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Getting Your Improvements Out of Neutral

in Management by Kevin Fox Leave a comment

Creating change is tough, and it isn’t much easier if you are the owner and your name is on the door of the Getting improvements out of neutralcompany. Recently a friend and business owner was telling me “I have been battling with my people for almost a year to change our process and I am running out of energy to continue.” His frustration mirrors things I have heard from dozens of other owners and business leaders whose experience is that change takes longer, delivers less, and eats up much more of their energy than it should.

While I don’t have any silver bullets, there are some things that I have learned in my 25 years of consulting to leaders that do help accelerate the process and reduce the frustration. If you’re finding that an important initiative is languishing or running into road blocks here are some things to consider.

Management and Leading Change are Different Beasts

Change comes with strong emotional components that make it a very different undertaking than the daily activities of managing. To get a salesperson to pursue a lead you turned up at a conference, instructing the individual to take the action and following up are likely to work well. But instructing your sales team to shift their selling approach from talking about your product and its features, to first questioning the customer to expose his need is likely to be less successful. Even when you have done the training and worked to achieve buy-in in advance the desired actions are much less likely to be taken.

There are any number of potential issues—lack of confidence, discomfort, unverbalized fears, unanswered questions, etc.—that I won’t go into here, that will cause a delay in the action. People will make partial efforts, or there will be reasons given why additional work needs to be done first, or why these sales calls are different and should be handled another way. You can probably supply your own examples as well. The long and the short of it is that the change will be put off or watered down. And it often happens repeatedly like this before the real issues even get verbalized. Change is different, and recognizing this is the first step in adjusting your approach.

Be Prepared to Get into the Details

One of the things many leaders are reluctant to do is get deep into the specifics of the change. No one likes micro-management, on either side of it. But staying out of the details, especially at the beginning of the change process will almost always result in delays. There might be any number of reasons for it—people put off acting, they don’t know where to start, they hit an obstacle, people in their area are pushing back, they are afraid of making a mistake or looking less-than-competent, their first attempts were less-than-successful, etc.—and unless you are knee-deep in it as the leader, you won’t even know where you are stuck. Not only will things languish, but when you do finally get into the details exposing the real cause will be more difficult and you are likely to encounter more resistance because of the initial lack of results.

Getting into the details at the start of a change process is not the same as micro-management, besides people really don’t want to be left alone. They want support. My son is learning to ride a bike, and in spite of his strong independence, he absolutely wants me to hold onto the seat and not let him fall. So right from the start delving into the details alongside your team will help ensure the needed actions are taken, obstacles encountered are overcome, and hidden fears and concerns get voiced. Yes, you will spend more time up front, but you will spend much less time overall, and your implementation will progress much faster.

Focus on Risk

No matter how much your change will improve the business, perceived risk will be a major factor in how quickly people adopt something new. It matters a lot that you as the leader/ owner recognize there will be hiccups in the beginning, and even give them permission to fail. But don’t fool yourself that statements of support will be sufficient to overcome resistance. No one likes to fail, feel incompetent, or to look bad in front of others.

Leaders can do a lot to overcome this simply by getting the question of risk out in the open. Many, maybe most, of the risks people fear turn out to be a lot smaller than the what is in their head. Getting the issue out in the open helps immediately; from there you can work through solutions to reduce the risk people feel. Getting people to try the new bid process on jobs you are less-likely to win anyway feels a lot less risky than using it on that huge bid from our best customer. Playing out worst-case scenarios can also help people realize the risk is much less than they fear. And when you voice your support for them, even in the worst-case, the reasons not to start will get smaller and smaller.

Emphasize Learning over Results

Change usually puts people into situations where the outcomes are less predictable to them. We have a lot of experience with the old ways, and even if they don’t work as well as we’d like, the outcomes are predictable and that matters to people. With any change, it’s critical to develop intuition and comfort with the new ways. By emphasizing learning and analyzing every experience—good and bad—you not only help people to improve their comfort with the new approach, you  trigger the refinement efforts that are needed in almost every change initiative. In this mode of operating, every time we learn the activity was a success, no matter what the immediate business results are.

