Focus and Strategy

From visits to various organisations, we have observed that many organisations are like alcoholics..... Alcoholics find it difficult to leave their drinking habits. Similarly, organisations too cannot leave their habits of clinging to operational silos. Daily urgencies and crisis are expected, attended and promoted than the important activities of business. Business connection is lost in many the organisations.  Operations are meant to drive business, but operations, in course of time, engulfs business and the very purpose of business is hijacked. We bring this anomaly to the notice of the key players of business. Even being aware of this predicament , the people in the organisation cannot get out of their habit of fighting daily urgencies and crisis.

Many say we need to form business strategy, but there is no time. they often say ... Let us finish this project and then we shall sit for forming business strategy. Most business owners and key players fail to take action on strategy but keep on continuing their operational routines.

Second factor that hinder the wished growth is the lack of clarity about overall strategy We have lost count of cases in which well-intentioned project managers waste their time and energy on initiatives that senior managers felt, this is not our priority, even when the same senior persons have approved the initiatives.

Still another observation is that ,  lot of good companies waste enormous amounts o resources on too many projects that had too little focus.

Our business facilitation workshops attempts to overcome these problems by establishing shared awareness and focus of the business. 

Benefits and advantages of Chai Board

Chai Board is the tool we use in facilitating DNA crafting (strategy Development). Flip charts and the marker pens are the usual tools that we use in the facilitation process. We have observed that this simple process brings certain significant and important value to the key players who are participating in the Chai Boards (DNA sessions).  

Some of the conspicuous ones are….

It brings Focus: Because everyone is looking at one display: the flip charts, the key players do not have many different versions inside their own imaginations. Slowly shared awareness and understanding is built. This shared understanding forms the basis for future social capital needed for the business growth.

It promotes camaraderie: The participants begin to feel they are part of one team. The provocative, interactive, engaging qualities of working with flipcharts and dialoging are found to be more effective at supporting relationship building, trust, and participation than pushy PPT presentations and lectures.

It prevents fragmentation: Fragmentation suggests a condition in which the people involved see themselves as more separate than united, and in which direction and focus are scattered. It is a phenomenon that pulls apart business that is whole. We have found that fragmentation is hidden, intangible and people in the organization do not even realize that there are incompatible tacit assumptions about the business and each key person believes that his or her understanding is complete and is shared by all.  Our flip chart display is a direct support to common findings, and allows the key players to aggregate and analyze the issues on a common platform. Most of the outputs that the key players are making in understanding the dynamics of their business are from displaying on flipcharts and dialoguing on the issue. This process prevents fragmentation but enhances shared understanding. This is key to business growth, without this it is less probable.

It allows easy follow-through: Connecting everyone’s activity over time is essential to producing anything. The difference between relying on everyone’s individual perception and having a shared schedule and road map everyone buys-in is night and day. The output flipcharts allow the key players to brief themselves, remind, repeat the matters of business, support after-action reviews, and document key outputs for broadcasting to others in the organization.

Contributed by Sasikanth Prabhu

Disorder in the Questions: asking the ‘How?’ sooner

When we go for marketing calls to sell the service of DNA development for the businesses, I make a single statement to make our point i.e. ‘we help the companies to grow from one level to next level’.  As a response to this, often we get back a question ‘How do you do that? ‘.  Also we get other questions that are closely related to the disorderly question “how do you do that? “. Some of them are ‘How do you get from here to there?’, ‘Where has this worked?’, ‘What would this program cost and what is the return on investment?’. ’ How do we measure it?’ etc. We prefer to call this question disorderly, because it beats all the creative and productive purposes. The question creates a subtle aura of cynicism or contempt. It indicates something such as “ We have been doing it all these years, how can you be better than us” ,  “We know it all , let us see if you can tell us more than we know, which is impossible”,  etc.. It is also a defense against taking action, as it implies that let us know clearly that it will yield what we want then we shall act.

Thus the How? question is a defense for the stubbornness to act for change or even to think differently. It is an indirect expression of doubt, more on to them than on us.  The How? question also seem to be a habit.   Business owners who have strong habits of pursuing what is practical and doable, tend to ignore larger purpose and impacts. We are astonished to watch frequently that when some business owner’s initiatives do not work, they simply try harder. When they are trying to control a business and it is failing, then they doggedly do more of what is not working.

The How? question also promotes an illusion of speed such as the world is moving fast now a days  and there is no time for thinking and emotions; At any cost we must do all things fast. Of course, we need to do things fast what needs to be done. What need to be done: ‘the business’ is often forgotten.  Instead the organization mindlessly pursues to meet the mechanical objectives. This mindset, of going only behind what works, is the biggest hurdle to sustainable business growth. We attempt to break this mindset very early in our interactions and that puts us in the risk of being expelled from the premises. But that is the hazard of business facilitation job. We need to put up with it.

Each time business owners / managers try to get answers to the question How?, they get answers such as .. do Lean management, do six sigma, do 5S, do 360 degree feedback, do balance score card, do leadership training etc etc. All seem to have not yielded what was expected if not failed. Still organizations resort to such programs every now and then with a hope to solve their fundamental issues.  Often How?  question fails because it is not the right question and secondly the answer comes out of someone else’s experience. It is difficult for any business to live on the experiences of others regardless of the meticulousness with which the answer is accepted.

