Archive for February, 2010
I received an e-mail from Aberdeen Research today that claimed 73% of companies responding to an earlier survey expressed “a need to improve operating expenses as a top priority.” Operational efficiency is subject to many definitions and in the Aberdeen case it is an argument for tools over technique. My definition is a little different.
My definition of operational excellence is the technique of maximizing profit by optimizing the cost of doing business in any economic circumstance. Excellence does not just happen; it is the result of advanced planning and timely execution.
Companies that are going to be successful in this more precarious and opaque national and global economy will be those that have a good Go-to-Market Strategic Plan supported by a set of solid tactical plans geared to optimize efficiency in any economic circumstance. The tactical plans must be based on the probable and the possible and the unthinkable business scenarios – all in support of the Strategic Plan.
Operational excellence is a product of good scenario design, and tactical implementation. The final question management must ask before accepting a tactical plan is “does the company have the focused business processes and the enabling tools to quickly identify the changing economic conditions (early indicators) and respond urgently”? If the answer is “no”, the remediation begins with determining if the answer “no” is a fault of the tactical plan or the result of sub-optimal business operating practices or enabling tools ?
Bottom Line Excellence is the result of focusing on continuous re-examination of strategic assumptions and the nimbleness to adjust to changing assumptions.
Joyce Stoer Cordi
All Rights Reserved 2/18/2010
What is a small or medium business to do in the current, unstable global and (US) national economy? I was reminded yesterday, while reading the Businessweek small business e-letter, of just how unclear the path to economic recovery is — or whether we are on the road to recovery at all? No two “economic experts” agree —
- It’s a V shaped recover and we have passed the bottom
- It’s a W shaped recovery and the double – dip is coming in the second half of 2010 or in q1 2011
- The US economy needs another stimulus plan (I have lost count. Is this the 4th?)
- Government stimulus plans have had little or no impact on economic recovery
- When government stimulus is withdrawn later this year, the unemployment will rise
What is the owner of a, just for a practical example, $50M plant nursery that sells to big box retailers to do?
- Small and medium business should be acting aggressively to be prepared for a surge in demand in second half 2010
- n Small and medium business should delay hiring and building inventory until there is more evidence of consumer demand
How about neither?
The smart nursery owner needs to plan for either, both, or neither eventuality in the next 12 months by focusing on the only important measurement – bottom-line profitability. A consistent record of profitability in good and bad economic conditions is the key to great customer confidence, employee loyalty and flexible, affordable, available credit.
Bottom-line profitability doesn’t just happen. It is the result of careful analysis and planning. It does not take a lot of executive time, but it does take executive focus. To learn more just click here http://www.cordiconsulting.com/thought_leadership.html
Washington Post Technology Page (2/3/2010) ran the headline “AOL posts profit, but subscribers dwindle”.
Disciplined customer segmentation and analysis will help a struggling company to reduce their operating expense by prioritizing their marketing and selling activities on the limited number of customers who produce the most revenue. The analysis may not provide an exact statistical 80%/20% breakdown but it won’t be far different.
When a company focuses on its most valuable customers it accomplishes two things:
Improves customer loyalty and, potentially, wallet share
Creates a model for increasing the total number of high value customers
$50M companies that aspire to be $1B companies need to build processes to continually monitor who their key customers are and why they are key customers