Take Small Steps, One at a Time

Breaking your change process down into smaller steps, and working them one at a time to completion may feel like the slow way, but in reality it will accelerate most efforts considerably. Defining individual actions within a larger effort reduces the magnitude of the change in people’s minds. With smaller steps you have more opportunities to achieve the early successes so important to motivation. Working these smaller steps, one at a time to completion before moving on to the next, also accelerates the process. When people are working many steps at once they will tend to make progress on all but complete few. Not only is this kind of multi-tasking inefficient but it reduces our sense of success because we are working hard, but finishing nothing.

Leading change is one of the most difficult challenges every leader undertakes, even in the best of circumstances. Recognizing that change requires a different level and type of leadership can help you avoid my friend’s frustration, maintain the energy and enthusiasm in your company, and get you faster to the higher profits you are working so hard to achieve.

Make Change Work for You

in Management by Kevin Fox Leave a comment

“I really can’t believe the change that has come over him.”

I was speaking with a friend recently who was telling me about a remarkable transformation he had seen in his teenager over the last 6 months. It’s a story that has enormous implications for every business to help make change work for you and improve the performance of your business. And who knows it may work with your teenagers too!

“He has an entirely different work ethic than before. He comes home after school and practice and disappears into his room. Every time I go in to see how he’s doing, he’s studying something. He never did that before, we always had to prod him to get his homework done.”

His son had gone from being a typical mildly interested student getting B’s and C’s to almost straight A’s. He had done this while choosing, for himself, to take a much heavier workload in more challenging classes. I also learned that the young man had worked all summer to try to increase one of his SAT scores. When his latest score came back it was up by 1/3 (an amazing improvement if you don’t know much about those tests)!

Having two teenagers of my own and a third child on the cusp, I was naturally very excited to learn how this incredible transformation had occurred. Getting teenagers to make even the smallest of changes can sometimes feel impossible. So this was a golden opportunity for me to learn something important. I was dying to know how this miracle happened.

Surprisingly, my friend told me he hadn’t done anything, that his son had done himself. Over the years they had tried many things, with little impact. They were many of the same kinds of rules, structures, disciplines and veiled threats (some not so veiled!) that have been used by parents everywhere for time immemorial. “My son decided he wanted to change, and it happened almost overnight, with no effort or involvement from my wife and me.”

The old adage about changed leaped into my mind:

 “People don’t resist change, they resist being changed.”

When someone wants to change there is very little resistance. Even if they struggle to get results, it’s not due to resistance. Yet almost when we turn it around and try to compel people to change—with things like rules, disciplines and threats that we often use in companies, or with our kids—more often than not we get resistance. At best these methods get ‘compliance’. But compliance is far from embracing change, from pouring your heart into it, like my friend’s son was doing. And the results don’t even compare.

My friend’s son had taken ownership and responsibility, not only for the change, but for something more important—the results. He was fully vested and investing in getting the results he wanted. In his case he had decided he badly wanted to go to a certain college. He did the research and realized his current grades and scores probably weren’t good enough to get him in. It was as if everything suddenly became clear to him and he started taking actions above and beyond anyone else’s expectations.

The level of engagement that occurs when someone decides they want to make a change is wholly unlike what happens when change is forced upon us. Forcing change can, course, lead to some results, but you can’t force people to care, to put their heart into it, or to get creative about solving problems. And once a company commits to “pushing” as the primary method for causing change, you have to keep pushing. As soon as you let up things will most likely slide right back to where they were and any results will evaporate. In organizations leaders simply can’t be everywhere, watching everything all of the time.

The Urge to Push Change

Finding solutions to business challenges is difficult enough, so when we get there and shift to implementing them, there is a natural tendency to want to “just do it”. It’s easy to think that all we need to do is tell people to change and it will happen. But that rarely gets results. Though I don’t have any data on it, I suspect that most companies struggle more with implementing change, than with deciding what to change.

I wondered how many hours, days and weeks I spent trying to push change. What if I had spent that time trying to find ways to help the other person want to change?

No it’s not easy, but I came to the conclusion very quickly it would probably take much less total effort, get better results and make everyone feel better along the way.

Shifting our perspective

The first step in any change is always in how we think about something. If we think about change as something we have to push through, to overcome resistance, it will lead to one set of actions. But if we think about change in a new way—how do we get people to want to change—entirely different questions come to mind.

