Focusing on What Matters

A company can slowly but surely start to build-up excessive overall company costs and overheads without realizing it.

When looking at P&L, consider the following:
1) revenue growth.
2) ratio between investments in marketing/R&D or customer-focused activities versus overhead costs.

There's no exact rule what that ratio should be, but it is safe to say that the lower the ratio, the more likely your company will get into trouble and stagnate or even loose market share.

Reduce company costs as much as you can, and invest the savings into opportunities that will directly generate revenue growth or increased customer satisfaction. Eventually, your bottom line will improve quickly.

The "War Room"

Studies point out that teams working in a "War Room" (closed environment) are two times more productive than others teams thanks to increased communication and focus.

Consulting companies often use this model on project assignements.

The Importance of Body Language

Dr Alrbert Moravian at UCLA did research to determine why people trust. He found out that:

• 7% of trust is established through the words that we say.
• 38% comes from the way we say those words, the tone of voice or inflections we use

BUT:

• 55% is established through the body language we observe.

Creating the Customer-Focused Organization

Most people know how critical it is to understand the customer and be customer-centric, yet genuine customer focus is rare. Profit and business growth is not in the "knowing" but in the "doing" and focus on customers definitely needs processes and structure to become reality.

Below are a few key steps for organizations to become truly customer-centric:

Establish a Formal Process to Create a Dialogue With Your Customers

• Your managers or executives should spend time with customers on a weekly or monthly basis and create casual interactions/discussions. Many top CEOs in Fortune 500 firms report that they spend upwards of 40-50% of their time with customers.
• Spend time at your customer's home (if you sell to homeowners) or workplace (if you sell to businesses): simply observe your customers when they are buying, installing, or using your products. What are their reactions and how do they feel? You will only really find out if you're right there with them - watching as they experience your product. This is how Procter and Gamble found out that customers in Mexico valued "water preservation" to a great extent. Based on this customer insight, Procter and Gamble developed a new detergent product and gained market leadership.
• Organize formal interviews with your customers where you can grill them for 1-2 hours. Use the "why" technique to dig deep and get valuable consumers insights about why they use your category, how they perceive the world around your products, and what their buying habits are (where they shop, who they consult, how they price-shop, etc). Young children are naturally good at using the "why" technique. Here's how it works.
  
  You say "it's getting late, and it's time to go to bed"
  The 2-year old asks "why?"
  "Tomorrow's a school day, and you need your sleep"
  "why?"
  "because you need to be rested to do well in school"
  "why?"
  "because you need to get good grade so that someday you can go to college"
  "why?"
  "because if you go to college, you can get a good job and take care of yourself"
  "why?"
  "because if you can take care of yourself, then you can take care of ME when I get old!"
  
  While this conversation is taken to the extreme, it shows how the "why" technique can yield deep consumer insights and help you understand your customer's feelings and aspirations.
  
• Develop a structure for everyone to report and share their new customer insights with your other employees - for instance, make it mandatory to report findings on a quarterly basis.
• Involve customer service in pro-actively providing feedback from customers. Ask your reps questions about your customers: for instance, what they like or don't like about your brand, or problems they experience and how they seem to feel about it.
• Invite customers to speak about their business and about your products with your customer service, marketing, sales and R&D groups.

Develop your Products or Programs Hand-in-Hand with Your Customers

• Involve customers EARLY in the process of a new program development – and keep them involved along the way. In a business-to-business situation, the success of your new products often depends on how many of your customers you have talked to. Target a minimum of 10-15 customer feedback sessions.
• Make sure you pick the right target: who are the people making the purchasing decision and who are the influencers?

Align The Organization Around the Customer

• Inventory your ongoing projects. Are they are focused on the customer or are they only mostly focused on getting more sales and running business operations?
• Look at your R&D investments: are they high enough to generate product differentiation and improved customer experience?

Understand Customer Choices

• Create an e-commerce or CRM architecture to effectively analyze customer choices.
• Connect with your customers at every point in the sales process: meet with them and ask open questions to evaluate how they perceive their customer experience.

Take It a Step Further: Build Your Organization Around The Customer, For The Customer

• As the company grows, develop your organization in customer groups (or create ad-hoc cross-functional teams designed around customer groups).
• ACFC: At the Customer, For the Customer. General Electric took it a step further and developed ACFC programs where GE employees work at the customers' worksite.

