Archive for the ‘Operations’ Category
In the fall of 2012, I made a presentation at a seminar focused on high growth strategies and I was intrigued that most questions and comments were directed at the pitfalls encountered, or to be avoided, while implementing such strategies. In this context, I define high growth strategies as major new product or service introductions or moving into new business sectors or geographies.
This is the second article in the series and it follows “High Growth Strategy Pitfall #1 – Turning Your Back on Your Base Business”.
There is an often used analogy “You can’t build a house on a cracked foundation” and this applies very well to expanding into new fields of business when there are flaws in the existing operations. Bringing new clients and related volume into an operation that is ill prepared for it is likely to result in inefficiencies and errors that will frustrate both the new clients and employees at the same time resulting in unpleasant consequences.
A friend of mine had accepted a position as CEO of a professional services business and after a few months had elapsed he engaged me to facilitate the annual senior management offsite meetings where the focus would be on the vision for the future and related new business streams.
I have found that engaging meeting attendees in confidential one-on-one consultations prior to the offsite session is a great way to develop an understanding of both the business and the views and opinions of these key individuals. Gathering perspectives from non-attendees is also valuable; and in this situation I held some employee group sessions. This process is invaluable in creating the agenda for the upcoming sessions.
Following the consultations, I will always remember walking into the CEO’s office and calling a “Time-Out”. I said that we should not be talking new growth strategy but rather working on business fundamentals. Unbeknownst to me prior to conducting the interviews was that the company was losing clients and employees and morale was low. People were spending time putting out fires as client delivery dates were missed on a regular basis. Employees stated that they hoped no additional volume would be coming in because they could not cope with what they had.
As a result the offsite and resultant action plans were focused on meeting client needs and expectations, employee satisfaction and on fixing business processes. We then held monthly follow-up sessions on the action plan and within a few months all action plan items had been implemented.
Over the following year, I conducted confidential interviews with a selection of key clients and these have been repeated on a regular basis and satisfaction levels have risen sharply. Likewise we conducted employee satisfaction surveys with similar results.
The offsite session the following year was focused on vision and high growth strategies, held with the comfort that the foundation was solid and employees were once again excited about facing the challenges that new clients and business would bring.
High growth strategies include acquisitions and the same foundational problems may be present in addition to the expected issues based upon different processes and different cultures. In the case of strategic purchases there is most often an expectation for savings associated with business synergies.
Prior to the creation of Halifax Global, I had been working with a large corporation that had recently purchased a value added reseller that had revenues of over $200 million from operations throughout North America and Europe. I was asked to join the newly acquired subsidiary as the Senior Vice-President Finance and one of the tasks was to help deliver on the operational synergies that had been identified during the acquisition process.
What I found was that there was a myriad of operational problems that had to be addressed before we could implement synergistic measures. The process was one of problem and solution identification with a well-communicated and distributed action plan.
An absolute key to success was to solicit and receive the proactive involvement of the acquired company’s employees and the elimination of the “We/They” syndrome.
Accordingly, the timeframe for implementation was extended from one to two years which provided time to solve the foundational issues from which we were then able to deliver the promised savings.
An important, but often unrecognized, element of the foundation is having a culture that will support aggressive revenue growth.
I was working on an initial assignment with a client that was going through transformational change with aggressive growth plans. Through my consultations with senior management and selected staff members, it became obvious that the existing culture in the organization was not conducive to bringing on new business in an effective manner. The decision-making process was too centralized at a very senior level and employee involvement with the planning processes, including budgets, was minimal.
Working with the leadership team, an action plan was created that included employee training that would enable enhanced employee empowerment. The planning processes were revamped with greater employee involvement in setting plans and objectives which generated heightened commitment, buy-in and accountability to the plans.
The engagement of and input from all employees in the planning process helped to identify the skill gaps that existed in the company that would curtail expansive growth. Filling those identified critical positions in various departments throughout the company not only provided the skill sets required but also demonstrated to all employees that their voices were being heard.
The overall outcome was that a culture shift occurred that strengthened the foundation of the company.
Two critical elements of an organization’s foundation are its people and processes. There must be the good people in the right positions with both an appropriate culture and with positive morale all supported by strong business processes. The stories are examples of pitfalls and shortcomings that have existed and been eliminated thus providing for the ability to enjoy new business growth.
Later in January, I will be writing about Pitfall #3 – Faltering Commitment to support High Growth Strategies!