Immediately it forces us to think about how the other side looks at the issue, to seek the “whats-in-it-for-them” part of the equation—things we are probably not considering when we push change or try to get people to “buy-in” to our way of doing things. It also focuses us more on the outcome we want, the purpose of the change we are seeking to bring about. This invites people to be part of figuring out the solution, engaging them in finding the answers, which not only leads to better solutions, but creates ownership as well.

Make Change Work for You

Re-thinking the change process as an exercise in how to get people to want to change is not an easy thing to do. But then again trying to push change probably isn’t much easier. It requires continuous attention to sustain and it rarely generates the kind of engagement my friend’s son exhibited. Creating a desire in people to change feels like unfamiliar territory to most of us; probably because it is. But if you want to make change work for you and get better results, some different thinking is necessary. Starting with better questions, even if the answers are not obvious, is always better than having the right answers to the wrong questions.

In the case of my friend’s son, his ownership of the changes made all the difference. He wasn’t just spending time studying because that was the rule. And he wasn’t just getting good grades, he was impacting his future in a new way, taking responsibility for overcoming obstacles and directing his life toward a goal that mattered.

That sounds like the kind of change any parent, or leader, would love to facilitate.

Find more solutions to grow profits, accelerate your career and get more satisfaction out of your career in Aligned & Engaged Hidden Keys for Turning Teamwork into Profit by Kevin Fox.

Grow Revenue Today with these Four Strategies

in Management, Sales by Kevin Fox Leave a comment

Growing revenue is one of the top priorities of almost every company. It consumes a significant portion of top management’s attention and Grow Revenue Todaycompanies often go to great lengths to create new markets, win new customers, open up new distribution channels, and more. Large investments are made in marketing, PR, sales calls, going to trade shows and a host of other activities all in the name of growing revenues.

While such efforts can be hugely rewarding for companies, but they can also be risky, expensive, and time consuming. And if they don’t pan out they can undermine current profits, especially in the near-term. So finding ways to grow revenue today without a large investment of time or capital is important if not essential.

Recently I have been working with several companies for whom this is a particularly acute need. They need more sales quickly and they don’t have the time or the cash to invest in major initiatives right now.

Four Ways to Grow Revenue Today

1.       Deliver every order on-time

This may sound obvious but the reality is that quite often companies struggling to grow sales are not delivering on-time and in full (OTIF) on their current orders. Quite simply this is revenue that is already there for you that you are not getting. If you simply ship every order you already have on-time and in full you will grow revenue today. Cash flow will improve as well since you are getting paid sooner and are reducing the time between paying your expenses and receiving cash for your deliveries.

And in most cases delivering OTIF will get you more orders from your existing customers. You may have to go and ask for it, but if your customer is currently tolerating late deliveries from you it’s probably because he isn’t able to get it from someone else OTIF. So when you start delivering OTIF ask for a greater share of your customer’s business. It’s rare that you will be the only supplier he uses so there’s more business to be had. Keep in mind that most companies can deliver a small increase in volume (5-10%) without having to add people or equipment, so the only real cost of small increases is likely to be the raw materials you have to buy. That means the majority of these additional revenues fall straight to your bottom line.

2.       Go the extra mile on bids

I don’t know how many times I have heard companies in need of sales tell me they don’t win enough of their bids, and then learned that they do little more than to send off their quotes and wait. If you’re losing 50% or more of the quotes you put out, you have a huge opportunity right in front of you to grow revenue today. Get aggressive, and I don’t mean with the price.

First of all turn your quotes around immediately. If your customer gets a quote that looks reasonable for something he needs, it’s quite likely he’ll take it. So be first, get your quote back right away and give your customer the opportunity to say “yes” to it. But don’t stop there, get on the phone. Yes that thing you talk to other humans with, not the email or the text function, the phone. Call a couple of hours after you send your quote and ask for the business. Talk to your customer, understand what expectations and needs he has, how your price looks to him. Very often you will either get the business on the spot or you will hear what you need to do to win the bid. Then you can modify your quote, delivery timeline, or payment terms right there and grab the business before someone else does. Getting aggressive also signals to your customers that you want their business, that you care about meeting their needs. In an impersonal world of emails and texts this is both refreshing and powerful. And besides its much harder for someone to say “no” to you over the phone than it is by email. So get aggressive, if nothing else you will learn where you stand and what it takes to win more business from that client.