As with everything, reward appropriate behavior - make "customer-focus" part of your performance reviews and let your managers know they will be evaluated on their customer-centric initiatives. Overcommunicate with your staff: publicize great, customer-focused heroes, and make sure you constantly talk about customers in your meetings. Don't be afraid to bore your staff with repetition, or you will never really get the message across.

Creating company alignement

One of the most important lessons about strategy from Michael Porter, professor at the Harvard Business School, is that a company's activities should fit and contribute to the building of a competitive advantage or unique positioning in the marketplace.

The selection of a CRM software, the hire of extra sales staff, or the development of a public relations campaigns are all major company activities that should fit the strategy and reinforce one another.

The trouble is that most companies don't have a "razor-like" strategic focus and it is questionable that each of their individual investments really clearly contribute to buidling a powerful, distinctive competitive advantage.

Below is a reminder of Porter's 5 tests of a good strategy:

1. A unique value proposition compared to competitors
2. A different, tailored value chain
3. Clear tradeoffs, and choosing what not to do
4. Activities that fit together and reinforce each other
5. Continuity of strategy with continual improvement in realization

Bullet points: how to motivate?

Motivating your direct reports is an art that cannot completely be summarized through a list of bullet points, but below are practical ways to do it.

Reward and celebrate performance, with:

• money
• lavish praise, public praise
• compliment personal qualities (not only project results - Do it sincerely and with sincere admiration).
• presentations of results to top management
• encouragements
• increased responsibilities
• increased budgets
• increased ownership of certain tasks/projects/expertise (assign them as the official champion of "x", and make sure they are required to give their opinions on every project involving "x")
• valuable gifts (trips, etc)
• training: invest in your people

It is critical for a manager to be excellent at rewarding performance - but it is also the easy part in management. The tough part is to generate performance to start with.

• find out what employees like to work on - if you assign them to projects they don't like, chances are the practical bullet points below will not help that much.
• set goals - together with your direct report. The goals must come out of their mouth (a French writer once said "those who speak will make it happen").
• explicitly mention that they own these goals (not you) and are responsible for achieving them
• give your employees a feeling of importance: why is their work critical?
• make sure they understand they are working towards a greater good (beyond just making money or helping the company make money)
• relentlessly encourage participation: discuss with them how to achieve these goals - Make sure they do speak at least 50+% of the time!! Encourage them along the way when they suggest ideas. Listen. Don't shoot down an idea.
• make sure goals are easy enough to reach, at least to start with.
• write down the goals and make sure there's a deadline.
• promote team work. Most workers get a motivation boost from working in teams.
• free up competent people to do their jobs as they see fit.

Finally: ask your employees about their work, and you will get good insights on how to motivate them.

The value of education

What is education about?

Is it about reading a book, attending a seminar, reading about an interesting idea in the Wall Street Journal?

It's not.

It's about how good you are at actually using these ideas in real-life. The "Execution" part of Education is critical and completely ignored by most.

You will often hear people say: It was an "interesting" book. Ask them how they changed the way they do business based on their findings and you will get a blank look.

Education is often worthless without the execution part. Education is not about "what's nice to know", it's about "what does this mean for my business?" or "what will I do about this now?". Sometimes, it takes a discussion with a friend or colleague.

Next time you take 5 hours to read a book, take 15 minutes at the end to ask yourself: "what does this mean for me?" and "how can i use this?". Six months later, pick up the book again and ask yourself if it's really been useful - or just "interesting".

Now of course, the long-term value of education should not be discounted. Sometimes, you need to read about a topic a few times and view the situation from different angles to really "get it".

Overal though, the value of education should be judged by results.

Laser-sharp focus on priorities

In his latest book, "Know-How: The 8 Skills That Separate People Who Perform from Those Who Don't", Ram Sharan stresses the critical importance of "laser-sharp" focus on priorities.

Most managers are over-achievers or thrive to development/implement new ideas. The concept of "new" is exciting but sometimes counter-productive: it distracts from your core 2-3 priorities you need to focus on.

An article in the Harvard Business Review uses the example of a HR Manager who had planned to implement 3 major initiatives at the same time. Eventually, he gave up on one and did not get very good results in the other two.

To maximize efficiency, managers should focus on a couple of key priorities for their team and overcommunicate them constantly (your subordinates are probably just as likely as you to get off track). Ultimately, it is also necessary to recognize that half of our daily activities do not significantly contribute to the big picture. Simply log your time and you will be surprised to see how you REALLY spend your time. Scary.

"Laser-sharp" focus you said?