Four Functions Every Business Needs for Long-Term Growth

Four Functions Every Business Needs for Long-Term Growth

A customer walks into your pizzeria carrying a lunch menu flyer. The cashier greets the customer and gets the order. A ticket is printed out and sent back to the kitchen. The ticket is reviewed and its details are relayed to the pizza maker who I just learnt is called a pizzaiolo (male) or pizzaola (female). If all goes well, in less than fifteen minutes, a fresh hot pizza is taken out of the oven, boxed and given to the customer. This exchange repeats until closing time, at which the bookkeeper, quite possibly you, records the sales for the day and also knows if a profit was made. Over several days, enough cash is put in the bank to print new specials and menu items on flyers to be handed out to potential customers.

No matter whether it’s a pizza shop, accounting firm, shoe shop, or manufacturing company, there are four functions every business must strengthen: Marketing, Sales, Operations, and Finance. In our earlier example, marketing hands out the flyers to customers; sales, the cashier, takes the order; operations which is the kitchen, makes the pizza; and finance is the bookkeeper who keeps track of the money.

Marketing

In most cases Marketing generates leads through outbound communication, either digitally or physically. Potential customers are attracted and inquire more information about the company or their product. Over time, if effective, marketing should be able to collect data so that it is able to build and refine the customer profile. Effective marketing systems nurture prospects into qualified leads to hand over to sales.

Sales

If marketing is successful, the sales team should have a sufficient quantity of leads to convert into paying orders.  This can take anywhere from a few seconds to a few months, depending on the complexity of the product or service. For example, in online sales, the sale team doesn’t interact directly with the customer most of the time and instead offers the customer sales tools such as a website with a shopping cart. On the other hand if the company were bidding on a construction contract, the sales cycle would be long requiring many face to face meetings and exchange of information. In either case, when the customer places the order, the work is handed off to operations.

Operations

A good order is like a blueprint for the operations team to properly execute the product or service. As the product or service is built or delivered, there may be more communication between the customer and operations. Once the service or product is rendered, the satisfied customer provides payment which is collected by finance.

Finance

Finance manages money. This means managing the short- and long-term requirements including payroll, and inventory, and new equipment, tools, and facilities, respectively. If the business is run successfully, more capital flows in and is retained in the organization, than flows out.  This allows the leadership team evaluate and act on greater opportunities to grow the business. As a result, marketing is provided a larger budget to attract more customers, and the cycle repeats.

While the functions appear discrete, they are all inter-dependent.  For example, the product or service experience delivered in operations will impact marketing through word of mouth.  Similarly, finance needs to allocate capital for the needs of all functions, not just marketing.  A leadership team that is able to consistently manage and improve the throughput and flow in each of these functions will eventually succeed in creating a sustainable company built to last.

Do you want to improve flow and throughput in your company? Give us a call and we’ll help configure your organization with consistent long-term growth.

8 Tips for Implementing a Gainsharing Program

8 Tips for Implementing a Gainsharing Program

Gainsharing

You’ve seen the signs over the last few years – employees not cooperating, resulting in efficient operations. Incentive plans like “Employee of the Month” and bonuses are given to improve employee sentiment. However, it seems like nothing has changed, and in fact things are only getting worse.

The problem may be that your incentive system may be inadvertently sabotaging your group’s performance. So how can you improve individual performance and also foster a collaborative environment?

One idea – implement a gainsharing program.

Gainsharing 101

So what is a gainsharing program? At its simplest level, it’s a group incentive plan designed to improve company performance. By designing a plan that rewards employees for developing and sharing ideas to increase company productivity, employees and management are working towards the common goal of improving the company. Typically, companies will reward employees on an individual basis, which many incentivize employees to compete with each other. When this happens the company suffers.

Gainsharing programs by design are meant to be simple and realistic in order for there to be complete understanding by all parties. Metrics used to measure performance are in step with the activities of employees, unlike financial measurements which can be complex and subject to manipulation.

