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Getting a grip on management

Here’s a fascinating fact about kettles. As you put heat energy into a kettle of water, the temperature goes up steadily, just as you’d expect. However, when it reaches 100 degrees, the temperature stops going up even though you’re still putting energy into it. It’s like it’s hit a glass ceiling. The reason? Well, the water uses the heat energy to transform into steam - to become bigger, better, and able to do some real work.

I see something similar happening in business all the time. Managers and business owners work hard on their business, growing it and developing it. But many seem to hit a glass ceiling. They find themselves working at full capacity, often reaching overwhelm as they work all hours. They think they can hire people with specialist skills to give the business an extra shove, but often this just adds cost and achieves little, sometimes with the business even slipping back.

In other words, the energy going in is just not lifting the business. It’s as if it’s hit a glass ceiling which its just not possible to see through properly. So what’s the answer?

The trick is to look through the glass ceiling and see where you want to be, and to expand into something that you may already have seen, or that’s different in a powerful new way.

Its vital for all proprietors to take some time, to step back, and look at the future of their company. The time spent seeing where they want to be, and how to organise and manage the way there, will be richly rewarded.

Look through the glass ceiling, and watch your business go through the roof!!

With best wishes

To the students on the Quality and Systems Management Course at Oxford Business College; Estelle, Salome, Ranjith, Peter, Saila, Gayetere, Suyama, Gayeteri, Uvrage, Anurag and Adi (plus babe!)

You kindly wanted to know what I scribbled at the end of the OBC Consultant’s presentation to the Managers of OBC’s Commercial arm, when they outlined the means of implementing EDI into the OBC Company.

And here it is - a statement on the purpose of a business;

“The best possible offer of value, from the customer’s perspective, should be delivered in the fastest possible time, with the least possible defects for the least possible price”

I think it was generally agreed that the introduction of EDI would facilitate this aim. It was generally agreed that customer service, productivity and profitability would all be enhanced. We also agreed that there would be “emotional,” training and user issues in the value system to secure our objectives when introducing EDI.

Of course all this needs to be planned. What better way than to project manage  to accomplish this. There may well be a need to reconvene to discuss all this. What do you think!…and what are the implementation issues.

See you soon

Is ‘profit today’ the only objective of your business?

Ask a businessman what his main objective is, and you’ll invariably get the same response: ‘profit’. But this can be misdirected thinking - or worse. It may endanger the survival of the business itself. Getting profit today could undermine the business of the future.

Objectives are needed in every area where performance and results directly and vitally effect the survival and success of the business. These are two areas that effect every decision of the business and decide what it means to manage a business. They also spell out the results that the business should aim at and what is needed to work effectively towards them.

Every business needs to set multiple objectives, whatever the type of business, economic circumstance, business size and so forth. Here are 8 good ones; market standing, innovation, productivity, resources, profitability, manager performance and development, staff performance and attitude, public responsibility.

The first 5 are economic in character and the last 3 are intangible. This latter group are as important as the first 5 because if they are neglected any business would result in a tangible loss in performance in the first 5 areas.

As business is in fact a community its performance is dependent on the performance of human beings. Thus managers must attend to turning such intangibles into tangible and practical principles and values that are measurable such exceptional performance is achieved.

So profit is in there, but it’s not even top of the list. Should your business re-examine its objectives? Could another look at how you measure yourself improve your profit in the future?

See you soon

Andrew

You know finding a breakthrough strategy is about finding innovative answers to one of three questions – or combinations of all three. The three questions are; ‘Who?’ (a targeted customer with a distinct need), What?’ (a superior offer to meet the need) and ‘How?’ (a means of delivering the product or service distinctively and effectively) - W-H-W for short!

I was speaking to a friend the other day. He told me about someone he had met in the road maintenance business. My ears immediately pricked up because I think the state of British roads is on the whole deplorable. Anyway as I listened W-H-W shot into my mind’s eye. He explained that this man had a global patent on a process for road repair.

The process, he told me, is that you melt the tarmac, with a special machine so that any cracks are meshed together and holes filled in. What a great idea! Far better than piece meal road maintenance where someone goes out fills in a hole or goes out and re surfaces a whole section - something that could take days.

This means real savings in road repair, so important to county councils right now. It also means faster repairs, fewer traffic jams and all that brings. Surely here we have something that is more productive and effective!

The solution tackles the question ‘How’ does it not? Apparently the the technology is in place and a breakthrough strategy ready! I bet this didn’t originate from  S.W.O.T analysis.

More soon

A client question

We were talking strategy in tough times and then my client blurted out “What about Toyota? What should they do, they are laying people off and halting production!”

That was an interesting one. And then I thought of a couple of things.  The first was how even the largest and most successful companies must constantly reinvent themselves. And the larger and more successful they are, the greater the practical and cultural challenges involved.

