash to handle the surprises, or perhaps even to make a second try for success. Firms striving for growth are just as susceptible to running out of cash as firms that are shrinking. Simply put, they can spend too much too fast, or spend too little too late.

One distribution firm we know created a forecast for closing one facility and shifting production to another state. It took twice the time, 70% more in cost, and shipment of goods was far more adversely impacted than was forecast.  The miscalculation hurt the firm badly, breaching bank covenants.

Forecasts like that can embarrass you…

So, what are the some of the most common mistakes?

Ignoring the Past Forecasting Performance of the Company as a Whole

If a company’s leadership team has previously been unsuccessful in forecasting, there is a strong likelihood they’ve not acquired that competency. Also look to the kind of forecasts they succeeded in making.  Forecasts for a line extension or new service line can be difficult, but they’re not nearly as complex as a large acquisition or developing a new business unit in a nearby adjacency.

If the past forecasting performance of the company is poor, look out!

Ignoring the Poor Past Forecasting Performance of the CFO

While many people will provide input to your forecast, there is one person—often the CFO in a mid-market company—who drives the forecast.  That person’s track record is crucial.  Only through much experience can a forecaster learn where slippage usually occurs.  They know where the surprises often lurk.  Additionally, and most critically, they learn to include the costs and items which inevitably make an impact on the forecast but are usually overlooked.

Creating the forecast is only the first step.  Staying on forecast requires an active financial manager, who not only monitors what has happened, but projects what is going to happen—or fail to happen—in the immediate future.  Having such a CFO on board (or acquiring one) significantly increases your accuracy of forecasting, provided this person is not overruled too often, or sidelined.

Disregarding the Past Poor Commitment to Hitting Forecasts by the CEO

Companies often miss forecasts because the CEO may decide that priorities have shifted and want to pursue another direction or may panic and start to look for other solutions.  In some cases, the CEO just does not like the discipline of sticking to plan.

It is true that circumstances sometimes call for a change.  Yet this implies that the management team was unable to foresee the situation when the forecast was originally created, a failure just as bad as undisciplined spending or insufficient sales.

The CEO can single-highhandedly cause the company to miss its forecast.  Looking at his or her past behavior is critical to any assessment of probability for hitting the next forecast.

Lack of Fallback Plans

It is naïve to think that the path to hitting a forecast is a straight line.  Management must usually make significant adjustments along the way.  In a mid-market firm, those adjustments must come early, before too much damage (over-spending, missing critical timing windows) can be done.

Good forecasters identify the areas of risk up front, building in triggers that spur implementation of backup plans to keep on target.  The presence of triggers—in writing—and the visibility of those triggers increase the likelihood of staying on forecast.

In the case of one manufacturer of hard drives, the firm was just coming off a poor quarter during the 2008 and 2009 financial crisis.  The team knew they needed to make some tough decisions and cuts to the organization.  In doing so, they focused on preserving an initiative in developing their next generation product… but had to make cuts in sales and other teams.

They built a longer-term plan around preserving cash, focusing on delivering the next generation product and then adding more salespeople as things improved in the macro environment.  The strategy was to develop a long-term One Page Business Plan that drove the organization to certain metrics and profitability that was important to for a possible exit of the public markets.  As it turned out, the sales team delivered, and the firm was ultimately sold at competitive multiples to Hitachi Data Systems.

The Lack of Consequences if Management Misses Its Forecast

The stock market punishes public companies immediately if they fail to meet their forecasts.  As a result, they are more likely to invest time and effort into setting realistic benchmarks and fighting hard to achieve them.  Yet in many private companies, missed forecasts are met with shoulder shrugs.  There are no consequences for poor forecasters.

There is often more pressure to agree to an overly optimistic forecast than there is to achieve the forecast.  This is a mistake of great consequence.  Pressure to perform is a critical factor in all business operations.  Identifying missed forecasts as failures and delineating serious consequences for those failures will increase your likelihood of hitting future forecasts!

One might think that growing exponentially fast from a small to a midsized company would be a good thing.  But many of these firms are totally unprepared for it.  A payroll of dozens expands into hundreds.  A burgeoning customer base exacts ever-bigger demands for support and preferential pricing.  A much-larger revenue stream leads to billowing expenses to earn that revenue.  And all this, in turn, means capital and other investments on a scale that would have been unfathomable when the company consisted of a handful of people who fit in a small office.

