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Getting your Company Lean, Mean and Efficient

Are you a hard core strategist, or just playing at strategy?

Bertie du Plessis

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Left, right and centre I hear business owners talk of their “strategies.”  It sounds as if everybody can do it. Yet when last can you remember a strategy break away that actually produced real results?

Yes, it’s easy to set revenue and profit targets, then make plans how to market and sell better so that we can increase revenue.  It’s as easy to increase our margin and therefore our profit by cutting costs.

So, there you have it, what could be clearer than that?  Market better and cut costs – that’s your strategic planning. All that’s needed to complete your strategy weekend is a powerful rah-rah session from you, the CEO.  Usually along the lines of: “If you can dream it, you can do it!”  So, if the strategy fails it’s an issue of everybody not having pulled their weight and the search for culprits begins. What a cheap shot, don’t you think?

Business strategy in a nutshell

Unfortunately what you have been doing is at best an exercise in efficiency and optimisation:  Trying to make your company more profitable by being more efficient. You can call it strategy if you want, but it misses the really difficult nut to crack.

Hard core strategy goes beyond an exercise in efficiency and optimisation because it requires you to take a long, hard, critical look at the stuff that you must do to get you company lean, mean, efficient and functioning at its optimum.

Let me explain.  There are three indispensable features of efficiency and optimisation that you need to execute if you want to remain in business:

  1. You need to deliver quality
  2. You need to remain close to your customers
  3. You need to benchmark to assure that you don’t fall behind your competitors.

These are all good things that you must do and nobody that ignores these will remain in business for any length of time.

From ‘what if’ to success

Hard core strategy takes the opposite tack. Hard core strategy asks “What if?” questions:

  • What if my quality is too good? What if there is a low quality competitor waiting to wipe me out?
  • What if I am too close to my customers so that I have become blind what newcomers to the market want?
  • What if my benchmarking let me improve, but in the process I destroy my differentiation in the industry?

Hard core strategy questions the assumptions of everyday business efficiency. Let me give you some examples.

Can quality ever be a bad thing?  Yes, if the client can make do with less. Sometimes, would you believe it, they just don’t care! A good example is the media industry. Newspapers had well designed, cool websites but then came this crazy individual Craig Newmark with Craigslist and destroyed the most profitable part of newspapers, the listings advertisements.

Craig hat crappy design quality, but he single-handedly destroyed an industry. We all know Gumtree, another good example that you don’t need crisp well-designed typography to take on the big boys! Do yourself a favour and go to www.vg.no ( I don’t expect you t read the Norwegian!) and see how this website looks that is most successful in attracting, readers, keeping them and monetising.

In the high-tech industry I have seen so many companies hell bent on competing on quality and going out of business, instead of saving on the hight costs of quality and competing on a different, less expensive value proposition.

Keeping customers close

This brings me to the second point: How can keeping close to your customers be a bad thing?  Clayton Christensen convincingly demonstrated this in one of the two or three business books that the great entrepreneurs in the world such as Andy Grove and Marc Andreessen recommend: The innovator’s dilemma.”

He treated the hard drive industry and earth excavating equipment. In both cases the powerful incumbents were so close to their customers that they did not recognise a new market opening up. The guys making hard drives for desktops heard their clients telling them, bigger, bigger, more memory, faster, faster.

In the mean time the laptop market was opening up and there bigger was a problem and customers would willingly sacrifice speed for smaller. The big hard disk manufacturers lost control of the industry because they were eaten up by the poorer quality products. In the end they did not even retain their hold in what they were good at! History repeated itself when flash memory developed.

None of the incumbents understood how important super mobility and super small was, even though that was how they conquered the big hard drive manufacturers! Hard core strategy asks: “What if the client does not know best?!”

Finally, what is wrong with benchmarking?  First of all there are some features where you should be worse than your competition! Better “in every aspect” costs money, too much money. It means that you sacrifice margin and therefore profits!

