Seek Advice

 Basic Business Cents

Seeking Advice

Never fail by yourself!

This is a powerful adage that is applicable no matter what type organization or position in which you might find yourself. It is especially true for the small business owners who feel they have no one they can talk to openly.

So what are the options of finding someone who you can talk to honestly and frankly and get good advice?  Family members and employees are always an option but there are downsides, they are likely to tell you what they think you want to hear rather than what you should hear and it might have a negative impact on morale.

Our friendly banker is always an option, especially if you are not in serious financial trouble, which might present a conflict of interest for him or her. Nevertheless, they are a good source of advice.

One excellent source to confide in and get good advice is a Board of Advisors, not to be confused with a Board of Directors. The Advisors provide advice, not direction. Most of the time you are looking for mentoring, not dictating. The Board of Advisors should be made up of people you respect, are knowledgeable, have a track record of success, and are willing to invest some of their time to help you.

And there are consultants. They come in many different stripes and hues. Fees (they prefer to call them investments) range from zero to part ownership of your organization.

Free consulting is available from the Small Business Development Corporation, which can be contacted through your local bank or by calling 218-299-3035. Their consultants offer free advice to small businesses.

Another source of free counseling is SCORE®, a nationwide group of retired or semi-retired executives who donate their time to mentor small business executives. They have a local branch office located in Room 101 of the Hubbard County Courthouse and can be contacted at 218-732-2259 or score@hubbardcountyedc.com.

And of course paid professional consultants are another path to take. For comparison purposes, they can be divided into independent consultants and large consulting companies. They should be capable of finding and solving problems, see through smoke, capable of improving processes and systems, understand good management theory and human nature.

Independent consultants usually charge fees in the range of $500 to $5,000 per day plus expenses. They bring expertise in a niche or narrow area and if that fits your needs, it may be a good experience. It should be looked at as an investment with a payback potential to make it a very good investment. How to measure that payback should be planned for and agreed to in advance. Do not agree to share your savings with the consultant, as that is considered unethical. It will lead to arguments over how to measure. They may not be particularly knowledgeable in your business or industry arena but are knowledgeable in means to improve your organization’s performance. They should be looked at as partners with you on solving problems or improving processes or systems. You know your business and they know improvement techniques, so if you work together you can be successful.

Large consulting companies offer a wide range of knowledge and charge accordingly. They may ask for fees starting at the top range of the independents going up to even asking for shares in the company. Their advantage is their consultants may have niche knowledge but they can go to other consultants in their company to access other knowledge you need. Again, their fees should be looked at as an investment and accomplishments documented carefully to see if the investment pays off.

Either you or your consultant should document accomplishments to-date and recommended actions after each consultant visit. After all, results and action are what is important and is what you are paying for, either monetarily or in time invested.

It may be that some combination of the above is best for you. You are unique, but there is always help available that can pay dividends for you. There is no need for you to walk alone.

REVIEW AND FUTURE PLANNING

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH TWELVE: REVIEW AND FUTURE PLANNING

The last month of the Community Performance Improvement activity for small businesses coming together for joint training sessions and applications of lessons learned between the training sessions will be reviewed for what worked and what did not work. The results of improvement efforts within their organizations will be presented to the group, discussed, and recommendations made by fellow attendees. Each organization is different and will have different experiences. By sharing, they can learn from each other without revealing company confidential information and gain new insight on what to do going forward.

Attendees from each organization will in turn, share their Performance Profile results with the class and receive feedback to help in the future. Examples of successes and failures will be helpful to the discussion. 

Plans for future deployment and continued learning will also be shared.

As stated in the first article of this series (July 6, 2011), the return on investment in this program should be huge. Large organizations have experienced real annual savings/project of $50,000 to $3,600,000. If we scale that down to one tenth of that for small companies participating in this Community Performance Improvement activity, and each participating organization undertakes several projects during the year, we begin to get a feel of the positive impact this program will have on the participating companies.

By sharing the cost of two days of training/month for twelve months, considerable savings can be realized and this can often be covered by a grant. The half-day of individual consulting per month for each participating company is then the responsibility of each of the companies.