In the meantime, additional insights related to growth pitfalls can be found in the first article in this series plus a previous blog article that I wrote called “The Ten Keys to Customer Satisfaction for Services Businesses” that you may find of interest.
Earlier this fall, I made a presentation at a seminar focused on high growth strategies and I was intrigued by the fact that most questions and interest were directed at the pitfalls encountered, or to be avoided, while implementing high growth strategies. In this context I define high growth strategies as major new product or service introduction or moving into new business sectors or geographies.
Over the next couple of months I will be writing a series of blog articles on the pitfalls starting with what I consider to be the most prevalent– turning your back on your base business.
The “New Business Development” component of an organization’s business strategy is often the most exciting element of the plan but often gets more attention than is desirous.
We were doing an offsite strategy session with the executive team of a manufacturing company and the discussion was around the recent move into the American marketplace. We brought up the danger of neglecting the base business and the CEO turned to the VP of Sales and asked when was the last time he had visited with the top clients in the home region. The extended pause before the answer was the answer.
Proactive communication with employees, clients and other critical stakeholders is a great thing but you must make sure that your messages are comprehensive and inspiring for everyone. Every employee should be able to link their role and activities to the overall strategy and goals of the organization. There is a natural tendency to talk about the exciting new future with a focus on the new initiatives but this can create the “chopped liver syndrome” for the more mature elements of the business! If you are an employee and your job is firmly tied to the base business and all the excitement is elsewhere you can start to feel left behind. This is dangerous territory. A firm must protect and nurture its base business as it is often the cash cow that provides the funds for new business development. Not only can this loss of importance be felt by employees but also by clients and suppliers.
A company brought in a new CEO whose mandate included expanding the service offering away from a paper based solution to a digital one in order to meet marketplace demands. Several new hires were made giving the company the capability to move in the new direction but still the bulk of client work was based on the existing technology. However, many of the existing employees started to feel like second class citizens since they were stuck with the old non-glamorous product while the future was digital. Soon this malaise started to be felt by their clients and key suppliers as confirmed in confidential interviews that I had with these stakeholders. Working closely with the CEO, we identified the communication shortcomings and the appropriate fixes.
The company addressed the morale problem with a well communicated strategy focused on the need for maintaining the paper based-product line as long as possible and that there would still be an enormous reliance on the employees in this base business. In addition, there would be an ability to provide an integrated solution set to their clients which also meant involvement in the digital business for all employees.
All employees stepped up to the challenge and five years later the paper-based product volume has increased and this coupled with new sales in the digital business has resulted in vigorous overall revenue growth and an even more impressive increase in profits.
Unless you are starting a completely new business, it is critical that an organization adopt a plan that provides for a strategy focused on the protection and nurturing of the base business that has gotten the organization to where it is today, while working on the high growth strategy with a distinct set of action items. The new business development focus must not be allowed to become a distraction that prematurely erodes the value of the base business.
In two weeks’ time I will be writing about Pitfall #2 – Expecting growth to fix problems with your foundation!
In the meantime I welcome you to visit our website for additional insights and stories including a previous blog article that I wrote called “The Ten Keys to Customer Satisfaction for Services Businesses”
Many companies state that they want to “delight their customers”. This article looks at this lofty goal from the customers’ perspective and the ten attributes listed below are what they say is truly important to them.
Our business services clients recognize the value of obtaining their customers’ perspectives as they undertake strategic and business planning initiatives. To solicit customer input, Halifax Global typically undertakes a number of one-on-one interviews with a representative sample, including, of course, the largest customers. We start off each consultation advising our client’s customer that the conversation will be kept confidential and that only a summary of all consultations will be presented to our client as “What We Heard”.
We typically ask about the length and depth of the relationship, a rating of the overall services provided, and the competition and marketplace. The key questions are focused on the value customers seek and are receiving from their supplier – our client.
We have identified the following attributes that customers value from their suppliers primarily in the business-to-business services sector but many of the attributes would also pertain to manufacturers and retail organizations.
Number 1 – Meeting Commitments
Customers want their suppliers to meet their commitments – to do what they said they would do by when they said they would do it. Physical product must meet the quality specifications. Attention to detail is critically important. Any faltering on timeliness or quality is very visible and certainly opens the door to competitors.
Mistakes do happen and often there is more tolerance for a single large mistake that is properly addressed in a timely fashion than a series of small errors that creates frustration in the relationship.