It is not that we propose a blanket ban on the How?, it is only that we persuade the business owners/ managers to save this question for a  latter period and that there are more important questions to be asked before the How?. Getting the questions right at first is the best step. We facilitate to make them ask right questions.

Contributed by Sasikanth Prabhu

Strategy during stressful times.

Recently we had to stall our Business strategy workshops (DNA Development) in one of the reputed company which serves as vendor to an Automotive OEM. The strategy development process is stopped because the company is undergoing distress in terms of increased costs of production, cut in orders from the customers, lower productivity etc. The company was also preoccupied with negotiations with labor for a renewed contract.  All these put together may take toll on the long term strategy. ‘We need to survive first, to think for future’ that is the principle chosen by our client for the moment.  Logically this mantra seems right but has very limited value.

Impulsive reactions to problems, across the enterprise cost-cutting, failures of leadership, lack of clarity, misunderstanding of risk and ignorance of consequences, are all common strategic failings during stressful times.  Typical actions during such period as we have seen is that, all activities centre around cutting costs and raising cash (by loans, by brisk debt collection or delaying payments to creditors). Other ways are – reducing salaries, renegotiating contracts, selling assets, closing a plant, or even reorganizing the entire plant. Business owners or managers who make these decisions seem to be making a critical error. A majority of companies’ cost-cutting measures fail to deliver the savings expected. In fact, half of all cost-cutting schemes are aimed at delivering incremental savings of less than 10% of costs.

Most ‘reduce - cost’ decisions have limited effectiveness. There is genuine concern that more invasive cost-cutting decisions designed to deliver short-term benefits often harm the long-term competitiveness of the company. The key to effective cost cutting is to know the business and its outcome.  That outcome should be in line with the organizational actions we take. Even if a cost reduction attempt is considered essential to survival, simply looking for percentage cuts across the business is likely to lead to a reduction in a business’ competitiveness.   The Business owners / managers should have strategic outlook on cost savings and it should be available for dialogue.

Applying a cost-cutting mentality within existing strategies (if there is one) can deliver not only sustainable savings but also help advance strategic goals. For example, it’s often assumed that cost-cutting and customer satisfaction – a common strategic objective – are mutually exclusive. But if there is an existing supply chain strategy in place, it makes sense to identify which processes are not directly related to improved customer relationships – then look to cut costs or refocus those activities.

Though we supported our client who suspended the strategy discussions in passive way, our answer to this problem is to address strategy in simple, relevant ways that keep business owner / key players focused on the business of the company (strategy), while delivering clear courses of action to survive in turbulent times and grow at the same time.  This need for maintaining a strategic approach is critical, which means looking clearly at business in clear ways, then analyzing how long-term strategy can be maintained in a depressed situation. Business owners / key players who have a mindset to make reasoned decisions based on the solid strategy will do a better job of securing a winning future of their business, as well as their survival.

At times of economic upheaval and low availability of finance, there’s a real danger that

the strategy can take a back seat to survival. But organisations that abandon strategic thinking not only run the risk of undermining their chances of advancing their business when the economy improves, they also endanger their ability to weather the storm.

The key to ‘strategy under stresses is discipline – business discipline !

Contributed by Sasikanth prabhu

Profit and Profitability

Many incidences we have faced in our strategy workshops, where we have to explain the difference between profit and profitability. Yogesh Jain of Niche Quality Systems Pvt Ltd, who is partnering for the DNA development service in Indore region has witnessed most of the confrontations related to profitability.

The question, what is the aim of doing business? Elicits an immediate and instinctive answer… ‘to make profits’ from most of our workshop participants.  Anything other than profit seems to be unthinkable for both business owners and managers.  This is the point where we struggle most to make the key players of the business think beyond profit.  One aspect that we push them to go beyond profit is ‘profitability’.

When we say that ‘profitability is healthier measure of business than profit’ is not welcome by most of the business owners, partially because they do not understand the difference between these two and due to the sentimental attachment they have towards the term ‘profit’.  

Why this strong sentiment?  We feel …….because everyone in the company pays attention to profits. Most of the key business teams have a revenue / budget / profit plan, each department / functional head owns an important element of that plan and progress is watched closely by them in the review meetings.  All managers work strenuously to meet these targets. Yet, even if each manager meets the budget targets, the company seems to be a lot less profitable.   

I remember sitting in a review meeting of a distribution company several years ago. The business owner of the company sat at the head of the table and looked at the four to five managers sitting on both sides of the table. Each manager, in turns began..’ here are my numbers’……. After presentation, they had discussions on implications of the numbers presented and finally all adjusted their numbers and a consensus was reached. This was the half yearly plan.   

In the following quarter the Sales manager grew the top line and met his quota. An additional sale came from new customers who ordered frequently in small amounts. The gross margin on these orders did not cover the distribution cost. Other customer ordered products that were out of stock locally and had to be couriered from other regions.