Invariably, an explosion in activities, expenses, and complexities ushers in an explosion in fire-fighting by managers trying to solve small (and not-so-small) unanticipated problems every day.  At the same time, the firefighters in chief… the top management team… too can become engulfed in the firm’s daily brushfires.

That lack of preparedness is the perfect recipe for making rapid growth go negative… and rapidly so.  By putting out fires, company leaders no longer have time to create the business plans that will position the business for the next stage of growth.

When its daily fires keep growing, a midsized business stops growing.  That’s unfortunate, to be sure. Yet it’s also avoidable, as I’ll explain.

Haven’t seen this yet in your company?  Congratulations – you are among the lucky ones.  You are also among the minority, from my  experience.  We have plenty of stories to tell about how leaders of midsized firms watched their companies shrink while putting out the daily flames.

Let’s start with one of these cautionary tales, the story of a fast-growing consulting firm.

How a Consulting Firm’s Growth Burned Out

The consulting firm surged from $15 million in revenue to $24 million in one year.  Fantastic!  But, with that growth they became so swamped delivering the work that they stopped planning for how to hit the $30 million mark the following year.  Profits were incredible, but the firm’s leaders stopped prospecting and selling.  They knew they needed to hire, to upgrade their HR processes, add some leadership—but they were too busy putting out fires.  The following year, sales dropped back to $20 million.

Growth requires planning for the future… not just a week, a month, or a quarter, but a full year or more.  This longer time horizon helps us anticipate what the business (or the market) will need and begin preparations early.  When that time arrives and these preparations are made, the business has the right people and the right systems already in place and can compete to win… without as many blazing fires.

But who has time to plan the future when each day has so many hot priorities?  We work with a lot of senior leaders in midsized businesses and find that many of them would gladly have a longer term time horizon but are overwhelmed with short term issues and projects.  They look to their subordinates to see who can step up but find no one.  This is the heart of the problem.

Senior leaders in every growing company need a protégé or two.  This is someone on their team who is up and coming, who is eager for expanded responsibilities and ultimately, promotion.  Intentional development of these people will not only help retain them but will also provide a ready path for delegation.  Senior leaders can keep their focus on the long term if, as the business grows, they can hand off their lower level tasks to subordinates.  If all their subordinates are “just barely competent” to do their own job, then they must upgrade one or more of them immediately.  Firms can’t grow if its leaders can’t grow.  And leaders like you can’t grow if your subordinates can’t grow with you.

Once you have the time to think, you must plan and execute for the long term.  We find that many leaders have trouble being proactive and allow urgent matters to compound and fill all their time.  Instead, here’s how you can better plan for the long term:

  1. Schedule time each week (actually block time on your calendar) for long term work.  If possible, do it with another senior leader.
  2. Lay out what the company should look like, quarter by quarter, starting six months from now through two years.  That’s six snapshots.  Note key products, changed customer mix, competitor moves and the overall size of the company.  Of course, you don’t know exactly what the future holds, but take your best guess.
  3. List the three biggest drivers… things that must happen in order for you to be successful.
  4. Also list the three biggest obstacles… the things likely to hold you back.
  5. For each of the three drivers and three obstacles, in each quarter, note what tasks must happen to optimally manage them. This becomes the core of the long term plan.  This is where senior leaders need to spend more of their time.
  6. Consider using One Page Business Plans to capture and organize your best thinking in a without resorting to complex planning processes.

When this is done correctly, something amazing happens.  Over the course of a year, you’ll see this long term planning begin to work.  There will be fewer surprises and the team will be more prepared.  There will be fewer fires and focus will stay where it should be… On growth!

The consulting firm that became absorbed in firefighting was set back for a year.  But they were determined to grow.  They hired a project manager and upgraded several intern positions to more seasoned talent.  They split one leader’s function into two, adding an experienced marketing manager to the team.  They more clearly articulated the career path for the team.  The additional hires knocked the bottom line down a bit, but as the new hires and processes became normal, so did a monthly $2 million run rate.  Where this growth rate had made the firm crazy hectic just two years prior, with the right planning in place, the firm was able to handle the growth smoothly.  Quality is back up, profits are back up, and the firm has a strong pipeline of new work.