3.       Identify and target your sweet spots

Most everyone uses some form of product costing to determine prices and evaluate the desirability of different products and types of work. I won’t go into the flaws of this approach here except to say that most companies know the characteristics of the work that is most profitable for them. It might be that you do better with higher volumes and longer runs, or product that requires a certain type of finishing, or work that requires a significant amount of engineering work, or any number of other factors. It might also be that you currently have underutilized capacity in some of area of your business and can handle more orders readily. Whatever it is, identify those sweet spots in your business where you excel and target the opportunities you are already getting more aggressively.

If you have underutilized capacity for a given type of product or work, you can probably deliver faster or at a lower cost than the competition, so identify those opportunities and pay extra attention to them. Offer something more, price to win, or simply connect with your customer to figure out what you need to do to win that job, and more of them in the future. Within your existing opportunities there are most certainly some things that you have an edge on, so use it to capture those sales and grow revenue today.

4.       Zero in on niches

Within your market there will always be smaller niches of customers who value what you offer in a certain way. Identifying and targeting a couple sub-sets of your larger market with a focused effort, a specific message or service offering is a fast and effective way to grow your sales. Remember you already have a base level of business, so targeting a niche or two will only add to your sales, and it doesn’t require a large effort, a lot of risk or significant investment.

Identify companies in these niches that you don’t currently sell to or don’t have a lot of business with and go after them. Use your experience with existing customers in that niche to bring more business your way. Unless you are the dominant global leader in your industry there is opportunity right at your doorstep right now. So pick some niches you already serve and expand within them. You already understand their needs, have a product or service that works for them and have experience in servicing them. Exploit that before you go off chasing something new and you will grow your revenue today.

More often than not one or more of these strategies will help you grow revenue today. It may not be sufficient to achieve your 10 year growth plan but with the profits you earn from exploiting these immediate opportunities you will have generated more money to invest in the future and bought yourself the time to do it.

Do you have another strategy for growing revenue today that has worked for you? If so we’d love to hear about it, so leave a comment below. And if you want more practical, effective strategies to grow your business, check out my new book, Aligned & Engaged: Hidden Keys for Turning Teamwork into Profit.

Exposing Hidden Profits

in Management, Productivity by Kevin Fox Leave a comment

Have you ever thought you understood something and then later got some deeper insight that made you realize you didn’t recognize the power or implications of the thing at all? It happens to me frequently, and suddenly hidden opportunities that were right in front of my nose suddenly ‘appear.’ Of course they were there all along, but I just couldn’t see them because my mind wasn’t looking at it the right way.  

Almost always what has led to these breakthroughs for me has been application. There is something about the process of putting something into practice that forces us to build a deeper understanding of it. I suspect that’s why my sons have to do so many calculus problems for homework, so they are forced to deepen their understanding of the concepts, though they claim its pure cruelty.A&E Cover VV web

It’s also why I decided to write Aligned & Engaged Hidden Keys for Turning Teamwork into Profit, to help leaders close the gap between understanding a good concept and getting great results from it. The book takes 29 of the best strategies I have seen work in businesses over the past 25 years and presents them as step-by-step ‘practices’ that can be applied on a daily basis. They enable leaders to truly capitalize on things they probably already know, but haven’t fully translated into results.

 

Find your Constraint

A recent conversation I had with an old friend who runs a small manufacturing business highlighted just how much potential there is for improvement through the repeated practice of a good idea. It’s one straight from the book, Practice 4- Find your Constraint, and it opened my friend’s eyes to a world of opportunity he was missing, even though he is quite familiar with the Constraint Management principles.  I am sure it will help you and your business too.

My friend was giving me an update on his business, telling me all of the challenges he was facing and how hard he was working to try to fix them. This guy is no slouch as a leader. He managed to keep his small manufacturing business afloat through the great recession when companies just like his were going under on a daily basis. His main customer base was in an industry that was particularly hard hit during this period, and he faced a number of personal challenges during the same period, so the fact that he is still in business is a testament to his business savvy.

