“Well done is better than well said.” – Benjamin Franklin
A poorly performing company is in a state of constant and unmitigated chaos, where uncertainty abounds, communication is poor, and frustrations among employees, managers, and owners are high. Obstacles, both small and large, are throwing the company off kilter and there is no systematic approach to achieving order. Without intervention, long-term prospects are poor and its demise is inevitable.
There can be a number of reasons for this chaos. For instance, the company may be attempting to grow by expanding into new markets, but still using an old markets business model. Competitive threats could be driving industry changes but the company is in reactive mode, rather than leading those changes with innovation and new thinking. The company may have an insufficient focus on achieving sales, margins, and profit growth, and therefore be starved for capital and unable to make the necessary reinvestment in products, people, and infrastructure. Finally, the company may lack the resilience to withstand significant shocks, common in today’s economy, such as Brexit, abnormally low-interest rates, sluggish global growth, or technological change. Whatever the cause, this chaos must be acknowledged and dealt with.
The solution to taming this chaos, creating order and building a more resilient company, lies in implementing a systematic approach to building the business. In my more than 25 years of experience in transforming and building companies, as an executive, advisor, and board member, I have found that the best companies are built by leaders who work not only in the company but on the company. They have a clear sense of the difference between great products and a great company that produces great products.
For your benefit, I have summarized the six steps I believe are necessary to help reign in chaos and restore order, based on my real-life experience in running and advising companies. They are:
No company can achieve any meaningful change without first committing to change. Buy-in may be the result of a major crisis in the company (such as a big customer loss, cash crunch or other near death experience) which drives change, or it can be the result of an exceptionally powerful or visionary leader leading change. Either way, it is an absolutely and necessary first step in achieving growth and resiliency.
A transparent, realistic, and objective understanding of exactly where the business is now is the next critical step. This is a thorough understanding of the company’s market, operational, financial, and execution strengths and weaknesses, validated by research and customer feedback. The assessment should also include a deep understanding of the talent in the organization, starting with the senior leadership through to all the roles of the company.
The plan encompasses the key findings of the assessment and lays out a clear, concrete, and well thought out roadmap which will create long-term value and market domination. The plan includes the necessary strategic initiatives that bolster your company’s position supported by actions and milestones. It should cover at least the next three-year period, and include a 12-month perform cash flow and income statements. It should then be communicated to all employees and the necessary resources secured to ensure its successful execution.
The most successful companies I have worked with have an obsessive focus on execution. Research has consistently shown that the ability of a company to execute well is one of the strongest determinates of long-term success. Good execution includes building a culture of excellence, developing good systems, providing employees with the necessary skills and tools to succeed, and ultimately aligning the achievement of execution with long-term goals.
A small number of key metrics in the organization (less than six), should be tracked, reviewed, reported and acted upon on a regular basis. The goal of the measures is to ensure that the execution of the company’s action is in alignment with achieving the plan, and any significant deviation is highlighted and addressed.
Continuous and aggressive improvement is achieved by understanding the delta (gap or difference) between the plan performance and the actual performance, and then closing this gap. The best way for an organization to constantly improve is to build a culture of improvement and excellence, so the employees ultimately rise above the need for a methodical system and embrace the philosophy as their own.
Any company can be turned into a well-oiled machine and survive the turmoil that we are experiencing today by focusing on these six steps; buy-in, assessment, plan, execute, measure, and improve. Order can be achieved as the company grows through different stages of its maturity. There is no need to put your company at risk during difficult times, just follow these six steps and you will build a valuable, enduring, dominant, and resilient company.
Eamonn has a B. Eng. (Electrical) from Lakehead University, MBA (Finance) from University of Toronto, and has completed Executive Education at Stanford University Graduate School of Business. He lives in Vancouver, Canada. Follow him on twitter @EamonnPercy