You can’t grow your business if you’re spending all your time firefighting short term challenges.  Midsized company leaders keep their companies growing by increasing their focus on the long term as the business scales.  Build up your support team, delegate more of the short term work, and make the long term vision of your firm into reality!

Jeff Hughes

The days of writing an annual plan and putting it on the shelf or in a drawer until next year are over.

Good planning is based upon the reality of constant environmental and internal changes.

New entrepreneurial businesses, growing businesses, and mature businesses each have different priorities.  Thus, the content of those plans—Vision, Mission, Objectives, Strategies, and Action Plans—will change as the business matures.  But there is no question that highly successful businesses often outperform others because they use a dynamic planning process.

What a dynamic planning process involves is an awareness of external and internal changes that can affect business strategy. This requires that objectives and action plans conform to any new strategies that address these changes.

New businesses will likely be in the capital acquisition mode and must simultaneously watch cash flow.  Marketing, advertising, and other forms of self-promotion are critical.  The infancy of company culture begins to emerge and the few people in the organization must be prepared to wear many hats simultaneously.  Each of these priorities require a unique set of objectives and action plans to keep the business in ascension mode.

Stable, yet growing businesses will face their own set of unique business planning requirements.  Planning for and executing an organizational development plan is key among them.  Outrunning the supply line is also a concern that needs attention.  Similar to a new business, capital acquisition, cash flow, and promotion require considerations for business plan inclusion.

Mature businesses will want to gain or maintain a leadership role in the sectors it serves.  Succession planning will become more of a priority as leadership team members move on or retire.  More emphasis on cross-functionalization of processes and workflows will be critical to enhance efficiency and cost management.  There will be a need for more innovation to invent spin-offs or to reinvent the company to ensure the longevity of the business.

New skills will likely be required to meet changing environmental changes such as the use of artificial intelligence and machine learning.  Leveraging social media in new ways and on new platforms may also push the skilling-up of certain areas of the business.

As you can see, only scratching the surface of a company’s maturation requires new objectives, strategies, and action plans aligned to the different priorities.

And even within each maturation segment, new opportunities and challenges will emerge that will require a rethinking of priorities that will require each department, work team, or project team to reevaluate their objectives and action plans.  As corporate strategy changes, the trickle-down of change will be required.

Maintaining a great business plan requires constant attention to internal and external change dynamics.  In a newer business, revisiting one’s plan may be required on a quarterly or even monthly basis.  More mature businesses can generally foresee the near-term future based on past and current trends and business cycles.  Major economic or sociologic environment changes, innovation, and disrupters require considering a recalibration of the plan.

So, if your organization has been doing business planning annually, waiting to make changes to your plan, the organization may want to consider formal quarterly reviews. We need only look at the rippling effect the Covid-19 pandemic has had on nearly every sector of businesses, world-wide consumer behavior, legal, and legislative action. All have been impacted by the pandemic.  While an extreme example of environmental changes that impact a business’ potential livelihood of survival, the point is that business leaders need to be vigilant about changes occurring in the external world as much as keeping an eye on the internal business, for changes one could correlate to changes in another.

One way to create and manage “living” or dynamic plans is to use an easily edited cloud-based system like The One Page Planning and Performance System as a place to capture and record your best thinking.

The process of a periodic environmental scan or S.W.O.T analysis concerning the sectors the business serves and any macro-environmental changes are ways to keep a handle on what could force change to your business priorities and, thus, to your business plan.  Considering different, creative ways to keep a vigilant eye on the competitive landscape are critical to maintaining a dynamic and responsive organization. Belonging to and actively participating in associations that serve your business sectors is another means of staying connected to environmental changes.

Look at your business plan as a blank slateto avoid preconceived notions or the creation and perpetuation of sacred cows.  A fresh, informed, and objective point of view will help make your business plan reflect the direction company leaders take.

Do not fear change.  Embrace it with a dynamic business plan! 

Overly focusing on revenue ignores other factors that can mean the difference between success and failure. Making the change to obsess on an EBITDA-based performance metric is a powerful way to improve your profits and valuation.