The benefits of this program are to share the costs of experienced consultants, processes, and material in a manner that will benefit all at a reasonable investment and pay a large return in the improved performance of the participating organizations. Process improvement and innovation have proven to be very effective and necessary to compete successfully and profitably in today’s challenging business world by large organizations and the Community Performance Improvement plan is an effective method to bring the same proven techniques to small organizations.

The Chief Executive Officer of Midway USA, winner of the 2009 Baldrige Award recipient, stated, “If you want sustainability in an organization, and you want to go from great to really great, you’ve got to have some kind of model…and Baldrige is that model. Our sales are up over 20 per cent per year over the last five years. Our profits are up over 40 per cent for that same time. Customer and employee satisfaction are at an all time high and it’s all because of our efforts in engaging the Baldrige Criteria.”

The Community Performance Improvement Plan makes it possible for you to have a similar experience with your organization.

Improvement Plan Results

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH ELEVEN: RESULTS

All the effort put into this Community Performance Improvement is of little value unless the organizations have obtained desired results. It should be of little surprise that of the 1000 possible points on the self-assessment, 450 of them are assigned to the Results category. This section examines your organization’s performance and improvement outcomes in all key areas-leadership, product and process, customer, financial, workforce, and market. The major elements of the Results category to be analyzed are:

·      Product and Process Outcomes: What are your product performance and process effectiveness results?

o   Customer-Focused Product and Process Results

o   Operational Process Effectiveness Results

§  Operational Effectiveness

§  Emergency Preparedness

o   Strategy Implementation Results

·      Customer-Focused Outcomes: What are your customer-focused performance results?

o   Customer-Focused Results

§  Customer Satisfaction

§  Customer Engagement

·      Workforce-Force Outcomes: What are your workforce-focused performance results?

o   Workforce Results

§  Workforce Capability and Capacity

§  Workforce Climate

§  Workforce Engagement

§  Workforce Deployment

·      Leadership and Governance Outcomes: What are your senior leadership and governance results?

o   Leadership, governance, and societal responsibility results

§  Leadership

§  Governance

§  Law and Regulation

§  Ethics

§  Society

·      Financial and Market Outcomes: What are your financial and marketplace performance results?

o   Financial and Market Results

§  Financial Performance

§  Marketplace Performance

After completion of the self-assessment on this category, the participants can add their scores from the previous categories to obtain their total score. For comparison purposes, beginning organizations in performance improvement activities should expect to be in the 200 range, really good companies in the 500 range, and world-class organizations score in the 700 range. Where else can you score 50% on a test and feel good about it? This only proves none of us are perfect and we all have a lot of opportunities for improvement.

The essence of the results category is monitoring and reporting the status of the quality improvement initiative.  Measurements help accomplish several important things,

• Define specific opportunities for improvement and focus attention on corrective action
• Create standards for comparison and monitoring improvement

The self-assessments conducted during the year reflect the opinion of the attendees at the time and hopefully they have learned more as the year progressed. Now it is time to take the self-assessment process back to the rest of the organization. A Performance Profile manual will be distributed to the attendees with instructions on how to facilitate a self-assessment by the leadership team of their organization as homework for the next session.

The Chairman and Chief Executive Officer of Dana Commercial Credit Corporation stated after winning the Baldrige Award in 1996, “One of the big things about this process is you measure everything and you find you’re not quite as good as what you thought you were. But more importantly, you find out specifically the areas you need to improve.”

Leaders Lead!

Basic Business Cents

Leaders Lead!

March 19, 2009

The sketch below depicts three types of leaders. With which one do you most associate your own behavior?

Most people realize that today you cannot behave like the dictator sitting in the driver’s seat cracking the whip over the team. Unfortunately, many managers do not know how to manage when they can no longer manage by edicts and threats and so they move to the back of the wagon. They sit there in a fetal position, hoping the team is going in the right direction. That is also not an effective way to lead the team to the desired goal. Today’s leader is in front of the team, feet on the ground, providing direction.

