Extraordinary Business

I recently read an article in Inc. magazine called Paradise Lost by Bo Burlingham. What caught my attention was the story was about Reell Precision Manufacturing. This company had been recognized for its culture and now was struggling for its life.

Reell was a successful company with a strong employee focus. In fact, all decisions were made in the best interests of the employees. For more than 30 years, the company had worked through good times and bad. When times got tough, the leaders took pay cuts to avoid reducing staff. The company was ran by three CEO's that made decisions based on consensus. The formula worked. The company experienced unflagging loyalty while having turnover well below the industry average. So what caused the dramatic turnaround in performance?

Reell's industry was changing. Responsible for making laptop hinges, they found their markets moving overseas. While they were able to make changes and compete for a while, they became burdened by keeping up with increasing sales. Those sales forced capital investments that forced the company to focus on generating more sales to pay for the equipment. Reell became forced to compete on price and reduced margins. In the short term, Reell's decision to globalize their laptop hinge product prevented layoffs. In the long term it nearly destroyed the company because of its failure to balance out the needs of the employees and the needs of the business.

The moral of this story is looking at all aspects of your business no matter how well you are doing. Too much emphasis in any one area can be disastrous.

Article:
Paradise Lost
By Bo Burlingham
Photographs by Mike McGregor
Magazine: Inc.
Issue: February 2008

Labels: Business, Business Coaching, Change Management, Coaching, Leadership, Management, Planning, Sales, Strategy

Recently I was reviewing a Businessweek article by Jack and Suzy Welch that was titled "Trim the Fat, Not the Service." The title alone brings up a good point. If you make your customers suffer through the tough times with you, they won't be there when those times are over... and you might not either.

The moment the word recession is tossed around, many companies begin preparing for the worst. They do everything to maximize their cash and eliminate services. Unfortunately the customers take the hit in many cases. The focus is on cutting costs instead of gaining market share. So, ironically, when you have your best chance to gain new customers from your competitors, you fail to take advantage of it because you are in your basement riding out the storm.

What if your business was prepared for this. What if instead of cutting costs, you had already managed your business to work efficiently while still exceeding your customer's expectations. What if all the people in your organization understood your strategy and were passionately living it each day. What would that look like? How would it change your business when you are growing while everybody else is cutting back?

Right now you are at the crossroads. Either baton down the hatches or take market share from your competitor. If you can't afford to grow your business, how much can you afford to lose?

Labels: Business Coaching, Coaching, Economy, Leadership, marketing, Planning, Strategy, Vision

Ever wonder what your business is costing you? Many of you can look to your P & L's to find a number. While that might be accurate to represent the total dollars you are spending, I am more interested in what lies beneath those numbers.

A company with a good strategy, strong leadership, and effective staff can be far more profitable than a business with a good strategy, weak leadership, and a staff unclear of their direction. I have seen companies with comparable sales in similar industries that have differences of hundreds of thousands of dollars (or more) in profitability. That difference could be the measure of what your business is costing you. But how can you be sure?

Here is a little test to start reading between the lines. Please keep in mind that if we are talking about averages it may not mean you do not have room for improvement. Remember, an average is little better than a C grade.

1. Advertising: How are your advertising expenses compared to the averages for your industry? What do the best companies spend? Some companies spend over four times the amount on advertising compared to the leaders in their industry. Unfortunately in most cases more advertising does not lead to greater results.
2. Turnover: How long do you retain people compared to your peers? Higher turnover can increase human resources costs exponentially through training, benefits, wages, unemployment, advertising (want ads), and recruiter bills.
3. Strategy: Great, you have a strategy. So who knows about it? How effectively is it executed? Over 90% of businesses fail to realize their strategy to its fullest potential and over 95% of employees in most organizations do not know what their company's strategy is. This can lead to even the right people doing the wrong things. In addition there can be multiple agendas, wasted time on projects not congruent with strategy, not to mention frustration, anxiety, loss of motivation, and ultimately lost sales.
4. Quality: So your quality is good, but can it be better? Each year, millions of dollars are lost to quality issues. These losses go beyond equipment failure into people related issues. Poor leadership can lead to poor morale and the "I don't care" attitude.
5. Sales: So your sales are down. It's the economy, the political climate, increased competition, the web, we lost our lucky rabbit's foot, etc. Remember, in the face of any bad economy, there are always companies that are growing and profitable. If you are not one of those companies that is growing and profitable, then you could be dying a slow death. Are sales fluctuations a blip on the screen or have steady decreases taken a bite in your profitability? There could be many reasons including the economy, but do you want your business to be influenced by the economy or do you want to be the best in your industry?

So what's your business costing you? What if you could increase your bottom line anywhere from 10-50% just by changing some of the things you already do without adding new technology? Many businesses seem to let these hidden costs go. My guess is because they cannot be seen. They remain hidden in the numbers. I would also guess that even if some companies knew the problems, they might feel powerless because they don't know what to do. What are your thoughts?

Labels: Business, Change Management, Leadership, Management, Planning, Sales, Strategy

So many people seek wealth without realizing they already possess it. Every one of us is already a millionaire. The only difference between those who have $1 million and those who are working for it is the skills they mastered. So something to ask yourself is if you are already a millionaire, why don't you have $1 million? Those obstacles in the way are what is cleaning out your "bank account." It's the counterproductive habits that have removed the funds to this point. What you really need to do is look at what has made you successful so far, and how can you use it to eliminate the bad habits. Apply more of what you do well and focus yourself on your goal. No matter what it is, you can achieve it if you are committed to taking action.

Labels: Coaching, Leadership, Management, Mentoring, Planning, Sales, Wealth