I just have this feeling that the business world will be an entirely different place within the next 3 to 5 years. Therefore, now is the time to ask not just questions such as what to offer the targeted customer and who the targetted customer will be but also how to do this efficiently - and differently to competitors.

In fact the whole issue of who, what and how can be used to question the established rules of the game and put innovation back into the heart of strategy.

I’m not sure I solved my clients question at that moment - but then we went on to look at Xojet as a case example

We’ll look at that next time.

BFN

Andy

So what did he do???

Andrew Cook took advantage of harsh conditions to provide precisely what customer’s wanted – a fast service and even more affordable quality product! His improvements saved customers money, which naturally increased demand for his product.

When others saw what he had achieved, they changed too, but it was too late. They sought to catch up and triggered intense battles in a long-lasting… but that’s another issue.

What an outstanding story! But what is the worth of its telling? True, times are tough, I’m deeply conscious of this. But it seems to me that Andrew Cook provides us with insights into how to manage in such times: concentrate on the core business, customers and value-differentiating activities and above all a means of doing this efficiently!

Whatever else, we can be sure that Andrew Cook acted with tremendous tenacity and courage to save his company and give it primacy in his industry. His actions reflect capabilities not often mentioned in boardrooms or training rooms – the hidden hallmarks of persistence, determination and sincerity of action, which are often overlooked when eager imitators review pioneers’ strategic innovations and successes. 

Cook himself said: “Press on. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts.”

But are the great qualities of persistence and determination alone omnipotent? I think not, even though they are the stuff of legend.

By for now

Andy

Well if you haven’t read on because his is an amazing story.

In the late 1970s and early 1980s he transformed William Cook, a well-established family manufacturer of steel castings, into a market leader - when all was against him.

At that time, of course, the UK economy was really tough, rather like now; output in the industry had been falling. On taking over the company, Cook went completely against the trend and invested in increased efficiency, quality and capacity in the lowest-value segment – all at a time when capacity was double the volume of industry sales.

Rivals thought he was mad. Indeed, conventional thinking would have dictated that Cook milk the business and leave the industry or switch to a higher-value and differentiated niche.

Remember, too, that William Cook couldn’t boast the image of a BMW or an Apple among its customers; neither was it a technological leader, nor did it possess some secret process to guarantee extra income. Nonetheless, Andrew Cook backed his intuition. In a few months, his efforts began to yield results.

His investment, within a hostile environment, transformed the business. Within a few years, sales had risen by 10% against industry losses. He was the first to invest in BS5750. Within a couple of years, he had acquired two of his major competitors and by the 1990s, he had become the market leader.

“What did he do?” you ask. It’s really quite straightforward….I’ll tell you next time as I’ve gone on for long enough.

By for now
Andy

I just can’t get it out of my mind. This business of positioning I mean. The thing is that you have to choose between competing with a strategy of high value or one of least cost. One or the other.

Reckitt and Benckiser has a reputation for cleaning up, in the household goods market (– maker of Harpic and Dettol and Finnish dishwasher products).

A recent report showed that shoppers continue to choose Reckitt’s premium brands despite a worsening economy. The company believes that shoppers prefer the reliability of premium branded goods during hard times rather than cheaper private labels.

Holding the No 1 and No 2 positions in most of its product categories, Benckiser has become more focussed than some of its competitors. Unilever has hundreds of brands but Reckitt concentrates its efforts on 17 power brands that account for 85% of its growth.

And the figures speak for themselves. In the year to February 2009 it achieved a revenue increase of 22% to £6.5 billion, a 25% increase in operating profit and a market value of almost £19 billion – all this against a 26% fall in the FTSE!

This issue, as the good professor, Michael Porter, tells us is to choose one or other position - not the one that gets you caught in the middle.

Bye for now

Business is a state of mind

How the new heroes will make it happen!

Many of my friends from industry have asked for my opinion on the economic crisis and its impact on business. My answer to them is that a key problem is that companies simply do not internalise the proper actions to take in order to respond to such a situation.

Yes, I see companies cutting expenses, freezing investments, and releasing people and so forth because they are afraid that sales will fall.

My opinion is that if a company wants to, it can move through this time, without suffering awful consequences, simply by turning the opportunity of having something into prudent action. If companies take the right steps then I think they can come out of the crisis much stronger than when they entered it.

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“If you’re interested in finding out how to make deeper cuts in costs, without destabilising your business, as well as retaining and growing your share of the wallet with some creative strategic thinking in a difficult trading environment, I highly recommend Andrew Pearson’s workshop.” - - Andrew May, Managing Director, Mainland Marketing Ltd, for Isles of Scilly Producers