business model
Continuous Improvement, Growth Mindset, and an “Attitude of Better”
This was originally posted on LinkedIn.com/in/chipn
When I had my own company, we focused on providing the absolute best services in a few niche areas. Our goal was to succeed in the spaces that were important yet underserved. We identified those areas, validated the need, evaluated the competition and our competitive positioning, determined the market potential, and then made an informed decision based on that data.
But, this was not a plan for winning. It was a roadmap to places we could win, but nothing more. What would our strategy be? What specific problems would we solve? How would we create awareness around the potential impact of those problems? And how would we position ourselves as the best candidates to address those business needs? In short, what was our real purpose or raison d’etre?
Recognizing that void led to a couple of powerful revelations –
1. It is great to have a goal of being the best at something, but don’t use that as an excuse to procrastinate. Learning and improving is an iterative process, so that goal itself was not good enough.
2. Adopting an “Attitude of Better” became a game-changer. We set our focus on continuous improvement and winning. We became customer-obsessed, driven to provide better service and better results for every customer. We gauged our success by customer satisfaction, repeat engagements, and referrals.
3. But it wasn’t until we adopted an intentional Growth Mindset that our business evolved and improved.
· We leveraged every win to help us find and create the next one.
· Our team constantly pushed each other to raise the bar of knowledge, expertise, and performance.
· Just as important was what occurred next. They became a safety net for each other. Failure for one meant failure for all, and nobody wanted that. They became a high-performance team.
· We created standard processes and procedures to ensure consistency and maintain the highest levels of quality. This applied to everything we did – from working on a task to writing trip reports, status reports, and proposals. It also reduced our risks when we chose an outsourcing partner to help us take on more concurrent projects.
· Whenever possible, we automated processes to maintain consistency while increasing efficiency, repeatability, scalability, and profitability.
· We measured and tracked everything, analyzed that data, captured lessons learned, and continuously worked on improving (and documenting) every aspect of the business.
· A byproduct of this approach was that we could offer leaner pricing based on accurate estimates with very small error margins. Our pricing was competitive, we could fix the price for much of what we did, and our profit margins were very good. This allowed us to invest in further growth.
Our “attitude of better” also came across as confidence when selling to and working with new customers. Not only could we tell them stories of our success that included tangible metrics, but most of our customers became references willing to talk about the value we added. Their stories included discussions about how much better things became due to our work.
Better became the foundation of what we did and the basis of those customer success stories.
To Measure is to Know
Lord William Thomson Kelvin was a pretty smart guy who lived in the 1800s. He didn’t get everything right (e.g., he supposedly stated, “X-rays will prove to be a hoax.”), but his success ratio was far better than most, so he possessed useful insight. I’m a fan of his quote, “If you can not measure it, you can not improve it.”
Business Intelligence (BI) systems can be very powerful, but only when embraced as a catalyst for change. What you often find in practice is that the systems are not actively used or do not track the “right” metrics (i.e., those that highlight something important – ideally something leading – that you have the ability to adjust and impact the results), or provide the right information – only too late to make a difference.
The goal of any business is to develop a profitable business model and execute extremely well. So, you need to have something people want, deliver high-quality goods and/or services, and finally make sure you can do that profitably (it’s amazing how many businesses fail to understand this last part). Developing a systematic approach that allows for repeatable success is extremely important. Pricing at a competitive level with a healthy profit margin provides the means for sustainable growth.
Every business is systemic in nature. Outputs from one area (such as a steady flow of qualified leads from Marketing) become inputs to another (Sales). Closed deals feed project teams, development teams, support teams, etc. Great jobs by those teams will generate referrals, expansion, and other growth – and the cycle continues. This is an important concept because problems or deficiencies in one area can negatively affect others.
Next, the understanding of cause and effect is important. For example, if your website is not getting traffic, is it because of poor search engine optimization or bad messaging and/or presentation? If people visit your website but don’t stay long, do you know what they are doing? Some formatting is better for printing than reading on a screen (such as multi-column pages), so people tend to print and go. And external links that do not open in a new window can hurt the “stickiness” of a website. Cause and effect are not always as simple as they seem, but having data on as many areas as possible will help you identify which ones are important.
When I had my company, we gathered metrics on everything. We even had “efficiency factors” for every Consultant. That helped with estimating, pricing, and scheduling. We would break work down into repeatable components for estimating purposes. Over time we found that our estimates ranged between 4% under and 5% over the actual time required for nearly every work package within a project. This allowed us to profitably fix bid projects, which in turn created confidence for new customers. Our pricing was lean (we usually came in about the middle of the pack from a price perspective, but a critical difference was that we could guarantee delivery at that price). More importantly, it allowed us to maintain a healthy profit margin to hire the best people, treat them well, invest in our business, and create sustainable profitability.
There are many standard metrics for all aspects of a business. Getting started can be as simple as creating sample data based on estimates, “working the model” with that data, and seeing if this provides additional insight into business processes. Then ask, “When and where could I have made a change to positively impact the results?” Keep working until you have something that seems to work, then gather real data and validate (or fix) the model. You don’t need fancy dashboards (yet). When getting started, it is best to focus on the data, not the flash.
Within a few days, it is often possible to identify and validate the Key Performance Indicators (KPIs) that are most relevant to your business. Then, start consistently gathering data, systematically analyzing it, and then work on presenting it in a way that is easy to understand and drill-into in a timely manner. To measure the right things really is to know.
Where Ideas, Experiences, and Lessons Learned Intersect 