Getting control of your business

Step 1: Define what your customers need from you.

An effective business provides products that customers demand at a price they are willing to pay.  It’s important for a business to have a good handle on what products and services they provide within their target market.

Products and services are defined in terms of features and grades.  For example, a company might sell different kinds of wheel barrows with different features and specifications.  These product and service definitions will drive the business in quality and focus.

Step 2: Define what your business needs to produce its products and services.

A business transforms resources into products and services.  The transformation can be viewed as a one-step process with resource inputs and product/service outputs.  Step 1 tells us what we will deliver to our customers, now we need to identify all the resources required to make those products and services.  Several types of resources combine in the transformation:  people (skills, personalities, aptitudes, training), materials, money, customer input.  What resources are needed to produce your products?

Step 3: Define the high-level business processes, roles and responsibilities that turn resources into sales.

Now we break the one-step transformation from step two into major business processes.  The business processes tie the function of the business together as one cohesive whole.  Candidate processes are sales, marketing, product development, supply chain (purchasing, manufacturing, distribution), account management/customer support.  Candidate roles are a combination of external entities and internal roles defined by the business processes.  The most obvious role is the customer.  The important information to capture here is how the major processes interrelate to each other and how various entities interact with the business processes.

Processes have three aspects:  interface, internal procedures and internal inventory (physical and electronic).  The most important aspect is the interface, because it determines how the process fits with its peers and other entities.  The best interfaces are optimized based on the attributes of the consumer.

As processes are developed, internal customer/supplier relationships are developed.  Because all of the processes involve two-way relationships with the other processes, the customer/supplier relationships involve all combinations of business processes.  Recognizing this situation will highlight the interdependence of all groups in the company and will foster collaboration between them.

Step 4: Define the culture of the business.

It is relatively easy for a small business to establish a culture and virtually impossible for a large business to change, so it makes sense to be deliberate in establishing a culture as soon as possible.  Generally, culture can only be defined by a single person that has the majority of control in the company, a situation that exists when a company is small and diminishes over time.

Various aspects of culture are important to address:  work intensity, hours per week, compensation, decision making processes, delegation of responsibility, team work, etc.  By establishing an effective culture, the company can build a cohesive group of people that will work toward company goals.  The success of most companies can be copied from a superficial point of view, however any company advantage due to people resources is nearly impossible to copy.

The most important cultural ideal should  be collaboration, which requires communication and commitment.  In a culture of collaboration, no group will feel superior to another and all groups will be viewed as essential to the success of the business.  The biggest driver for collaborative behavior is consistency of rewards across the company relative to the company’s overall success.

Step 5: Establish an expectation for quality.

Quality is a boolean.  A product or service is either good enough for the consumer or it isn’t.  The easy target for quality is measuring products and services that are delivered to the customer, however due to the internal supplier/customer relationships, quality is an issue for the breadth and depth of activities of the business.  Whenever a supplier delivers a product or service, reasonable effort should be made to ensure a high level of quality.

Quality involves collaboration between suppliers and customers.  As customers interact with suppliers, they learn what works and what could be better.  When a collaborative effort exists, customers will be able to communicate with suppliers to help reach mutually beneficial changes in the interaction.

Step 6: Establish expectations for improvement

Improvement happens on two levels:  small improvements at the lower process levels and large improvements that involve major components of the business.  Focusing on both of these levels is essential for a business to become more efficient over time.

The primary source for improvement ideas is the people performing the work.  It is important to develop a culture and processes where peoples’ ideas are capture, vetted and processed through an improvement process.

Step 7: Establish goals

Goals are important for a company to move forward and can address quality, efficiency and sales.  The goals need to be reasonable and based on the phase of the company in its life cycle.  For a mature company, the focus might be on efficiency and looking at untapped related markets.  For a new company, sales might be the primary focus.

It is good to separate goal achievement from compensation because goal-based motivation often induces behavior that is not beneficial to the overall success of the company.  For example, a bonus based on a sales goal may lead to a salesperson to meet the goal but not exceed it.  Goals should provide a company-wide focus on success.  Tieing compensation to company success rather than goals is much more effective for motivating the right behaviors.

Step 8: Execute

All the planning in the world is pointless without execution.  To that end, a company needs to have mature project management skills to keep focus on moving forward.  Project management involves understanding what the business needs to change in order to be more successful.  Possibilities are prioritized, planned and executed according to the needs of the business.

The first priority should be to make changes required to conform to the decisions from steps one through seven.  Once these changes are made, then the company enters the continuous improvement mode where further changes are designed and executed.

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