Bruce Merrifield 2018-03-05 00:52:40
Create your own success road map McKinsey Consulting cranks out a lot of quality business research. I recently noticed its “Top 10 Insights of 2017” blog has three interrelated themes: successful companies have effective CEOs, are creating innovative cultures and are becoming digitally effective enterprises. REDUCE GENERALITIES AND CREATE YOUR ACTION SCRIPTS Generalized advice can ring true, but what vision do you want to share with your employees tomorrow? How will you package your unique and best opportunities into an enthralling plan? CEOs must at least: 1.Define the uncomfortable truths about the business in concrete terms based on data; 2.Offer a vision that will benefit all stakeholder groups. What’s in it for ‘we?’ 3.Shrink the vision to discrete plans or scripts that everyone can understand and not fear; and 4.Create sustainable levels of urgency and action while steadily cheering and publicizing every small win. PROFIT-CORE CUSTOMER RENEWAL Over the past 20 years, financial performance surveys for all types of distributors have confirmed that: 1.The same top-performing 5% of companies make a pretax return on assets of more than 20%. This is presumably due to effective leadership and perpetually innovating cultures. 2.The bottom 90% make commodity-hell returns of about 7% by pursuing the herd’s best practices and having no competitive edge. Unmeasured delusions of “good service” and trying harder based on common vision aren’t working. Customer profitability analytics reveal that for the bottom 90% there are a few super-profitable customers paying for many losing accounts. But these distributors don’t have the talent, free cash flow and courage to innovate. They must first improve service value for their best accounts to further grow and retain them. Then, they can cure the subgroups of losing accounts. I call this profit-core customer renewal. PROFIT-CORE RENEWAL VISION DECLARATION What if you trumpeted to all employees: “We are going to increase everyone’s compensation, job security, growth and pride, starting immediately, by pursuing a detailed list of sequential action plays!” Would everyone be listening? While there is no magic recipe with silver-bullet shortcuts for general corporate innovation, there is a process with specific plays (or scripts) distributors can put into action to: 1.Retain and grow the most profitable accounts; 2.Fix the losers; and 3.Deal with the psychological and political resistance to change NO MORE POWERPOINT Distributors sell products and react to supplier and customer needs. Innovation is not their strong suit. But digital channel disruption is here and if a company doesn’t change as fast or faster than its environment, its future is grim. To boost your company’s innovation game, why not borrow and simplify a key technique from Amazon. More than a decade ago Amazon CEO Jeff Bezos concluded PowerPoint presentations should be banned. He felt presenters were speaking extemporaneously from their bullet points, their communication lacked clarity, breadth and depth, and attendees were confused. The big-boss, data-free opinions always won, unswayed by a PowerPoint and time was wasted. The new meeting format began with everyone reading a document (six pages maximum) thoroughly prepared by whomever wanted to champion something new. These narratives were not assigned in advance to be ready unevenly and forgetfully. At the meeting, each participant was expected to take the time (5 to 30 minutes) to thoroughly read and digest the information at their own speed and in their own way. Next, the presenter(s) answered attendees’ questions as if they were defending a dissertation. The subsequent page-by-page review evoked questions and discussions that were informed and focused and contention was substantive, not political bickering. After the reading, all attendees had a fresh, shared and in-depth understanding of the topic. The presenter took notes and sometimes asked for a redo, usually to get more data. If a presenter pressed for a decision, the only responses allowed were “Yes,” “No,” or “I disagree and commit.” So why is this better? The innovation presenter or team is forced to do deep research and present clear thinking. The document should stand on its own and include: 1.An imaginary future PR statement describing a successful outcome for all shareholders; 2.Sufficient research facts; 3.A proposed roadmap with assumptions, experiments, milestones and required resources; and 4.All anticipated questions from all potential stakeholders with wellthought- through answers. This process levels the playing field between introverted champions of innovation and glib, popular politicians. The process simply delivers better collaborative plans and decisions with less total time invested. Writing these narratives is tough. Most distributors don’t have MBAs adept at writing or reading such documents. So, simplify the process to fit your firm. Ask Bruce: Longtime industry consultant Bruce Merrifield is an expert on highperformance service management and is one of the most successful turnaround advisors for wholesale-distribution companies and channels. Each month Bruce will answer your distribution-related business questions here. Have a question for Bruce, email Chief Editor Mike Miazga at firstname.lastname@example.org.
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