Develop a contingency plan for each need of the actions that drive the critical path that drives success of targets that drives success of objectives, which drives accomplishing the goal.

December Newsletter

Supporting 2010

We discussed how to establish the target.  A target is driven by goals, which create objectives, which create metrics to measure status of achieving the objectives.  Achieving the objectives drives achievement of the goal.   

The target is set as an improvement of the base line of the metric (present situation).  The base line is driven by the design of the business model, product or process!  So to achieve an improvement in the base line metric something has to change, right? 

RIGHT?  Do you agree?  Seriously, do you agree something (drivers) have to change?  Raise your right arm and say ‘I AGREE, THAT THE DRIVERS OF THE TARGET HAS TO CHANGE!’   

This is the first step to achieving your target.  You acknowledge and accept that what drives the baseline metric has to change to achieve the target. 

However, accomplishing a change needs support.  Support involves the availability of resources to succeed and a business culture of change and improvement.  The book’s last chapter (FOCUS) discusses the culture of change.  The key is to honestly establish that change is good for your business.  Change can be threatening and too often change means loss of employment.  But real change for customer satisfaction creates expansion of your business.

Since it is football season let’s look at the New England Patriots championship teams and the present day Packers and Vikings.  What is the same and different? 

The Patriots championship teams had all the aspects of a successful team – offense, defense, special teams.  The present day Vikings management have provided all the tools to be successful.  The present day Packers have struggled with providing the tools and support to be successful, even though they have a championship quarterback.

These are examples of how ‘support’ is about providing the tools and resources to be successful!

The next aspect of support is a culture to change.  The change to achieve your target, must be supported continuously, to fruition. As soon as the change is sneezed at, the change is in jeopardy. 

A change process has many implications.  Some are perceived as positive and some perceived as negative.  The important word is perceived.  Perceptions and political rhetoric and rumors and gossip must be quelled back to the factual basis of the need for the change.  Support is maintaining the change’s effort to hitting the target. 

The next aspect of supporting a change (improvement) is ‘the right resources’.  We stated that the drivers of the metric must change.  So you need to use the expertise of those involved in what drives the metric.  But the expertise must be forward looking!.

Not all forward looking expertise or change minded resources are openly known.  Many times the quiet people are the real experts.  They ‘perform exceptionally’ what they do and importantly know better than anyone what is successful for them or their process.  Find these people.

In summary –

November Newsletter

Business Model Change vs Capability of Business Model to Expand

Some major businesses are merging!  But are they business model changes? 

Black and Decker (BDK) is really Black and Decker, Dewalt, Porter Cable, Delta, Kwikset, Baldwin, Weiser, Price Pfister and commercial hardware.  In summary - electric powered tools, locksets, bath fixtures and commercial hardware.

Stanley Works (SWK) is Stanley hand tools and MAC hand tools (screwdrivers, wrenches, pliers, socket drivers) AND pneumatic tools (Bostitch) and Proto tool storage systems.  In summary - hand tools, pneumatic tools and tool storage. 

Therefore the combination will supply customers with electric powered tools, pneumatic powered tools, hand tools for retail and commercial businesses, and organization of storage of the tools as well as locksets, cabinet hardware and plumbing fixtures that uses the tools for installation. 

But is this a different business model?  If your first answer is yes, read this example again.  There are few overlaps between the products of the two companies.  Porter Cable pneumatic tools and Bostitch pneumatic tools are an overlap.   What is the common denominator or synergy of this merger?

Monopoly?  No, maybe if Makita, Schlage, Knaack, etc. were involved!  What is the common thread?

Dah Dah Dah Dada Dah Dah Dah Daa Da Da Dah Dah Dah. 

Write down your answer.  Then write down the basis of your answer. 

This merger was recognized years ago.  Because of the trashing of stock prices, it is now very opportunistic!  What was developed years ago was the purchase of companies that had the same customer.  Both companies supply products to retailers to resell to the end user.  Therefore they must be increasing customer satisfaction!  So which W of customer satisfaction is addressed? (reference BOOK page)  Why does this merger help the customer? 

The customer base is the same.  Therefore the customer has less suppliers of what they need! It is simply (just that, simply) simplification of the supply chain (one stop shopping)!  The W is ‘in the Way’ the customer wants to do business!  Your customer wants to, simply as possible, get what they need to satisfy their customer.  So the merger provides one supplier, instead of two, to obtain what they need.  Therefore, their supply chain is reduced and the customer’s MUDA (waste) of time in ordering product is reduced to one supplier instead of two.   

Now let us look at the next recent example! 