Two things were noticed in this situation. First both the Sales manager and the Logistic manager were on target; the sales manager grew revenues and the Logistics manager met his target because his budget was based on an average cost that allowed these inefficiencies with a hope on future business. Even though these managers met their numbers they failed in managing the profitability.

Second, these uncommon sales and orders could have been made much more profitable through some very simple business oriented twists, which would have benefited the customers as well as the company. These twists require only a business acumen and execution - not extra financial capital. Our strategy workshop highlights this point to a large extent.

As a discipline, we need to see Profit and Money as two different things. It is certainly possible for a firm to make a huge profit and have no money. It is equally possible that company is flush with funds but is suffering from losses.  What happens when an organization shows a profit?  There will be a line of people standing in a queue waiting for a share of profit.  Some organizations get into trouble because they don’t make profit. And others get into trouble because they make profit.

But successful businesses stand on two pillars. One: the ability to generate profit. Two: the ability to manage cash flow. Managing cash flow is very much related profitability. But this is missing in most of the companies… profitability is unseen and unmanaged!

 Contributed by Sasikanth Prabhu

Entry Barriers

When I was a MDP consultant at IBS Kochi, I had a chance to visit premises of more than 50 small, medium and large businesses. My job was to develop businesses for the intellectual capital of the faculty at IBS. My experiences during the visits to the prospective customers' premises made me feel that intellectual capital is the least wanted capital by them, but mostly needed. We found two situations in the customer’s premises: one is " business is doing well" and the other " business is not doing well". After visiting a score of prospects we found a pattern in their responses, mostly unfavourable ones.

Places where business is doing well the following behavior is found.....

 They....

·   Do not allow the new service providers to access the business leaders

·   Show ‘we-know-it-all’ attitude

·   are busy Expanding the organisation at a faster pace

·   Revenue growth and profit generation is equated with business growth

·   Give high priority to prestigious certifications and image building activities

·   Focus mostly on customers with high purchase power

·   Engage in creating entry barriers to the new comers / competitors

·   Look for business diversifications

·   Command and demand services from the vendors (supply chain)

 Places where business is not doing well the following behavior is found.....

 They....

·         engage in cost cutting measures

      ·         sell the products at thin margins

·         arrange programs to change the peoples’ behavior. The programs will be conducted by in house experts or by an outside agency that quotes the least.

·         take disconcerted marketing initiatives

·         spend more time in urgent and managerial issues

·         Search for certifications that will give them credibility in the market.

·         are hesitant to discontinue the unprofitable / failed product lines

contributed by Sasikanth Prabhu

Killing Business Innovation

Innovation happens in most organisations on daily basis, but most of it is revolving around cost reduction or pricing tactics. Very very rarely do Business Innovation happens.

Business Innovation isn’t just a strategy – it’s a mind-set founded on the belief that a win for customers and employees is a win for the company. Unfortunately, most companies are unwilling to make the transformation from being product, geography, or function centric to becoming truly Business centric. With a decade of experience with many businesses, we have found six mind-sets that block business innovation.

1. Spends without focus. Firms pour money into traditional pockets.... training, sales promotions, advertisements, product / service development, but research shows that the market refuses to give them credit for this. Business owners make all kinds of excuses for this state of affairs –“We’re in a tough industry” or “All the Street cares about is short-term results”– but customers just aren’t buying it.

2. Makes budgets an entitlement. Senior managers who negotiate for funding typically make their decisions on the basis of the prior year’s budget or the company’s general cost concerns. At the same time, department staff view the budget funds as an entitlement (we ought to get this... attitude) rather than as a investment focused on the business. The result?  Business as usual, and the same (boring / off the shelf ) customer offerings.

3. Assumes people in the field know nothing. Most firms treat departments as seperate entities /functions run by people with respective special backgrounds. A typical business owner / CEO thinks, “Our technical people are in charge of product development – they have to develop and educate the sales people about the new product. Sales persons will never understand the complexities of engineering.” This mindset almost guarantees that products and services don’t properly connect within the organisation.

4. Puts Marketing, Finance, Administration etc. in different cubicles. These distinctly different functions are more or less autonomous. They rarely communicate, except to consider cutting budgets when overall business performance lags. Such disunity ensures that no one pays attention to business of what the customer needs and wants from the company as a whole.

5. Detaches Marketing from the customers. Marketing people can’t do much for customers beyond feeding them propaganda. For eaxample when premium resort customers often lack a decent meal or even a pillow, the poor folks in Marketing can only report on customer rage.

6. Don’t rock the boat ..attitude. Harmony is given priority than doing more business. Business leaders / top management shy away from organizing their businesses around customers' needs , arguing that doing so is “too complicated” or “too disruptive” for them. But for the organic growth of the business, shaking up is needed. Only then the sustainable benefits will flow to the customers, employees, shareholders and the economy as a whole.

We are exposed this kind of mindsets in our retainer engagements (DNA Crafting) and it frequently challenges us in various forms. With a balance of approaches we have begun to grapple with the situations. But we hold on to our methodology of 'Merciless provocation" though it is interpersonally risky, yet the only known effective method. Changing mindsets emerging to be our specialisation.

contributed by Sasikanth prabhu