Secondly, if bench marking results in you erasing the differences between yourself and the competition, you destroy your ultimate competitive advantage, the holy grail of strategy: DIFFERENTIATION.  Hard core strategy requires you to say no to each and every improvement and pick those improvements that will enhance your differentiation.

Sometimes you should even intentionally scale down on features where you are too good without them contribution to you differentiation.

Anybody for hard core strategy?

Bertie du Plessis founded his successful consultancy firm, MindPilot, 17 years ago. He names several of South Africa’s blue chip corporations among his client list and has taught as a lecturer and guest lecturer in six different disciplines at tertiary institutions. His fin24.com blog is the most read business blog on the 24.com domain. Visit Bertie Du Plessis's website for more information.

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Strategy

4 Ways To Develop The Leaders You’ll Need In The Future

One of the most challenging aspects of leadership development is consistently and effectively identifying the next wave of leaders.

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One of the most challenging aspects of leadership development is consistently and effectively identifying the next wave of leaders.

It can be easy for those at the top to forget that eventually someone will have to take their place at the helm. And ignoring that fact has lead to issues with succession planning, unwanted turnover and other challenges in leadership development in many organisations.

2016 High Impact Leadership research from Bersin by Deloitte asked 2,422 HR and business leaders from around the world how well they believed they could discover new leadership talent. Just 35 percent of respondents said they were above average when it came to successfully identifying and developing leaders.

To understand why this is, consider the typical leadership development paradox. Traditionally, the first step is to choose who has leadership potential, then develop their skillset. Logically, however, this makes little sense.

How is it possible to identify effective leaders if employees have yet to receive any type of leadership development?

Here are four ways to properly identify better qualified candidates for leadership positions:

1Stop choosing potential leaders based on unrelated skills

Gallup’s 2015 State of the American Manager Report, which studied 2.5 million manager-led teams in 195 countries, found that the top two reasons employees are promoted to management positions are because they were successful in a non-managerial role or because of their tenure with the company. Neither of those criteria have any proven correlation with leadership skills or relevant experience.

Create a better means of measuring for true leadership potential. Look at the culture of the organisation and envision what it would look like for someone to lead by those values.

Also consider how successful leaders evolved over time in the organisation. Then use that information to make a list of recognisable traits to look for as signs of leadership potential.

2Broaden leadership development to more employees

People learn and grow at their own unique pace. Requiring that an employee reach a certain position or be with the company for a certain number of years before they’re offered leadership opportunities holds back those who might be ready for more responsibility now. Or even worse, it might push those who aren’t yet ready into leadership roles.

Instead, let leadership development be a company-wide initiative. This gives more people the chance to take the next step in their career. It also creates a larger pool of possible great leaders to draw from across the organisation.

3Track progress and growth

Track progress and growth

There’s no way of knowing who is ready to step up and lead unless development is monitored. Remember that this is a process. Employees need feedback from their mentors and coaches to know for certain what skills they’ve mastered as well as where there can still be improvements made.

Develop a way to assess progress for different leadership positions, and be clear with employees and coaches about what success would look like in different situations. For instance, explain what is expected of a first time project leader.

Get everyone on the same page about the developing leader’s responsibilities and how that should guide their team.

Then collect thorough feedback from all those involved. Ask the leadership candidate what challenges they faced as well as where they think they thrived. Pose the same questions to those they supervised and organisational mentors.

Over time, this will reveal patterns that make it easier to identify who is best suited for leadership in the long-term.

4Focus on continual leadership development

There is no such thing as too much experience. There is always more that can be learned. After leadership candidates have been identified, continue to nurture them. This keeps employees from feeling that they have plateaued, which is unfortunately common.

The 2014 Insigniam Middle Management Survey: Middle Management’s Critical Role In Saving Company Innovation looked at responses from 200 middle managers from around the world. It found that only 15 percent of managers believe they will ever be promoted to the next level of leadership at their company.

Whether intentionally or not, employees who have proven their leadership abilities are being told that their leadership journey is over – and this hurts both them and the organisation. Encourage a steady stream of highly trained and skilled leaders working their way up by demonstrating that there is no end to development.