An obsession with sales revenue is a destructive habit shared by many CEOs. They become emotionally attached— even addicted to the revenue metric. Revenue is the first thing they think of when they wonder how the current quarter is going and the single metric they quote most often. But overly focusing on revenue ignores other factors that can mean the difference between success and failure. Metric-minded CEOs need a better metric to obsess about. Read on to learn the tale of two CEOs who illustrate our point perfectly.

Revenue: This Is Not the Success Metric You’re Looking For

Gross revenues are a readily-available number that many firms use as a convenient proxy for success. As their ever-ready metric for performance, it does provide a consistent and measurable data point, but it falls short in three critical ways:

Margin – Not all revenue is created equally. Different product mixes mean different contribution margins. Changing the terms of a sale can change profitability.

Direct Costs – Whether for overhead items like a facility maintenance emergency or changes to the cost of materials or overtime, cost changes can wreck your budget, but they won’t be visible in your revenue tracking.

Indirect Costs – Overhead and support salaries, spending on initiatives that will support future growth, or even just plain old pet projects.

For measuring progress, tracking revenue is less effective than tracking actual earnings. It doesn’t accurately represent the desirability of your performance against the company’s valuation, profitability or cash flow goals, and it ignores factors that can mean the difference between a profitable, successful organization and one that’s losing money.

Forecast Monthly EBITDA Dollars. This Is the One You Want

We don’t disagree that growth is critical to having a great bottom line. But instead of putting your focus on revenue, here is an excellent metric that will get you both top line growth and a healthy bottom line. Forecast EBITDA dollars for the 12 months ahead, based on your budget. EBITDA is Earnings Before Interest Taxes Depreciation and Amortization and many CEOs are familiar with it. But using it in exactly this way and as their #1 metric is likely a new approach.

A Real-World Example

The CEO of a $110 million, private-equity-owned manufacturing firm told me that the current quarter was going well because he beat his EBITDA target for January by $280K.

That was it. No mention of current revenue numbers at all, or whether his sales numbers were trending up or down. Just that single data point and the far-reaching conclusion that all was well because they were beating their EBITDA target. It was that simple. He only had to track one metric to know everything he needed to know about his current operational performance.

Soon after, I met with another client, who told me a very different story. This CEO is an entrepreneur, running his own $25 million revenues business. His strategic focus is on sales, and he places a lot of emphasis on tracking his topline revenue.

This CEO told me that his company had turned a 7% profit in the previous quarter, then logged an unexpected 7% loss in the next. He blamed expenses that had gotten out of hand and a modest “miss” on volume. Clearly, tracking revenue hadn’t helped him avoid losing $438,000 in one quarter alone.

These two contrasting conversations clearly showed two sides of a problem that I see in many businesses I encounter. Companies focused on driving growth often put all their focus on creating revenue growth. But primarily tracking revenue, even when also tracking various expense metrics, is focusing on the wrong metric if your goal is to ensure profits.

EBITDA – What’s In and What’s Out

Think of the important data you capture in an EBITDA number… and the data you leave out.

EBITDA starts off as an earnings number with income and all your operating costs already subtracted. So, we have exactly what the business is producing through operations. EBITDA ignores income taxes, depreciation, and amortization. Those numbers are important for cash flow and accrual accounting, but they don’t show how well your operations are supporting your growth. Leaving out depreciation also encourages capital investment that drives growth or increased efficiency.

Challenges to Avoid

Some CEOs worry that focusing on EBITDA might encourage cost cutting and short-term thinking. To avoid that, you should set a rising EBITDA target dollar amount for each month for the next 1-3 years. Setting it in dollars rather than percentages ensures that you can’t simply cut your way to meeting a goal, since you need both sales volume and margin to deliver EBITDA dollars.

Your EBITDA goals should extend over enough time to account for both the costs of your investments and the income you expect them to generate. For businesses with short investment and sales cycles, a one-year forecast might be enough. For others, a five-year forecast might be much better for tracking the financial impact of capital expenditures. If you plan to invest in growth, you will forecast lower EBITDA dollars in the near term, but higher EBITDA dollars when your investment should be paying off.

Making the Move Today

Making the change to obsess on an EBITDA-based performance metric is a powerful way to improve your profits and valuation.