Kraft - Kraft cheese, dressings; Oscar Mayer; Philadelphia cream cheese; Maxwell House coffee; Jacobs coffee; Nabisco; Oreo; Milka chocolates; LU biscuits.  In summary - cheese, dressings, coffee, cookies, crackers

Cadbury – York and Cadbury candies and chocolates; Dentyne, Chiclets, Trident, Bubblicious, and Bubbaloo gum AND Schweppes, Seven-Up, Canada Dry, DrPepper, Hawaiian Punch, Clamato, Snapple, and Origina beverages.  In summary - candies, chocolates, gum, sodas and beverages  

Therefore it goes from Kraft (cheese, dressings, coffee, cookies, and crackers) to

Kraft/Cadbury - cheese, dressings, coffee, cookies, crackers, candies, chocolates, gum, sodas and beverages. 

One of the potential down sides to watch out for is assuming synergy of technical support of the expanded product offering.  In both situations there are overlaps.  But the majority of the combined products are adding new products to the purchasing company.  Both examples are suppliers to the retail market, which provides technical expertise to the end user.  However, the technical expertise of the retailer must be taught by the supplier.  For example the technical expertise of the DeWALT product may not be qualified as technical expertise for Kwikset lock sets.

Another potential down side is competing and marketing against yourself.  Black and Decker already has to deal with issue since, Black and Decker and Porter Cable already compete with each other for retail shelf space.  Competing with yourself to satisfy customer satisfaction can be a dicy situation.  While the Kraft/Cadbury situation has less competition within the new business.  

What did you learn from the above examples?  Both situations had the same customers and can provide a simpler supply chain.  Both situations took advantage of customer satisfaction capabilities to expand their business.  Therefore, both situations are about realizing the capabilities of the successes of the present business model to expand the business model.   

To answer the original question ‘But are they business model changes?’ – No.  Both are using the capabilities of their business models to simplify their customer’s processes.

Your business and situation can learn from how these examples take advantage of the capabilities of a business’ customer satisfaction to develop more business. 

September Newsletter

WHAT DRIVES GOALS, OBJECTIVES,TARGETS

Some say worry about the details and the top line will be successful.  This is very true.  The details drive the overall result.  The objective (target) or result is driven by the details.  But do not look at the details as the dots and commas (micro managing).  The details are the drivers of success.

First of all; what are targets?  They are goals, which create objectives, which create metrics to measure status of achieving the objectives. 

For example we will use ‘best in class’ as the goal!  A simplified definition of ‘best in class’ characteristics are customer satisfaction, financial performance, ‘green’ achievements, and employee turnover.  So you have the targets?  No!  You have the characteristics of the goal.  Also ‘best in class’ means you know how well the competition is achieving the goal and how well you are achieving these objectives.  So you need to know how the competition is doing.  No!  First you need to know how you are doing!  Therefore you need to identify your performance in factual (preferably calculated numerical metrics).

Always remember your success is driven by customer satisfaction, be they paying, internal or investors. 

The first step is to develop a metric of the characteristic of the goal.  A metric is how you measure the performance of the characteristic of the goal.  The example we will use is the customer satisfaction characteristic.  We will create a positive and a negative metric.  The positive metric will be repeat business measured as sales from previous customers.  The negative metric will be non-repeating sales (sales from customers in the prior period (year, quarter, or month) who did not re-purchase.

Now the metrics must be ‘base lined’ by calculating the present performance. 

For the repeat business metric you calculate what percent of sales is from existing customers versus total sales.  For the non-repeating sales metric you calculate sales in the prior period from customers who did not buy in the present period versus total sales.  This is your base line for the customer satisfaction characteristic of driving your goal.

Repeat the same for all of the characteristics driving your goal.  Once you have ‘base lined’ the characteristics of the goal, you need to identify the targets. 

Targets are numerical and calculated the same way the base line values are calculated.  Targets should be challenging, but realistic in achievement and the results needed.

Targets can also be beyond the perceived ability to accomplish.  This type of targets are for ‘thinking outside the box’ to drive ’innovation’.  This type of target is also use to start of identifying what could be accomplished.  For example the present base line could be 70%.  The beyond target could be 100%.  The ‘thinking outside of the box’ or ‘innovation’ analysis of the target could identify 80% for year one and 95% in year two. 

Targets that are ‘under realistic’ or ‘low balling’ to insure success indicate distrust in the ability to achieve.  If you have ever dealt with equity analysts or owners, ‘low balling’ is an easily reputation, you don’t want.  Once you are known to low ball, your targets will be irrelevant and challenged to be higher. 

Therefore use you base line and establish challenging, yet achievable, meaningful targets based on what is required to achieve your goal.