Number 2 – The Team and Relationships
The connection between the two organizations is only as strong as the relationships among the people involved and a set of strong, positive relationships is a powerful attribute. There is a strong linkage between high employee satisfaction and client satisfaction levels.
Transition of team members is disruptive and the ability to handle it correctly and professionally is of critical importance. If done in an orderly fashion within reasonable timeframes this is considered acceptable. High turnover of people in either organization is fraught with risk, particularly if the customer deals solely with one person
Number 3 – Knowledge
Customers value the knowledge that is represented by their suppliers. Customers can readily tell if supplier representatives truly know their subject matter and this expertise certainly represents a value that customers are willing to pay for.
Knowledge typically transcends the individuals involved and there is a collective knowledge within a supplier that creates both a critical asset in an existing relationship as well as a reputation in the marketplace.
Number 4 – Trust and Integrity
Customers will talk about individuals at suppliers firms but also talk about the integrity of the organization as a whole. “We trust them” is an attribute associated with the supplier in its entirety and not typically tagged to individuals. Trust is earned over time. Customers welcome the opportunity to collaborate and to discuss strategic and operational matters in confidence.
Administratively, it is important that all documentation (quotes, purchase orders, contracts, etc.) are kept current and customers expect to receive accurate invoices on a timely basis.
Number 5 – Responsiveness
Being easy to do business with ensures that the supplier is in tune with how the customer wants to engage in business activities. It may be through direct face-to-face contact, the use of inside customer service reps, web-enabled commerce, or some combination thereof. Clear communications are very important especially where services involve multiple iterations and/or steps in the process. Role definition is essential where multiple staff members from both parties are involved.
Responding to customer requests left by voice mail and e-mail in a timely manner is fundamental. Voids in communication create uncertainty.
Number 6 – Innovation and Leadership
Customers often choose suppliers that are acknowledged or seen to be leaders in their industry and are a continuing source of innovative products and services. The supplier must be proactive in providing customers with access to the leadership of their organization on a regular basis. This can be done through one-on-one meetings, account team sessions or supplier sponsored events. The supplier could be an important conduit of industry product innovation so part of the value of the relationship is that the customer is regularly made aware of industry and marketplace trends and development.
Number 7 – “They Get Us”
The respective parties develop deeper, collective knowledge over time as the supplier learns more and more about the customer and vice versa. This includes a greater knowledge and appreciation of the values and culture of each organization and the supplier builds an understanding of what the customer’s goals and ambitions are all about. When customers tell us that our client really understands what we are all about or that “They get us” it is clear that a strong relationship has been built between the two organizations.
Number 8 – Passion and Energy
Customers love working with people who enjoy what they are doing and are passionate about it and this energy elevates the relationship. People who enjoy working with each other are likely to sustain their commercial relationship over the long term.
Number 9 – Supplier Longevity
There is a sense of stability in working with a supplier that has been in business for a period of time. It creates a feeling of comfort in taking the time to build a relationship with this firm because they have a history that suggests they will be here for the long run.
Number 10 – Living up to Expectations
This is a critical element in a new relationship. Customers come with a set of expectations and if they are met or better yet, exceeded, then the likelihood of repeat business is high. However, if the supplier falters and does not live up to expectations then the customer will revert to previous suppliers or continue the search for a new one.
The key for future success and growth for most businesses is to maintain and nurture their existing client base. I have never heard one of my clients’ customers say the they “Want to be delighted” but if a supplier rates highly on the above noted attributes they are sure to have very satisfied and repeat customers in the future.
A month ago, I wrote a blog article entitled “Egypt, Bahrain, the Middle East and Our Businesses”. I could now write an article entitled “Japan, Libya, the World and our Businesses”. However, I think I can safely leave the name of any country or region of the world out of the title for it is very clear that what happens around the globe has an impact on us – our families, communities and at the places where we work.
Global crisis and events impact our businesses/organizations and we must ensure that our decision making processes are nimble and appropriately responsive to change. We cannot afford to ignore the world around us as being outside of our control.
Role of business planning and intervention
Businesses can cope with global disruptive change through a robust planning process:
- Ensuring the organization’s vision encompasses the impact of the global environment;
- Understanding the exposure of a firm’s current marketplace position to international events and activities;
- Continuous assessment and monitoring of critical success drivers with regard to setting direction, working together and people;
- Monitoring those key performance indicators that are most sensitive to global change;
- Delegation of decision making authority so that appropriate actions are taken on a timely basis; and
- Where overall disruption is significant an action driven intervention process may be required, with:
- Leadership team engaged;
- Contingent operational plans;
- Budget review evaluation and possible amendments; and
- Monitoring processes.