His list of current challenges was long and among those I was able to scribble down as he talked were:

  • “We are struggling to deliver reliably
  • I can’t find enough good people
  • Our business is concentrated with too few customers
  • I need to upgrade my equipment
  • It’s hard getting my people to work together
  • We are just barely getting by each month”

 

Why constraints matter to your business

bottleneck trafficOne of the things I learned from my mentors is that in any business there are very few things that truly determine performance—the constraints. While there are many ‘problems’ we all face only one of them is the ‘weakest link’ for our business. So when he took a break from updating me on his challenges, I decided to ask him what he thought the constraint of the business was right now.

After thinking for a minute he told me the constraint was “sales, right now.” I didn’t have to ask him the question I often use to help leaders think about their constraint (“what is the one thing that if you had more of it would increase your profits the most?”). But just to confirm it I asked him if he could produce 10% more sales (the increase he needed to be profitable) with the people and equipment he already had. He replied he could probably do 20% more without much trouble.

Exposing Hidden Opportunities

I already knew that my friend had a very small (read: ‘microscopic’) share of the market for the things he can make, so obviously there was lots of room for him to expand sales way beyond the 20% he said he could handle right away. He told me he was looking at some new products and new market segments but that with all the fires he was battling he wasn’t able to spend much time on it.

It’s not hard to get consumed with all of the daily ‘problems’ in running a business, and it’s also not very effective. So I asked him how that was working for him. “Not very well” he admitted. We are struggling to break even and it’s been this way for quite a while. So, I asked what the impact would be if he could eliminate any one of the daily problems he was working on as compared to increasing sales. He told me it would be trivial compared to increasing sales.

He clearly had an intellectual understanding of his constraint and an awareness that it was important. But it wasn’t the deep understanding that drives action and improves performance.

He did say he was out trying to open up some new customers and new products and he was considering buying some new equipment that would enable him to serve some other customers, but that that was a long process that wouldn’t produce much in the short term. It was quite clear that he hadn’t dug in deep to his constraint to really expose the potential that had to be available right now. While I didn’t know exactly what those opportunities might be, I have seen the practice of finding and focusing on your constraint work in so many places that I knew in my bones it would be there if we just started digging a bit more.

Dig deeper

So I asked him “what percentage of your bids are you winning?”

Without hesitating he told me, “20%.” Bingo!

Sales was the constraint of his business and he was losing 4 out of every 5 opportunities he was already getting. (Later he would email me that the actual figure was less than 9%, so he was losing more than 9 of every 10 bids he made.) He didn’t need to go after new business, new customers or new segments of the market.

Knowing is not the same as results

He knew what was limiting the performance of his business, he just wasn’t focused on it like he could be. In fact he told me that he spent little time with the bidding team because they were among his most experienced and capable employees. And that’s often how it is, the constraint of most businesses is almost always in an area with a lot of expertise, or that we do well or which is very expensive. After all if the resource were easy or cheap to acquire, we would probably have plenty of them.

But it wasn’t an issue of skill it was an issue of needing to win more bids. And if my friend wasn’t focusing on how to do that he would probably never solve the problem.

I spent some time checking with him that he could win enough more bids to get to a revenue target that would assure his profits, and we confirmed that it was very achievable. While I prefer not to use price to increase sales, we nevertheless confirmed that even if he had to get more aggressive with pricing that it would still increase the company’s profits. Since he already had capacity to make 20% more product, the only real increase in cost would be the cost of the materials he would have to purchase to do the additional volume, and those only amounted to about 30% of his selling price normally. If necessary there was room to use price to win more, and doing so would return the company to profitability.

When we finished our call I had no doubt that he understood something he already thought he knew in a whole new way. In a way that would enable him to make it pay for his company and himself.

Find the constraint in your business

Do you know what is the constraint of your business? If you don’t finding out is one of the fastest ways to expose immediate opportunities to improve performance. If you already know where it is, like my friend, it’s probably worth digging in a little deeper to see what can be down to increase it. It doesn’t matter if your constraint is sales, or a resource internal to your company, it’s critical to dive in deep and search for ways to open it up.

It doesn’t require any money to do it, just the decision and a bit of your time to do it. When you do I can If you want to read the full practice for finding your constraint from Aligned & Engaged, I’ve provided it as an excerpt—along with another practice that will help you break that constraint—on the website for the book, www.teamworkforprofit.com .