For Example: A reduction in total worked hours to produce a given volume of goods or services. Employees will see the value and understand how their hard work positively impacts the goals of the organization. If employees are given unrealistic expectations, the gainsharing program will be unsuccessful.

Some Helpful Hints to Creating and Implementing a Gainsharing Program:

  1. Tackle the biggest costs first.
    If a company spends 90% of their product cost on material, then a gainsharing program designed to reduce material waste and rejects would be appropriate. If the costs are more evenly mixed than the previous example, then adjust the gainsharing program accordingly.
  2. Use the records on hand.
    If detailed records aren’t reliable, start at the base level of measurement e.g. total product cost. As the more useful information becomes available, a refinement of the gainsharing program metrics may be possible.
  3. Start small.
    Although it is not unheard of for companies to initiate a plan for the entire company, gainsharing plans are typically done for a certain set of employees within one set location. For example, sales staff are typically paid on commission, so it may not be necessary to include them unless there is evidence of overuse of company resources and time to acquire a new client.
  4. Be mindful of the current employee-management relationship environment.
    If there is a lack of credibility by the managers to their employees, there may be further prep work needed to be done before implementing a successful gainsharing program.
  5. Understand the company needs.
    Creating and implementing a gainsharing program takes significant effort by all parties and may not be necessary for small issues.
  6. It’s not an easy fix.
    Management across the board need to be active in promoting and nurturing improvements in the organization, not sit on the sidelines.
  7. Review the data.
    Ensure the data is accurate before designing a formula.
  8. Over time, “rachet” the base.
    As employees improve over time, the new base efficiency can be raised to further improvement. One way that is fair to all parties is to adjust the base e.g., add 50% of improvement from last year to this year’s base. This allows the base to grow without employees feeling like their efficiency will punish them in the future. Also, one-time improvements in new equipment or reductions from government regulations should be considered when setting the new base.

Think Collaboratively with Gainsharing

Perhaps the idea of creating a collaborative bonus structure has come up in the past, but the structure hasn’t been there to create it. There are numerous materials online that go into detail on how to create a proper gainsharing program, including “All You Ever Wanted to Know about Gainsharing but Were Afraid to Ask” by Woodruff Imberman. The key is to be diligent and patient with the program – your company will be rewarded by their efforts.

If you’re ready to see your company move in the right direction, but may not have the right systems in place, discover how icube can

5 Netflix Documentaries Every Business Leader Should Watch

5 Netflix Documentaries Every Business Leader Should Watch

Videographer

The other day I received an email about twelve books all business leaders should read. It was an impressive list of works written by some of today’s masters in business thought leadership, such as Peter Drucker and Jim Collins. I have no doubt that reading any one of the books listed would be highly valuable to any leader.

But then I put myself in the shoes of most of our clients at PCS Insight. “Would they really have the time to devote to this?” Most of the leaders we deal with are so engaged with their businesses that it consumes every last ounce of time and energy. More often than not they need down time, not business advice. I was convinced that there must be a better way.

5 Netflix Documentaries with Hidden Wisdom

It just so happened that around the same time as I came across the book list, I had just finished watching the second season of “Chef’s Table” on Netflix. I found myself thinking of the impressive personalities and their struggles and was convinced that this would be good for any business leader to learn from.

With that, the idea of compiling a list of other documentaries that would entertain and inspire leaders was born.

Here it is:

  1. Chef’s Table: A Netflix original documentary series. Each episode delves into the life of a single world-famous chef examining the forces that shaped their stories and identities.

What’s it got to with business? The series is a fascinating collage of inspiration, challenges, overcoming adversity, and the creative drive that all of us possess. It would be hard for business leaders not to relate with how some of these chefs approach creativity, planning, and execution of some of the finest dishes known to humanity.

  1. Happy: Directed by Roko Belic and executive produced by Tom Shadyac, this movie is an uplifting experience that explores human motivation and the psychology of happiness.

What’s it got to do with business? The movie shows that beyond a certain base level of compensation, money rarely continues to provide the motivation we need to excel at what we do. Instead, we need to feel connected to something bigger and more important than us individually.