Keep tracking all your KPIs, but put EBITDA dollars at the top of the list, and move sales revenue tracking down the list.

By setting monthly dollar targets for your company’s EBITDA for the next year or two, you can avoid many of the drawbacks of the all too common sales revenue obsession!

Jeff Hughes

Companies that achieve alignment realize better results and a more efficient workflow.  By alignment, I mean that all associates, departments, divisions, and corporate are all working toward achieving a set of pre-defined, measurable objectives that support the mission and push the company towards its vision. By examining functions and associates’ roles and the utilization of a business planning process, this article explores solutions to achieving alignment and increasing the probability of improving financial results and organizational efficiency, effectiveness, and employee engagement.

Key Functions

Achieving profitability for your business is why you are in business.  Core functions of marketing, advertising, sales, technology, financial management, and human resources, and other functions, all working seamlessly and interdependently are the hallmark of solid business infrastructure for most mid-sized and large companies.  Unfortunately, many departments work in silos and their leaders do not realize the potential for exponential success if they were to work with other department heads on universal or common issues associated with profitability. Workgroup leads and/or individual contributors who, too, find themselves working in silos within their department.  What’s needed are goals and objectives that bring everyone under the same umbrella working toward universally common business needs.  

Functions and People

The people you are hiring today and those who have been with the company for weeks, months, or years need guidance to do their jobs well.  Most employees want to know what is expected of them.  These human assets play a pivotal role in making things happen in your company.  They are the activators of the aforementioned key functions.  But how well are each and all of your people equipped to accomplish the work that matters?  Getting everyone on the same page and moving in the same direction is a key role for you as the leader.  A unified organization is a strong organization.

There are several ways to begin to gain alignment of the company’s expectations and peoples’ understanding and acceptance of them: 

Writing, publishing, and posting what you want to achieve requires careful word selection to define your mission, vision, goals, and strategic business objectives.  The wrong choice of words can send the company down the wrong road.  Getting the words right may require several drafts of the mission statement and vision statement.  Getting the metrics right requires analysis of current business results and desired future business results. 

Determining these elements are well suited to executive team collaboration.  Creating and executing a communication plan to share this information is vital.

Use Your Best Thinking

To pull the aspects of functions and people together you need to prepare and actively employ business plans.  These plans are the basis of successful business integration.  When I say plans, I mean that each department’s or work group’s leader should have and use a business plan aligned with the company’s strategic business goals and objectives.  In other words, these individual plans must sum up to the goals and measurements of success that drive the company’s positive results.

Many business plans get mired in mind-numbing data and minutia at the onset and never get off the ground.  Guided by the mission, vision, goals, what are needed are clear and achievable measurable objectives and well thought through action plans designed to achieve the objectives to propel your key performance indicators. And do not forget to administer a two-way, comprehensive communication plan.

I suggest that your strategic goals and objectives be reviewed annually, as the pace of change in many aspects of doing business successfully is significant.

Measurement and Adjustment

Having clear and periodically measured objectives are the elements of a scorecard from which you can determine what action plans are working and which need to be tweaked or replaced.  Similarly, objectives may need to be recalibrated.  Business planning is a dynamic undertaking.  Getting the plan right is the key priority.  Constant attention to results will guide your thinking about what is working and what is not.

Monthly one-on-one meetings between the supervisor and the individual associates responsible for implementing the action plans should be scheduled and then a recap shared with the whole team of the aggregate results.  In this way, expectations and accountabilities are reinforced and agreement between parties can be reached and documented.  These meetings should not be one-way lectures, rather a collaborative discussion on how to improve performance and results. This undertaking should help enhance employee engagement, once habits are formed.  Employees want to do a good job and knowing what their job is creating job satisfaction.  Achieving results tied to a greater purpose adds to their enthusiasm.

The management team should also plan to meet monthly to review departmental, team, or project team progress.  I suggest this be done in a group setting with the CEO or president facilitating the process.  Questions from the CEO and questions from peers are encouraged to generate discussion and the creation of solutions to help objectives get better achieved.  This session is not an “I got ya” moment; it’s a moment when the entire management team is reminded of the vision and mission and how their achievement of objectives, strategies, and action plan help to fulfill that vision and mission.