Here are five global related items that have been impacting us and getting our attention of late along with some thoughts on how we could respond to, or counter, the impact on us.
1 – Fuel and Energy
Last month, I noted how the price of crude oil rose in January due to the uncertainty in Egypt and the remote possibility of disruption of shipments through the Suez Canal. Look at the price of oil now following the Libyan conflagration. Your organization is paying more for transportation now and energy prices will be moving upwards as well.
The disaster at the Fukushima Daiichi nuclear plant has governments around the world reassessing their plans to maintain and build additional nuclear energy capacity which could increase reliance on fossil fuels with long term repercussions on both price and energy security here on Canada’s East Coast. What will be the impact of the disaster on the refurbishment costs and timing, to say nothing about the community acceptance, of the reinstatement of Point Lepreau into the energy grid in New Brunswick?
What to do?
Short term, we could consider implementing fuel surcharges on our existing contracts where meaningful and acceptable and, over the medium term, we should write contracts with surcharge provisions or other pricing mechanisms. Over the long term, we must be looking for alternate energy sources for our businesses either directly or by supporting such initiatives from energy providers.
2 – Global Supply Chains – logistics
There have been negative impacts on global supply chains. I spoke with a local manufacturer last week and this firm is experiencing significant delays in receiving electronic components. Another local company, Scanwood Canada Inc., is in the midst of bankruptcy protection but what recently caused a temporary shut-down was the fact that components were held up due to transportation logistics.
What to do?
Your customers expect prompt delivery of products and services and the failure of your supply chain to deliver product to you can have direct negative consequences. Planning for disruption requires relationship management so that your needs are met whenever possible. You should also built a robust, multiple supplier network ensuring security of supply in anticipation, however slight, of delivery failure from current vendors.
3 – Military Operations
To quote from my earlier blog “Continued unrest in the Middle East may well require support or response from Maritime Forces Atlantic that could well see the deployment of ships and personnel into the region.” Not only is the HMCS Charlottetown positioned off of the coast of Africa but the Canadian military now has six CF-18 Hornets and crew in Italy and these aircraft are currently being deployed in the skies over Libya.
What to do?
The populace of this region and, in particular, this city has been aligned with the military for centuries and I am proud to be a Nova Scotia Director for the Canadian Forces Liaison Council. Your organization should proactively support the Canadian Forces Reserves.
On March 30, 2011, the CFLC Nova Scotia Provincial Council is planning an awards ceremony to recognize ten Nova Scotia organizations that have provided excellent support to their reservist employees or students. Her Honour, the Honourable Mayann E. Francis, Lieutenant Governor of Nova Scotia, will preside over the ceremony and present these awards.
4 – Our Employees and Families
For a week in February, the local press followed the story of Glenn Sutherland and his family, from the time he was forced to flee from an oil rig site in Libya until he reached Malta and finally arrived safe and sound back in Nova Scotia. Glenn was working for Suncor Energy Inc, a Canadian company with operations in Libya.
My daughter and grandson live in a coastal community on the Big Island, Hawaii. On March 11, 2011 our daughter called advising us that they were under a tsunami alert and they had gone to higher ground and were waiting ….. Thankfully, they were fine as it was a non-event for them but now we worry about radiation and the recently resurgent Kilauea volcano that is only a few kilometers away.
What to do?
We must be empathetic as a community and as employers. We have family, friends and employees that have been touched by any one of a number of recent global events. Virtually every organization that I have worked with acknowledges that their employees are their vital assets. Now is the time to ensure that we support those employees who have family members impacted by global catastrophes including those who are serving with Canadian Forces abroad. Such support could be coverage/stories in internal communications, time off as required and counseling where appropriate
5 – Global Economic Recovery in Peril
The global turmoil is creating additional uncertainty in both domestic and international marketplaces and is undermining the rather fragile economic recovery that we have been experiencing in the past 12 months. We have seen a rise in protectionism as some countries try to shield their economies, and this is stifling market opportunity for Canadian exporters.
What to do?
