Tag: strategy

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Perception vs Reality

Many business owners are justifiably proud of their products or services and invest great amounts of effort and time in them, often with a program of enhancements and improvements.

Fewer of them consistently check that what they are providing is a good match to the customer’s requirement.

“Build it and they will come” is a mantra often quoted when people analyse early-stage businesses  where a product or service is created without thorough market testing and analysis and is often regarded as a red flag by potential investors.

Building a product or service without market research is not always a failure – famously Henry Ford created the Model-T in the belief that if he had asked what people wanted, the answer would have been a faster horse. In a similar vein you could look at the Iphone creating the market for smartphones.

For the rest of us it really does not matter what you think of the quality of your product or service. What matters is what the market thinks.

If you are not checking the market perception you could be the next Steve Jobs or Henry Ford but it is more likely you are misdirecting your efforts!

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You can’t just choose the good bits

During the festive season I have mixed emotions. On the plus side, there’s the excitement and pleasure of family get-togethers and the happy times they bring. The negative side is trying to avoid the Christmas shopping crowds, corny canned music and over-hyped Christmas deals. And please don’t get me started on the ‘friends and family’ bulletins that some people insist on sending, telling you how wonderful their year/vacation/kids are or have been!

Putting the Grinch aside and focusing on the cheerful is my way forward.

But it’s important to understand that good things are often accompanied by things that are not so good, or even downright bad. This is true in business as well.

Having a leadership position allows you to enjoy many benefits – and I’m not talking about financial reward. These include opportunities to make a difference and help the team who work with you. There can be opportunities to hire or promote deserving individuals. You often get to travel, meet customers and suppliers, and attend events and conferences.

Those benefits are counterbalanced by the less pleasant aspects and responsibilities of leadership. If you’re responsible for hiring people, you’re also responsible for making sure they are performing to the required standard and, if necessary, firing those who don’t make the grade.

You may have opportunities to meet and greet customers, but you’re also responsible for managing those relationships when customers are less happy with you!

My method for dealing with the Christmas negatives – ignoring them and focusing on the good stuff – won’t wash in business. When you’re in business, you need to be able to take the good with the bad, deal with the unpleasant as well as the pleasant, and accept responsibility as well as authority.

You can’t just choose the good bits.

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As simple as it can be

Simplifying things is a challenge for any business. If you have a simple process, people can follow it without making mistakes. If you have a complex process, mistakes can and will be made.

I find that quality management systems often appear to be over-complicated. There’s a theory that goes something like this –

‘The system is important. Important things are complex and difficult to understand, so they are written in complex language.’

If you add to this theory the individual who overplays the difficulty of their job, you have the quality management system that becomes a bureaucratic nightmare  –  otherwise known as the business prevention system.

Those are the systems that people hate. They are seen as restrictive, serving only to enforce compliance.

One recent experience with a customer – a very large organisation – illustrates this. They were returning a unit to us for some additional development work, but the unit had been purchased as a standard unit, not for development.

We’d agreed in April to do some further work. In July, after several emails, we got a reply from someone in the customer’s team, a frustrated engineer. He told us –

‘I can’t send you the unit. It’s sitting on my desk, but it’s so far into our systems that I can’t work out  how to send it back to you.’

I’m sure these were exceptional circumstances, but it’s an example of a system hindering the business.

However, if you can take a step back and look at the reasons why particular processes or procedures exist, you may find some nuggets of value.

A procedure or process often came into existence to resolve a problem. Over time, extra layers were added. The result is that you end up with a complex mess.

When you set about simplifying a process or procedure, start by asking, ‘Why does this exist?’ and create a simple process to deal with just that: ‘Why?’.

If that’s not possible, perhaps the process is trying to do too much?

You’re likely to find examples of trying to do too much when you examine  complex assembly processes. We have processes that are extremely complex – one product we analysed recently had 174 parts. Any process that tries to capture such a large assembly of parts is going to be complex.

However, it’s possible to view that product as a number of different sub-assemblies. Each of those can still be regarded as complex, but there are probably only 30 parts in the most complex of them.

We have an overall procedure in place to assemble this product, but the lead procedure is simple and refers to the sub-assembly procedures, which in turn are also simple.

Making a process or procedure simple isn’t easy – but it can add great value to your business.

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A system set for failure

The surprising thing from reading the news about the misbehaviour of RBS is that a structure where RBS have their own property business was not seen to be a recipe for trouble if not disaster.

If you have a business, or a department or a division, they need objectives and targets. You can guess that in this case the property business had a set of targets to maximise returns from the properties in their portfolio.

If that’s the case, you have the bank’s internal property company competing with the property companies who are borrowers from the same bank.  It’s not that much of a stretch to see that the internal company, incentivised only to maximise returns, would influence the lending teams to turn over any business that even began to struggle. Someone undoubtedly misbehaved, but the system was setup to encourage that bad behaviour.

One of my clients had a problem with their collections; very long days outstanding, and it wasn’t getting any better. When we drilled into it, the credit control team were doing their best but sometimes had to go back to the customer service team.

The customer service team’s incentives were all around speed of customer response and satisfaction  and had nothing to do with credit control, so of course the requests for help from the credit controllers were very low priority.

We made the credit control team a “customer” for the objectives of the customer service team; many of the problems were cleared up and the debtor days were greatly reduced.

When you set your departmental objectives, do you make sure they align with the overall business objectives?