Business Planning and Implementation

Achieving your objectives is a function of the results generated by the teams and departments.  If objectives are not achieved, then analysis of action plan effectiveness is required to get to the “why”.  The review of objectives should answer the question:  Are they attainable within the time frame required?  If individual or general team performance is at the center of poor results, then documented training, coaching, and/or accountabilitycounseling must be done.   To paraphrase Jim Collins, having the right people in the rights seats is as important as having clearly written objectives and measures thereof.  Your people are responsible for driving positive results.  Make sure that each person knows and accepts their role in achieving the mission and their own objectives.

As with every asset, you need to be prepared to invest time and money in preparing people to master their roles in achieving the desired outcomes.  This includes:

If there is no will to succeed in accomplishing the assigned objectives, then termination or reassignment is warranted.  You don’t need to weigh the organization down with non-players.

Preparing for the Future

Career and succession planning are essential in retaining high potential, well-performing associates as well as maintaining continuity in the instance of a hand-off of responsibilities.

Your future leaders who will be charged with delivering results must be brought into the supervisor’s role ready to implement the planning process.  And when it comes to new hires, one part of the selection process is to ascertain the candidate’s values.  There are validated testing instruments to help you determine alignment or dissonance on this point.  If there is dissonance, you’d better pass.  Values are the foundation of whether or not the individual has the potential to be a good fit in your high-performance organization.

In all instances, people alignment is your goal.  Without it, some achievements may fall short of desired results.  Business plans are blueprints, but the blueprints must be followed to build a strong performing organization.  That is why you need the right people in the right seats leading and doing the work. While the business plan will not address the top-down communication and downstream discussion, these communications are essential to successfully implementing the plan.

Business success is driven, in part, by a group of interdependent people with single-mindedness, using processes and tools that work.  This does not happen magically.  This function and the role-related multi-faceted system must be managed top-down and scrutinized for slack and misdirection.  This important leadership responsibility is what will keep your train on the tracks of success and better ensures you will hit your profitability targets.

Pulling all of the elements of function, people and business planning together can be a challenge.  The leader needs to explain to associates what aligned business planning is all about and what will happen and why.  Good business planning is part of a change process and needs to be managed as such. 

It’s recommended that starting the aligned business planning process be staggered, with the departmental, team leader, or project leader with the highest, perceived will to become fully engaged in the process.  Word will spread and the improved, well-promoted results will encourage fence-sitters to get in the game.  Critical mass will drive the balance of the organization to full implementation.

A Practical Solution to Alignment

I have reviewed many business planning systems and have found The One Page Business Plan is a superior tool and process to help you achieve aligned results.  The plan is broken down into pieces that guide the planner in establishing solid objectives and action plans tied to the company goals and mission.  This cloud-based system allows leaders to view the macro-results of the aggregated level of objectives’ achievement as well as individual departmental objectives’ achievement. Individuals post their results online and leaders input the status of their action plans and quantified results to the cloud-based reporting system which can be uploaded to an assigned senior team leader for analysis and recommended action.  This is the only plan I have researched that offers both strategic and tactical planning elements.

The One Page Business Plan Company has a geographically dispersed corps of high performing, certified coaches who can help you create and begin to implement a One Page Business Plan.

The One Page Business Plan is the linchpin to achieving desired business results.  Once organizational action plans and objectives are reported, viewing them on-line is straightforward.  And the planning system works for small businesses and individual business owners and those in individual practices as well.  The process is the same.

If you get the plan right and the people right, your likelihood of success is great.  But as you have read, communication is a key element of the plan’s launch and maintenance.  It is the thing that turns words on paper into action and action into results!

If you’d like to learn more about Jeff’s experiences with the One Page Business Plan please contact him at inspas1@gmail.com

Troubled companies do not generally fail by surprise. Their ailments are known for some time and the outcomes are predictable. Startups and growth companies do not miss their sales or profitability numbers for lack of good ideas. Established companies generally do not lose market share to upstarts because they do not have creative ideas for new products or services. Owners and management teams generally know their industry and their market and have solid ideas for growing their businesses and solving their problems. Frequently companies do not achieve their goals because they simply fail to implement the plans they have created.

Do you or your company suffer from a bad case of Failure to Implement?