In order to clearly see who the next wave of leaders is going to be, employees need to be given the chance to hone and exercise their skills.

That means redefining how leadership potential is identified and providing each employee with the chance to develop personally and professionally.

This article was originally posted here on Entrepreneur.com.

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Strategy

Have You (Really) Put Your Business To The Test?

You should constantly test things in your business to see if they’re working. In that direction lies success.

Nicholas Haralambous

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There’s a pretty famous saying that people in business like to use: Always be closing, or ABC. It’s a very sales-driven concept that suggests that whatever you do, you should always be closing a sale.

I used to like that way of thinking: Drive your pipeline growth, work on the numbers and push the sales as hard as you can all the time.

That approach definitely works for certain types of businesses, but after a while it can be soul destroying work that leaves a business a bit hollow. So over the past few years I’ve been working on a tweaked methodology.

I call this method of building and selling: Always be testing or ABT.

Related: 3 Sure Fire Ways To Improve Efficiency And Find Your Business’s Productivity Sweet Spot

The concept is simple. You should constantly be testing things in your business to see if they’re working. If they are working, great, you can then start testing how to improve them. If they’re not working, you find out and can start testing fixes for the problem.

This applies to your team, your product, your day-to-day strategy for selling, customer acquisition and anything else you can think of.

Start testing yourself

The obsession with testing things started in my personal life. I was doing it without realising what I was doing. I started waking up 15 minutes earlier every month and after a while I was spritely and awake by 5:30am and walking my dogs or working while everyone else was asleep.

Then I stopped eating sugar for a while to see if I’d feel better. I did. That didn’t last but I then stopped drinking coffee to see if I’d sleep better. I did. So now I don’t drink caffeine of any kind after 3pm.

I found that I was constantly testing out everything that I did and tweaking my life accordingly. So one day I realised that this model would probably work in my business: Small, frequent tests with specific goals in mind to try to learn something new or verify something old.

Related: How You Can Make Those Sales When Nobody’s Buying (Yes It’s Do-able)

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Testing requires reporting

Setting up tests is not difficult. But tracking the results of the test requires preparation. Interestingly, when I moved Nic Harry from a pure e-commerce company into physical retail, I discovered how slow real world retailers have been to use technology to track changes they make in store.

With nicharry.com we have been able to test, tweak and track results for years. I have many tests and lots of data to pour through when I want information about a decision. I can make a change on the homepage and see if it leads to more transactions than the previous homepage tweak. If it works, great, if it doesn’t, I go back to the way it was.

I decided to take this type of thinking into our flagship store by treating each wall and window as a web page. We kept notes of which socks were on which walls and which socks sold better where in the store.

After a few months we had figured out which walls were the hotspots in the store. Then we started to move the socks around and see if we could influence who purchased what just by placing the socks in a different place.

This type of tiny testing environment helps me understand my stores, my team and me products with granular detail. However it wouldn’t be possible if my systems weren’t set up properly to help me track these changes.

Why test something that works?

People often ask me why they should test something that is clearly working. Well, what if one day your product stops selling and you don’t know why? What if your core revenue stream dries up over the course of a few months or years and you haven’t noticed?

Testing helps me to stay in front of my problems. I can think of a stand out example of a company that stopped testing and ended up losing: Blackberry. Do you remember them? I do, but not many people will in a year or two.

Related: 10 Brilliant Responses To The Customer Who Is ‘Just Looking’

It’s also worth remembering Kodak. Kodak was founded in 1888 and thrived for a century, literally. Then it stopped testing in the face of innovation all around the company and from within. In 2012 Kodak filed for bankruptcy protection. The ironic part of the Kodak story is that digital photography killed their business. Why is this ironic? Kodak developed the first digital camera in 1975 but didn’t test it in the market. They were worried it would eat into their existing business.

If only they had tested the product before they dropped it. Tests do not have to be large and complex. Implement systems that allow you to track the changes in your business whether online or offline. Then engage with your team about how they can help you to measure and manage the tests and then start with something small.