Everyone is having fun today dissecting the auto industry to understand where they went wrong. One reason is the unfortunate pattern of alternating “car men” and “financial men” into the CEO position. Donald Peterson of Ford (Taurus), Bill Hoglund of General Motors (Saturn), and Lee Iococco of Chrysler (K Car and also the Mustang while he was at Ford) were “car men” and had great success. “Financial men” who followed tended to focus on short-term financial results and the fall into mediocrity followed. Myron Tribus of MIT once said, “Managing your company on financial figures alone is like trying to drive your car by looking in the rear-view mirror. The numbers reflect what has already happened and cannot be used to predict the future. Management is prediction. That requires feet on the ground, leading your team in the desired direction.

What is that direction? It is the role of the leader to provide the aim of the organization. Every organization must have a vision, and by extension a vision statement shared with all employees. A strong and clearly worded vision statement allows employees to make decisions consistent with the organization’s overall goals and objectives. Without this clear direction, the employees will do their best but they may not be pulling in the same direction.

A good vision statement must meet three criteria.

· It must be memorable. If the employees cannot recall it immediately, it probably is not of much use to guide their behavior.

· It must be inspirational. It should excite the employees to want to enlist in the crusade to achieve it.

· It must be compelling. It should move employees to action. Understanding the vision and being excited about it means nothing if action does not take place to get the desired results.

In order for the employees to buy-in to the vision, it must be communicated to them in a way to achieve true understanding. Japanese friends say that it takes more than one of the senses to communicate. Merely sending it out in printed format, putting up posters, or pontificating about it will not achieve the desired buy-in and commitment. The leader must publish it in written form and also explain it to all employees about it in a true dialog format.

Success in today’s challenging business world is increasingly based on the extent of the leadership, personal involvement, and visibility in developing, deploying, and maintaining an evironment for excellence. Leaders lead the way.

Operations Focus

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH 10: OPERATIONS FOCUS

This category of the Malcolm Baldrige Criteria for Performance Excellence was at one time labeled Process Management, which I prefer. This section recognizes that all work within an organization is composed of a series of processes and these processes form a system for getting work done. A footnote in the Baldrige Criteria states, “Work systems refers to how the work of your organization is accomplished. Work systems involve your workforce, your key suppliers and partners, your contractors, your collaborators, and other components of the supply chain needed to produce and deliver your products and business and support processes. Your work systems coordinate the internal work processes and the external resources necessary for you to develop, produce, and deliver your products to your customers and to succeed in your marketplace.”

Performing the self-assessment on the Operations Focus category starts the month 10 training activity. It examines how the organization designs, manages, and improves its work systems and work processes to deliver customer value and achieve organizational success and sustainability. It will also measure the readiness for emergencies of your organization.

The areas addressed are:

·      Work Systems: How do you design, manage, and improve your work systems?

o   Work System Design

§  Design Concepts

§  Work System Requirements

o   Work System Management

§  Work System Implementation

§  Cost Control

o   Emergency Readiness

·      Work Processes: How do you design, manage, and improve your key work processes?

o   Work Process Design

§  Design Concepts

§  Work Process Requirements

o   Work Process Management

§  Key Work Process Implementation

§  Supply-Chain Management

§  Process Improvement

Following the self-assessment on this category, each of the participants will be asked to draw a system chart of how their organization works. This is not as easy as it might sound, as management does not always know how the work really gets done. They will have to talk to their people to see what they do in reality to confirm their theory of how it is done and how it should be done. Workers sometimes do something different than what they are instructed to do, not because they are negligent or lazy, but because the processes which have been provided to them do not work. They do what they have to do to get the job done.

Instruction and coaching will be provided on flow-charting and drawing a systems map. This will involve the identification of the 3-5 key processes of their organization and the activities that are part of the value stream and those that are the supporting and leadership processes. The key processes are drawn in a box and represent the value added that the organization provides. Inputs such as labor and material suppliers are drawn outside the left side of the box with arrows going to the box. Users of the output of the organization like customers and other stakeholders are drawn outside the box on the right. Management is shown outside the top of the box and supporting activities like accounting, personnel, legal, etc. are shown outside the box on the bottom. This is a useful way to depict that those activities on the top and bottom may be useful, but they are overhead. Only those activities contained inside the box are adding direct value.

As you might envision at this point, this chart is extremely useful in managing the organization.kay