Companies and the people in them are like supertankers, they can take a long time to change direction even when a new course is desired. But if you turn the wheel, the rudder will move and the ship will alter its course. Similarly, action within your business will produce results.

Successful change or growth requires planning, execution, monitoring results, and making small but consistent corrections along the way. Major course corrections may be required from time to time, but not frequently if the plan is well thought out, executed, and monitored. If you or your company is stuck, knows, and talks about the solutions, but fails to implement them, there are likely un-spoken or un-resolved issues that are causing the blockage.

If you are ready to move forward, consider asking yourself and your management team the following questions:

• Do we agree on the root cause of our problems? Or the potential opportunity?

• Do we genuinely believe that the plans we have outlined are doable and realistic?

• Why are we placing our resources (time, money, people) on lower priority tasks?

• Who are we protecting in our company? Are we ignoring a performance, capability, or accountability issue?

• What sacred cows (traditions, practices, beliefs) are alive and well in our company that no longer serve us well?

These are difficult questions. The answers may be even tougher. Your company’s success depends on it. Take the risk, ask the questions, and move forward… then “Failure to Implement” will be no longer a part of your business vocabulary!

In this webinar, we’ll look at how leaders must communicate with each other and the broader team to gain alignment, and how that communication must be captured in writing to gain the clarity that will be needed in the execution phase. We’ll make clear that striving for alignment is not asking for “permission” from the team, but instead involving everyone in figuring out how to achieve the goal.

You will learn:

• Specific steps required to gain alignment of other leaders and the project team.

• Specific leadership behaviors that stimulate alignment activities.

• How to capture decisions as the team aligns so that the team stays aligned over time.

• Why the work of alignment is never truly completed, even as the work is being executed.

No is a very powerful word! In fact, most of us don’t say it frequently enough, and/or with enough conviction. What’s the evidence? Do any of these situations describe you?

Clients from hell? Do you have any? Were you really surprised that they turned out to be trouble? Or were there one or more clues you chose to overlook?

Ever make a bad hire? Just bad luck? Or were there signs during the interview?

Recently agree to price or contract terms that you regretted? Took on a new piece of business that is really outside or your expertise… and now instead of this client being a profit center, they are a drain on you and your business?

Traveling more and more and enjoying it less and less? Did you make a promise to yourself to stop taking clients that required airplane rides?

Bring a new partner into your business that you thought had the same vision, ethics, values…and actually had clients they were going to bring to the business? Were you just wishing? Were there advanced signals this was not going to pan out?

Here are 10 ideas on how to get back on track and stay there…

  1. Don’t ignore your hunches and intuition. They are part of your internal guidance system. You developed them over years of experience!
  2. Without clear boundaries… it is too easy to say YES or NO to the wrong things.
  3. Group decision making is great to a certain degree. It can be disastrous if you have no idea where you stand on an issue.
  4. All ideas can seem seductive… until you have a plan!
  5. Other people’s ideas will seem better than yours…until you stop, reflect and get in touch with yours.
  6. Tell me what you will say NO to… and I’ll know where your convictions are.
  7. Tell me who you want to be in service of, and how you can be of benefit…and I and others can introduce you to them.
  8. Tell me you will work with anyone… I’ll know you have worked with few.
  9. Willing to travel anywhere for a client? You may be improperly valuing your time or yourself.
  10. If you will discount your product for everyone…then nobody is special.

When is the last time you said NO? Are you overdue?

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Having data that you can trust is a key to consistently making better business decisions.

Shipments that don’t arrive on time to customers (especially big ones). Defective products whose defects don’t get fixed in the next manufacturing run. Manufacturing process glitches that reduce output at times of big demand – neither of which (the glitches or the pending product shortage) are known by the manufacturer’s top management at the time they are happening and the time they are booking big orders.

These are just a few of the operational nightmares of executives who run midsized companies, like the South Dakota manufacturer that I’m going to talk about in a bit. Such nightmares weren’t frequent when such companies were small –when the executive team and supply chain managers talked every day, and the factory was down the hall or in next building. But when a small company grows bigger, the plant is no longer in the backlot (and there are now multiple factories around the country), and top management can no longer observe what’s happening every day in production and distribution, such operational disconnects must be expected.