Testing for no reason is futile. It’s imperative to know what you’re testing and why. Once you’ve figured out your goals, start testing and never stop.

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Strategy

Leadership: A Potent Combination Of Strategy And Character

Business leadership and the love of a brand with John Nicolakakis, CEO of Roman’s Pizza.

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“Leadership is a potent combination of strategy and character. But if you must be without one, be without strategy.” – General Norman Schwarzkopf

In the context of a large number of businesses and franchises being over managed and under-led I found Roman’s Pizza to be a welcome exception.

As I walked into John Nicolakakis’ (CEO of Roman’s Pizza) office I was met with the confidence of a man whom has been in the trenches, one whom has done the hard work himself and who’s passion for the brand is visible in his demeanour and speech. As he put it: “My father and I love this brand like you would love a child, always nurturing it, and always looking after it.”

Him saying that, I recognised that I was sitting in front of a “cause fuelled” leader, one who finds purpose in what he does and whom derives energy from this purpose, and that increasing profit was definitely not the sole driving force of his success.

So many companies claim to have a clear vision and value system in place, but unfortunately in reality usually a vision and value system only remains theory. True values are lived by and become transparent through especially the leaderships’ behaviour.

Related: How Roman’s Pizza Got A Great Big Slice of Success (Over R1 Billion Of It)

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“Best Pizza – Best Value” in the Roman’s Pizza context is definitely not a theoretical “mantra” being chanted in the hallways of their head office. John, realising that those two values forms the chore of the brand, makes all decisions accordingly. Costs are not being cut aggressively purely for the sake of it being prudent business practise but to deliver on the promise that the aforementioned values embody.

John is a clear communicator and no one from the head office team down to every franchisee, or any stakeholder can claim that they do not know what is expected of them. “We shoot from the hip” was the term he used and by how clearly and concisely he answered my questions there was no doubt what Roman’s Pizza stood for and what this brand means to its Leadership. It is also clear that although his communication style is very direct, the support to franchisees is also very direct and aimed at delivering on the values of the company.

Johns’ personal cell phone number is available on the company website and he interacts regularly with Roman’s Pizza customers directly and expects the same from all head office personnel. All of the above forms part of Roman’s Pizzas’ rich culture.

Mastering any aspect of life, business, or leadership, is inherently about the ability to simplify what appears to be complex. John has a simplistic view on the difference between leadership and management and is clear on what that means in relation to his role as CEO.

“Leadership is the future, and management is the here and now.”

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To lead by example John has spent a lot of time micro managing certain elements of the business, but is also deliberately freeing up more and more of his time to work on the future vision of this industry leading company and to maintain and build its culture.

Related: 25 Leadership Lessons From Millionaire Business Owners

General Norman Schwarzkopf had the trust of his soldiers as he understood that leadership was about showing the way. As he was a decorated Vietnam veteran he knew what the soldiers under his command went through and had their best interest at heart. As is key to any relationship he had the trust of his soldiers and therefore they were agile in their execution of his orders.

Similarly, Roman’s Pizza is a brand built on the foundation of trust and as a result an agile brand. Leaders are followed and trusted when they consistently behave in a way which is congruent with the company vision and values. In general, Roman’s Pizza franchisees trust their leaders as the company owns several stores and goes through the same challenges as the franchisees.

A learning culture is part of the Roman’s Pizza ethos and learning is in part done through experimentation by head office. When an experiment fails the cost of failure is not passed onto the franchisee but is incurred by head office through a reduction in royalties for a period of time.

John himself reads and learns all the time and encourages all head office staff to do the same. He immediately had a Jim Collins quote handy when I asked him about the Roman’s Pizza approach to change: “Test things with bullets, not with bombs “, alluding to the incremental approach to change that this franchise system has adopted.

In conclusion I believe that most will agree with General “Stormin Norman” Schwarzkopf that Leadership is a potent combination of strategy and character. After close observation I am impressed enough by this brand to say Roman’s Pizza has both.

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