Innovate Your Management System or Die

One of the keys to health and growth of any organization is innovation, often times known as R & D.  Innovation comes in many forms and is often thought to refer to products or service offerings.  But those aren’t the only important forms of R & D.   Innovation can also take place in the management systems of an organization.

Gazelles International provides coaching and technology services to help mid-market companies around the world build and execute a strategic plan. The Gazelles are probably best known for the One-Page Strategic Plan and other one-page tools.  Certified Gazelle coaches focus on helping executive teams make the right decisions when it comes to four key decisions areas: people, strategy, execution and cash.

This program helps teams get company alignment around key points like, strategy, priorities, brand promise, goals and core values.  It is a straight forward way of communicating the important aspects of the business to all stakeholders.  How much more effective would your organization be if EVERY EMPLOYEE UNDERSTOOD the company’s strategy and their role in its execution?  For a number of our clients, that “secret weapon” has been particularly innovative.

How can that happen, you ask?  Simple, get some professional help from a certified Gazelles coach to focus on the four key decisions in your business: people, strategy, execution and cash.  If you don’t, you risk leaving significant revenues, profits and time on the table.  Furthermore, you leave the door open for your competition or the market to pass you by.  Now please allow me, with help from Verne Harnish, founder of the Gazelles, to provide some guidance on the four decisions.

People Decisions
In general, you know you have People challenges when you’re not enjoying running your company. You either have a partner issue, a customer with too large a piece of your business, a supplier delaying your success, a key employee or two who’s disrupting the rest of the organization’s effectiveness, or challenges at home. Or you might simply lack enough employees to serve your customers, though I caution executives to avoid tossing employees at problems.

Until you settle these relationship issues, they’ll continue to consume a tremendous amount of emotional energy, making it difficult to focus on the other three main decisions. Focus first on getting the right people, doing the right things, with clear accountabilities and metrics.

Strategy Decisions
Strategy challenges are indicated by a slowing in top line revenue growth. If revenue is not growing as quickly as you like, then it’s time to re-examine your strategy i.e. what you’re selling, at what price, and to whom. It’s important to have a concise articulation of that strategy so you can get everyone aligned and on the same page without wasting sales or operational energies on activities not useful to the business.   You will know you’ve gotten the strategy right if revenues are growing as rapidly as you want.

Execution Decisions
Execution challenges surface when your increasing revenues are not generating increasing profits. We’ve seen firms double and triple their revenue, because they have capitalized on a differential advantage, only to see their profitability drop because of the sloppiness of their execution.

The other indication of poor execution is pure hours spent delivering your products or services. When execution is haphazard, the organization has to rely on the “heroics” of their people putting in incredible hours to just keep the wheels from falling off the organization. By simply tightening up your execution habits, you can dramatically improve gross margins and profitability while reducing the time it takes for everyone to complete their work.

Cash Decisions
The last, but not the least, challenge is Cash.  Cash provides both oxygen and options for an organization.  Without cash, a business is in trouble.  Furthermore, the first law of entrepreneurial gravity is “Growth Sucks Cash.”  We take client companies through a process to help calculate their Cash Conversion Cycle (CCC).  This measures how long it takes from the time you spend a dollar (on sales, marketing, proposals, rent, inventory, wages, etc.) until you get that dollar back.

In the early days of Dell, the CCC was running 63 days and caused Michael Dell to almost run out of cash. By focusing on decreasing this cycle, they got it down to close to minus 35 days. That meant they generated more cash the faster they grew. We believe all growth firms can accomplish this or at least dramatically improve their CCC giving them sufficient internal cash to fuel their growth.

We suggest executives read Neil Churchill’s famous Harvard Business Review article entitled “How Fast Can Your Company Afford to Grow” which provides the formulas for calculating your cash conversion cycle.

Secret Weapon
The secret weapon is the way Certified Gazelle Coaches help organizations get all employees aligned with the company’s major goals and objectives.  Everyone on the team knows where they are going and what their individual duties are to help complete the big picture.  Through some simple techniques and procedures, your management team will be shown what they need to do to innovate your management system and get your organization firing on all cylinders.  The power this alignment brings is incredible, as any Gazelle coached company will tell you.

Innovation of your management system can rejuvenate your team and your business.  You, as leader, must take the first step to make that happen.  May your business be healthy, happy, and help you reach all your goals.

“In business you cannot discover new heights unless you have the courage to leave the ground.” ~ Seth Godin

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