Most lean initiatives are focused on a specific part of an organization: improving the operations of the manufacturing floor, reducing work in process (WIP) or lean-driven accounting practices. While that approach can be highly effective at solving a single problem, it often misses the improvements that could be realized by looking at your entire business holistically. By seeking to eliminate waste and align resources from a 30,000-foot view, you can create better results across your entire business, especially when you focus on strategic execution.
In our experience and research, very few leaders are focusing on execution to streamline their businesses. This is in spite of independent research, such as that of Stanford faculty members Mark Morris, Raymond E. Levitt and William Malek, which shows that fewer than 10 percent of well-formulated strategies make it to a successful implementation.
Because execution isn't a skill that's generally taught in business school or developed within organizations, many business leaders overlook it. However, it can become a key ingredient for eliminating waste and increasing efficiency.
It starts with focusing on the six key components of your organization. As you focus on strengthening each of these components, allowing each to work in harmony with the others, you'll clear your obstacles to growth and pave a path toward a new level of success.
When you have a strong vision for your company's future, it's possible to get everyone in your organization focused on the same future — and how your company will get there. Start by getting your ideas onto paper, then sit down with your leadership team to develop concrete answers to eight questions:
1. What are your core values?
2. What is your core focus?
3. What is your 10-year target?
4. What is your marketing strategy?
5. What is your three-year picture?
6. What is your one-year plan?
7. What are your quarterly Wildly Important Goals — your priorities for the next 90 days?
8. What are your company's issues?
When you finish, you'll have both 1. an overall vision for your organization that will renew your enthusiasm and excitement and 2. a means to make that vision a reality.
The health of your organization also depends on making sure that you have the necessary staff to deliver your product or service consistently with excellence — and no more. You'll first want to make sure you have the structure in place to deliver on your vision. Make sure your company’s structure and all individual positions are clearly defined and understood by everyone. Once this is clear, make sure everyone understands their position, wants it and has the capacity to do their job well.
Once your staff is aligned in the positions they want and the core values you've defined, you can start making significant progress forward. You'll define that progress through data points.
By establishing consistent data points, you can objectively manage your business through a small set of numbers. We suggest choosing five numbers that you can run on weekly basis that will offer you an accurate pulse of the health of your organization.
Which numbers you choose will depend heavily on your individual business. Most companies choose some variation of the following five metrics:
1. Weekly revenue
2. Closed business
3. Accounts receivable and accounts payable
4. Customer satisfaction
5. Gross margin
Assign one person to be accountable for each one. When that number gets off track, look to the person in charge to create an action plan for realignment.
Once you have your measurements in place, you'll want to look closely at the issues list you developed with your management team and remove any barriers to your progress.
To help your company grow, you need to define all of the issues in your organization and prioritize their solutions. Unresolved issues drain your energy, slow your progress and often work in opposition to your forward motion. We suggest the three-part issues-solving track:
1. Identify the underlying root cause.
2. Discuss the best possible resolutions.
3. Select the best action steps to take to solve the issue forever.
Once you've removed all of your barriers to progress, you'll want to take your most effective processes and duplicate their successes across the company.
To multiply the positive effects of your best processes, identify the six to 10 core activities that make up your business model. Document them in a fashion simple enough for everyone in the company to replicate them exactly.
Ask yourself: What are the core functions in your HR, marketing, sales, operations, accounting and customer care departments that keep your operation running smoothly? Standardize them by focusing on the essential steps within each process, then train your staff to follow these procedures consistently. As you reduce complexity, you'll duplicate successes more easily — and scale your business effectively for geometric growth.
As you strengthen the first five components of your business, you'll begin to build the momentum you need to create traction for true growth. As a leader in your company, it's your responsibility to foster it to spark future growth. Meet with your leadership team to establish the most important priorities for the next 90 days, then continue to meet weekly to keep these goals on track. As you repeat these steps each quarter, you'll continue learning from your performance in the previous quarter, establishing the habits you need to move your organization forward in a significant way.
Working with the six key components will have an incredible impact on your business. It will help you eliminate waste and align resources as you set up your organization for a healthy future. Taking the time to examine your organization holistically will help you build a solid, well-oiled machine and have a stronger business than you ever thought possible.
This post was written by Kevin McArdle of McArdle Business Advisors. To discover more about how to align the six components of your business and move your business forward, visit McArdleBusinessAdvisors.com for additional best practices resources and articles. To learn more about LEAN and its benefits to your business contact the LEAN Accountants of McKonly and Asbury, LLP.