So far we have top down discussed goals develop objectives, which need to be base lined to establish targets. You finally have targets!  But how do you achieve the target?  The next step is to identify what drives your targets.  Yes we have finally gotten to drivers!  . 

What are drivers?  Drivers are the actions that the design of the business model, the product, or the process requires!  In the example above - What drives the ‘repeat business’ targets?  Customer satisfaction drives repeat business!  Now you must define what drives customer satisfaction! 

As stated in chapter one “First Focus Customer Focus” of the book, customer satisfaction is identified as satisfying the W’s of the customer.  Let’s use the What, W!   The What W, deals with giving the customer what they want.  The driver is understanding, What the customer wants.  Therefore, the process of identifying ‘What the customer wants’ is the driver.  Therefore, to improve the target you must change the process of identifying ‘What the customer wants’.

In summary - A goal has characteristics that drive success of the goal.  These characteristics create objectives to achieve the goal.  The objectives are quantified to develop baselines.  The quantified base lines become metrics. The metrics create targets.  The targets are achieved by improving what drives the targets.  What creates achievement of the target is the ‘real root cause’ of what drives the target.  The ‘real root cause’ is the design and conformance to design of business model, processes and product design affecting the target!

Therefore if you want real success change the drivers of the targets, which drive the objectives, which drive achievement of the goal.

August Newsletter

A BUSINESS VERSUS A CONCEPT OR A TALENT POOL

 I recently ran into a network that included many talented people.  I looked at the list of people and thought what a business!  There is executive talent, sales, supply chain, coordination, design, operations excellence, finance, self motivated, and talented people.  But, you know what?  That isn’t enough. 

What I have learned is that talent matters but it is meaningless without the key. 

I have very talented squirrels who are experts in planting trees throughout my yard and even in the trim of my house.  But as talented as they are at planting, they are planting trees that aren’t needed.  The squirrels also are wired to believe if they plant enough some will be available when needed.  Businesses are also created with a concept or pool of talented people but they may struggle. 

Why do they struggle?  They lack an understanding that customer satisfaction is first (also first chapter “First Focus…” of the book).  Every business needs customers – no kidding!  But you wouldn’t believe how many businesses believe that customers grow on trees. 

“If you build it they will come” is still valid if you build a business that satisfies a customer need that is not satisfied. 

Another phrase is “The cart before the horse”.  Providing a cart without something to pull it means the cart sits still.  More importantly, who needs the cart?  Well the designer and builder needed the cart to satisfy realization of their concept.  This is cash outflow.  Time and money is spent to develop the cart.  Where is the cash inflow? 

All the great talent and investor money is wasted if there isn’t a cash inflow to pay for it.  Where does the cash inflow come from?  You know – the paying customer! 

The paying customer will come if yo0u have something they need.  The paying customer is the horse that pulls the cart (the business).  The paying customer is the source of cash flow that pays the bills.  So, look at a concept or all this great talent, but understand neither is important unless they address customer satisfaction or innovation to provide something new that can improve their business. 

There are two key categories discussed above –

Customer satisfaction

Innovation to improve a business 

Customer satisfaction is well known.  It is about the customer’s needs.  The first chapter of the book (FIRST FOCUS www.hassoldps.com/book.htm) identifies how you categorize the customer’s requirements to better understand what you must do!

Innovation to improve or create a business is different.  Innovation is about creating a new product or service that the customer needs even if they do not know they need it to satisfy their customer.  How many of you have a “personal computer”?  Did Mr. Jobs (Apple) satisfy existing customer requirements?  No!  Apple created a product that the customer did not know they needed.  But the key to the success was that the customer actually needed the product!  Whether you have an Apple or a Microsoft computer your life is based on the personal computer! 

Therefore, while you may have a talent pool or a concept or a hobby you think is a business; the only thing that is successful is customer satisfaction of a known need or a new need to satisfy the customer to make them better suppliers for their customers (www.stapletonresources.com).

Post script – The above is lessons learned.  Many times I saw the perceived opportunity of something.  However, the investigation and demographics (observation, interaction, data collection, and monitoring the situation) first, identified that the perceived customer didn’t understand or need the opportunity.  Also businesses had to react to re-configure themselves to survive, because the original concept did not understand the perceived customer’s W’s.  All of the re-configured businesses are high quality providers and have numerous customers.  However they had to reconfigure to be successful.   

Re-configuring your business model by necessity is reactive.  Re-configuring by understanding (July topic) is proactive!

“What did we learn?” = Understanding and ability to create your future without forecasts and spin

Over the past year we discussed –

But, “What did we learn?”.  The first step is asking the question!  Answering the question is just as important.  However, using the answers is the most important step!