A stall in the recovery does not have to translate into a stall in revenue streams with the right preparation and adoption of risk mitigation activities, such as:
- Optimized pricing strategies that may require decreases or increases to meet marketplace requirements. Or what may be required is a realignment of how products and services are priced to best match value in customers’ eyes.
- Multiple volume strategies:
- Existing clients;
- New clients same markets;
- New market segments; and
- Alternative international markets.
Is there an opportunity to cut costs – sure. The private sector has been doing this throughout the recession and governments are in the throes of trying to manage down horrendous deficits including cutting funding to the post-secondary education sector and all organizations that receive government support.
One cost lever that requires continuous monitoring and evaluation is managing the balance between fixed and variable costs, make or buy locally or import. The context changes constantly, as revenue and activity mix ebbs and flows and the critical mass required to support continued investment increases or decreases. For example:
- Exporters – international direct sales force vs. channel; or
- Currency hedging strategies including the matching of foreign purchases to sales.
Nimble and timely response to fast paced global change is a receipt for success. When the economic tsunami threatens our businesses can brace for it, scramble for higher ground or implement contingency plans at the earliest possible moment.
The upheaval started in January in Tunisia and by mid February not only has the leader of that country been ousted but also Mubarak in Egypt and this morning, February 17, the military in Bahrain has taken over that country’s capital. Protests and unrest are happening in a dozen other Middle Eastern countries. This has and will continue to have an impact on our businesses and on our employees!
Fuel and Energy
The price of crude oil rose in January due to the uncertainty in Egypt and the remote possibility of disruption of shipments through the Suez Canal. The price retreated following Mubarak’s departure but continued unrest in the region, especially amongst oil producers, could soon result in rapidly escalating prices that will quickly translate into higher transportation and energy costs in Atlantic Canada.
Egypt is the largest importer of wheat in the world and the supply side of the equation has been driving up prices due to weather related crop failures and protectionism by historic exporters such as Russia. Egypt must continue to feed its population and will purchase wheat on world markets but while Western Canada will benefit from increased prices and volumes of wheat sold, Atlantic Canadians will pay more for these goods and bread and other baked goods will continue to get more expensive.
The uninhibited flow of goods through the Suez Canal is vital to The Port of Halifax and its customers, suppliers and employees and any disruption would have negative implications for all of Atlantic Canada. Just after Mubarak’s departure Iran requested permission, for the first time in 30 years, for two military ships to pass through the Suez Canal. Israel quickly called this a provocation and the tension has lessened now that Iran has withdrawn the request.
Continued unrest in the Middle East may well require support or response from Maritime Forces Atlantic that could well see the deployment of ships and personnel into the region. This may well in turn necessitate the call up of reservists to enable the military missions.
Egypt has long been a tourism destination site but the influx of tourists to the region has dwindled considerably over the past month. While Atlantic Canadians may have to pick another destination outside of the Middle East over the short term the collapse of a significant source of revenue and employment will have major economic impact within local economies. Gail Adams, one of our associates travelled to Egypt last summer for a vacation and enjoyed it immensely and would return to Egypt tomorrow for another one.
Nova Scotia-developed curriculum is used in Cairo and Alexandria, Cape Breton University has a campus in Cairo, the College of the North Atlantic has a campus in Qatar and there is an EduNova Gulf office located in Abu Dhabi, United Arab Emirates. A large contingent of students from the Middle East attends educational institutions throughout Atlantic Canada.
Atlantic Canada, and Halifax in particular, has benefitted from a steady stream of immigrants from the Middle East, especially Lebanon over the longer term and more recently from Egypt. Continued unrest will create an impetus for enhanced immigration from the region while the adoption of democracy in countries such as Egypt may create an environment whereby residents will choose to stay in their homeland.
What to do? It is all about operating in a world of change and prioritizing our activities to optimize positive outcomes.
1) Risk Mitigation
- We all need to look at our operating plans, budgets and people with an eye to the impact Middle East in turmoil may have on us.
- Many of us have already taken steps to reduce energy costs but we need to consider what would happen if the price of oil was to leap 50%.
- What kind of support can we give those who have family in areas undergoing significant turmoil?
2) Seize the Opportunities
- Change creates opportunity.
- We know that we are going to face significant labour shortages in the future. Do we have opportunity to welcome immigrants from the Middle East into our businesses and communities? Look around at the very successful entrepreneurs who emigrated from the Middle East and have had a significant impact on Atlantic Canada .
- Imagine a free enterprise Egypt and what a market it might be for our goods and services.
More to come …