  1. Jiro Dreams of Sushi: This documentary is the story of Jiro Ono, the ninety year old (as of this writing in mid-June 2016), sushi chef and owner of Sukiyabashi Jiro, a three-Michelin star restaurant in Tokyo. It describes how Jiro painstakingly built this restaurant over decades of singular focus. There is also a particularly poignant scene in which it is clear that father’s (Jiro) dream may not necessarily be that of son’s (Yoshikazu) and yet he is obligated to take over the restaurant because of cultural tradition.

What’s it got to do with business? Wow, so much to mention here! A work ethic that is out of this world, and with that the apparent complete lack of balance in Jiro’s life. The focus on excellence and little details that go into building a brand and reputation. The wisdom of staying small. These are just a few that come to mind.

  1. Cooked: A four part documentary series host and food writer – (yes, I love the world of food and it’s a common theme here) – Michael Pollan describes the use of the four elements, earth, wind, fire, and water in the transformation of the bounties of nature into delicious dishes.

What’s it got to do with business? This series shows us how what we eat is central to everything that shapes society and culture. Food is often at the intersection of art, science, technology, economics, religion, and culture. The conventional wisdom is that we cook because we are civilized. This series shows us how we may be civilized because we cook.

  1. Human Planet: Narrated by John Hurt, shows us how humans have learned how to adapt to harsh weather and topographies. The stunning cinematography captures the glory, ferocity, and fragility of our planet.

What’s it got to with business? I guess one could say the expression “to adapt is to be human” captures the sentiment. The series also shows us we humans have been able to conquer the most inhospitable places on earth with just our innovation and collaboration.

Sit Back, Relax, and Enjoy the Show

I hope you enjoy your summer and much needed rejuvenation with one or all of these wonderful works of art to give you the inspiration and energy to take your business to greater heights. PCS Insight can help guide your organization in this journey. With icube™ you can enjoy the balance, happiness, and flow that you need to make this happen.

Happy viewing!

4 Steps to Ensure Business Meeting Success

4 Steps to Ensure Business Meeting Success

There are few words more irritating to entrepreneurs than, “Let’s have a meeting about it!”. If you’re like most business owners, you’re driven to get things done and can’t stand pointless meetings. What got you here wasn’t managing by committee; it was execution and action.

However, as your business has grown you might have observed that the complexity in running the business has also grown. Decisions that took minutes or seconds to make now take hours, days, or even longer. You see yourself needing the input of other members of the company. The dreaded meeting is often the only way to get everyone on the same page.

What used to be fun and exciting is at risk of being dull and boring. But it doesn’t have to be this way. Here are four simple things you can implement in all your meetings starting right now to improve the quality and effectiveness of meetings in your business.

Essential Stages of Business Meetings

In all the research and work we have done with teams large and small, all successful meetings have 4 essential steps:

  1. Status: During which all meeting participants have clarity and alignment on the purpose of the meeting, the goals, the agenda, their participation, the meeting leader, and any other meeting details such as duration, location, and logistics.
  2. Accountability: During which all meeting participants report on any commitments they had made to the group prior to the meeting.
  3. Discuss and Solve: During which the group discusses topics, resolves issues, and solves problems.
  4. Action Items: During which all participants have clarity on next steps and their own responsibilities relative to follow-up work that needs to be done.

To accomplish this, follow these simple steps before and during your next meeting:

Step 1: Create and distribute a meeting notice to all participants with the following information:

  • Goals and objectives of the meeting
  • Agenda of the meeting
  • Individual participation expected identified by participant’s name
  • Preparation required by each participant clearly stated and identified by name – provide enough time before the meeting so that the participant has an opportunity to request clarity and complete the task
  • Location, time, and duration of the meeting

Step 2: During the meeting, review the agenda and request each participant to report on their tasks. Refrain from actually discussing the task. Instead, note the task status along with the specific topic to be discussed. Ensure that Steps 1 and 2 do not take more than a few minutes, preferably less than a third of the duration of the meeting

Step 3: Follow steps 1 and 2 with a prioritized discussion of topics and issues. Each topic should be reviewed, discussed, analyzed, and if appropriate, followed up with one or more action items assigned to individual participants for follow-up. Continue this process till a few minutes before the end of the meeting time EVEN IF THERE ARE TOPICS THAT HAVE NOT BEEN DISCUSSED.*

Step 4: Review all the action items that were created and assigned in step 3 and ask each owner if they are clear on what is required and a completion date for each task. If the meeting is held weekly, then the due date is automatically a week out.