We’d love to hear your stories about finding and breaking constraints and the results you achieved right here. So leave a comment on your experiences.

 

Time is Money

in Management, Productivity by Kevin Fox Leave a comment

“What can we do about it…today?”

My partner Chris always had a knack for asking great questions. This one was common, even routine, right up until the end when he put all the emphasis on the last word, “today”. That’s what changed it entirely.

We were working with a very talented group of managers, but they were facing a challenging quality problem in manufacturing with a vendor supplied component. The rate of failure of these components had suddenly spiked and shipments were being directly impacted. It was a very important and profitable product line for the company and customer service was critical to sales. They had been meeting for some time and had just come up with a plan to fix the root problem at the vendor. They were pleased. But it wouldn’t solve the problem quickly—and was costing them $60,000 per day in lost shipments.

I have seen this many times since and the effects can be devastating—weeks or even months lost, problems magnify, client relationships sour, and opportunities are missed. It’s a kind of subtle inertia that can creep in without notice. A difficult problem, or challenge in growing your business surfaces and the problem quickly gets treated as a ‘big’ problem.

In people’s minds ‘big’ problems don’t get solved today, they require thought, analysis, maybe even assembling a cross-functional team to work on it. Even the solutions themselves typically take time to roll-out and take effect. What often happens (like it did with our client that day) is that we declare the problem addressed and set it aside. As Eli Goldratt would often say when people became happy with their own answers, ‘they stop to think’.

The action our client had settled on to work with the vendor was a good one, it just wasn’t sufficient. Rather than allowing them to be satisfied with it, the question kept the matter open and on the table. The question got repeated several more times getting only more ‘future fixes’ before one engineer suggested that they might be able to find a way to test the compressors before they were assembled onto the units. This would help weed out the bad ones before they were assembled onto the units, but immediately there were protests: “It wasn’t part of their process”, “it would circumvent quality controls” and the like. There were a host of reasons why it could NOT be done. It’s amazing how we can build our own obstacles out of thin air when we feel someone is challenging our work!

After a lengthy debate they finally resolved that it could be done and agreed to make the changes needed to their processes. The Engineer informed the group he would order the gauge and that it would probably arrive next week. Pleased with themselves, the group was ready to adjourn when the question from Chris came again: “So, what can we do about it…today?”

We were immediately barraged with protests and reasons why nothing more could be done right now. We reminded them that it was costing them $66,000 per day until we have a solution—by next week they would have burned more than $300k in lost shipments. When we finally got back to looking for a solution the discussion eventually got around to asking if there was anyone in the company who might have a suitable gauge squirreled away somewhere in a drawer. Right away you could see people lighting up and someone said they knew who probably had what was needed. A phone call was made and sure enough there was a gauge they could get today.

How many times have you found your company in a similar position where we don’t feel we can do anything immediately about a problem? This way of thinking effects our whole approach and the kind of solutions we look for, or better said, the kind of solutions we don’t look for. One leader told me, that the solution to most such problems in his organization was usually—“IT needs to fix it”. As soon as this conclusion was reached, he said, efforts to look any further stopped.

To break this mentality, leaders need to drive for more and more penetrating thinking. If we allow the path of least resistance we will never get to the higher levels of performance we seek.

  • What important problems or issues are you planning to solve in the future and what is really blocking you from getting results today?
  • What opportunities for growing your business are getting put off until you ‘have more time’?
  • Where are you waiting for a solution (the new ERP system, new hire, release of a new product, etc.) to take effect?

Getting to the next level of business performance doesn’t happen by the plans you make or things you will do in the future. It happens by what you do right now. Eleven weeks after the meeting, when the compressor problem was finally solved at the vendor, one manager calculated that they had saved almost $5 million dollars in missed shipments because they persisted that day to find a solution.

So before you accept the first answer of your team, try Chris’s question. If there is truly nothing that can be done about it, today, all you will lose is a few minutes of time. But I suspect you will find there’s more that can be done.

Don’t forget to register to receive regular updates, so you won’t miss opportunities like this one. If you are struggling to break your company out of its inertia, explore more of the strategies here on our blog, contact us. We have many ways to help get you unstuck and moving forward.

I’m pleased to announce that I am releasing my first book, Teamwork for Profit: Producing Extraordinary Results with Everyday Actions, later this month.

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