The fix is neither easy nor inexpensive. But it is necessary. Without sophisticated information systems through which top management can monitor their plant and distribution operations every day from afar – even by the hour – they are putting their business at risk. They are flying without instruments. They need software that will deliver the data they need to understand what’s happening all the time in the supply end of the business – the data to make good, fast decisions. Otherwise, they are operating on hope and delegation.

Consider this South Dakota manufacturer who kept missing delivery targets.  Surprise shortages of parts plagued efficiency and never matched the inventory system.  Work in process wasn’t tracked in real time so problems with quality and bottlenecks wreaked havoc, and root cause analysis was impossible.  Everyone pointed the finger at someone else.  The CEO was fed up.

Some firms try being more directive, counting on top leadership to give the right detailed instructions to all the lower level managers, or they decide to wait a year or two to complete installation of a big IT system.  The hope is that an outpouring of massive amounts of data will push the management team to optimize everything at once.  But these approaches don’t work and won’t scale up the business.

Instead, be strategic.  Study your corporate strategies and pick one that, with great data and analytics, will deliver the most performance in the near-to mid-term. Implement technology (probably in the cloud) as needed, then train all levels of the management team to look at just a few key metrics that will change behaviors.

Direction Before Data

Piles of data do not equate to knowledge or action. What we want and need is our entire team taking the right actions at the right time.  We must be crystal clear about what we need more (or less) of within the organization.  We can’t fix or optimize everything.  Typically, if we know what strategic lever(s) create more differentiation between our offering and our competitors, that’s where we should focus.

But midsized businesses are too big to stop setting clear direction at the corporate level.  We have to take corporate strategies and break them down into supporting functional area strategies (and probably departmental strategies as well).  For example, if “hot new products” is our strategy for increased differentiation, how can operations, accounting, production, and engineering each help in their own way?  We must be specific about who needs to step up where to generate improved corporate performance.

What Data Do We Need?

Once we know our direction, we can start collecting data.  That might mean installing a new, more powerful ERP.  It might also mean more diligently using tools you already have.  Or it might mean making tick marks on a yellow notepad and tabulating at month end.  Most companies can step up their data collection immediately with a little bit of effort no matter what system they have.  Do that now.  But if you’ve outgrown your tech systems, also start doing your homework and planning an upgrade.  It might take you a quarter (or a year or more), but the sooner you start, the sooner you’ll finish.  Don’t bite off more of an IT upgrade than your company can execute well.

Establish Targets and Leading Indicators

Harnessing data means using it to help us hit targets in the future.  We must set those targets thoughtfully.  They should have buy-in from the team responsible for execution and should be just-possible.  They should be balanced between financial targets, customer targets, organizational capacity targets and efficiency targets.  They should also include activity-based targets which tend to be leading indicators of results-based targets.  As we work our way down the organizational chart, having activity-based targets articulated will feel more controllable than results-based targets, and will gain more compliance and acceptance.

Don’t Forget External (Environmental) Data

An important, but often underemphasized aspect of data collections comes from outside your business.  Benchmarking data is crucial.  Even regular, but periodic tabulations of competitor observations is important.  Tracking the market for human talent in today’s environment can be powerful.  Surveying employees and customers is a must.  Midsized businesses must keep such measures simple to keep it affordable (and to maintain the data collection process).  Don’t forget to look for cloud platforms that provide benchmarking data.

The CEO of the South Dakota manufacturer decided that on-time shipments was the number one priority.  She deployed a planning tool with cascading KPIs and projects to focus the team on the problem.  Their new ERP was in the middle of implementation, so they used whatever measures they had at the time.  On time shipping improved significantly.  Nine months later, the ERP and its reporting systems were humming, and more data was available at all levels. The team carefully selected a small number of new KPIs based on new system data but used many of the other new live data feeds to diagnose what was working and what was not.  Throughput rose again, and the dream of keeping some products in stock for immediate shipment was largely achieved. (One great place to track all of these KPIs is the One Page Planning and Performance System.)

Data that top leaders and managers at all levels can trust is a fundamental piece of leading an organization that consistently makes more intelligent and competitive decisions. Set a direction and emphasis for stepped up metrics, then focus your team on the right KPIs. The growth will come!