* In some situations a team may have to continue the meeting until the matter at hand is resolved and may not be able to conclude at a preset time. This is “fire-fighting” mode and should happen very rarely. If it’s happening frequently, something else is wrong and the team needs to get to the bottom of it.

Enjoy More Productive Business Meetings

By implementing the following steps, you’ll drastically change the complexion of your business meetings. Not only will meetings become less painful but you and your team will reap the rewards from the newly revitalized structure. Visit our Backstory to learn more about how PCS Insight can help your business meetings become more productive and enjoyable.

Confused About Business Culture? Learn The 4 Pillars of an Effective Culture

Confused About Business Culture? Learn The 4 Pillars of an Effective Culture

There’s a lot of talk these days about culture. Lou Gerstner, the legendary CEO of IBM during the 1990s and early 2000s is believed to have said, “…culture isn’t just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value”. That all sounds great, but what exactly is culture?

As the leader in your company you know in your gut what your company should be doing. You’ve built your business on being able to deliver real and tangible value to your customers by addressing their needs. Often, leaders are so clear on what needs to be done, they don’t see the relevance of creating a great culture.

Learn about the 4 Pillars of an Effective Culture so that your organization can continue to create value for the long term.

Create the Ideal Culture

If you’re leading a growing company you have probably experienced the communication complexity that follows a growing team. You’re also probably seeing first hand evidence of the team not being on the same page relative to the direction and priorities of the company. It is time to look into this elusive concept of culture.

Learn about the 4 Pillars of an Effective Culture so that your organization can continue to create value for the long term.

Pillar #1: Purpose
Does your company have a clear purpose?

If your answer is making money or generating a profit, that’s not it. While those are very important, they’re not the end goal. They only help keep it going and be sustainable. The purpose is a bigger reason why your business exists. Since the late 1970s, Steve Jobs defined Apple Computer’s purpose as having a computer serve a single person and that person not having to learn how to use it. This clear purpose has driven the development of the very first Apple II personal computer to the Apple technology we use today.

Pillar #2: Vision
Do you have a clear vision that embodies the realization of your company’s purpose?

The vision of the Oxfam, an international confederation of 17 organizations with presence in 90 countries has a simple vision statement: “A just world without poverty”. In the 1970s Microsoft set its vision to be “A computer on every desk”. Such simple vision statements set crystal clear direction for a team. Using these vision statements can help define a company’s mid-term (3 years out), near term (one year out), and short term (90 days) goals.

Pillar #3: Values

Purpose and vision provide the guidelines for the values upon which the team operates. These are the guiding principles that define the behavior and decision making processes for the company. It’s impossible to anticipate every single situation faced by individuals or teams within a business. Having clear values can help ensure that at every step of the way, the purpose and vision is closer to being realized.

Pillar #4: Trust

Trust is the glue that binds organizations together. Without trust everything falls apart. The goal of purpose, vision, and value is to enhance trust. Trust is the embodiment of a culture. When you have high-levels of trust, human friction is reduced or eliminated which results in the collective alignment and focus of all members.

Enhance your Company with Culture

By utilizing purpose, vision, values, and trust, you’ll begin to build the ideal business culture. As an organization’s leader, once a culture is in place, you’ll soon be able to focus your efforts on other important aspects of the business. Reducing human friction is just one of the pressures culture helps to relieve. PCS Insight can help guide your organization in the right direction to begin creating a sustainable business culture.

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