Innovation Isn't Always Easy...
People talk a
lot about the need to be “innovative” in their approach, or to come up with
“innovative” ideas for their company.
What does it all actually mean?
One definition
of “innovation” is:
That’s it. The key is in the words “idea or invention”.
Inventions come from ideas, and ideas need to be made reality. It’s making the connection between idea and
reality that’s the hard part. The dictionary
goes on to say that:
“To be called an innovation, an idea must be replicable at an economical cost and
must satisfy a specific need.
Innovation involves deliberate application of information,
imagination and initiative in
deriving greater or different value from resources…”
That bit about “replicable at an economical cost and must satisfy a specific need” is important. The
innovation must be needed at the time and at a cost that people will
pay. You take in the information available, use imagination to work something out and
then initiative to make it
reality. Just find something for which
people will pay and that can be produced affordably.
Innovation can
be:
1.
Evolutionary (lots
of small but progressive advances
in
technology or processes);
2.
Revolutionary (the
“quantum leaps” that many associate with the word “innovation”).
People look at revolutionary innovations and ask “Now why didn’t I think of that?” Most often, they could have. What they lack is the ability to convert the
idea into reality (for any number of reasons).
Moving to a corporate level, why do some companies
find it so difficult to be “innovative”?
Look at the requirements above for:
- Information
- Imagination
- Initiative
The answer lies in the “corporate life
cycle”. When a business is young, it’s
small and nimble. Decisions can be taken
quickly and people do whatever it takes to get the business. Focus is on "Why are we here?”
Information, imagination and initiative are in balance.
The business grows.
More rules come into play. Information is still available, but now
the emphasis is on efficiency (doing
things with minimal wastage). Focus shifts to how things are done. This satisfies
the “affordable” (to the business) condition, but it may stifle original
thinking (imagination) as everything
must fit into the processes, routines and conditions prescribed by those who
are (often) least in touch with end users.
Add in the requirements for business cases, testing, legal approval,
management approval and so on and you have an environment that stifles initiative.
Being innovative also means taking risk, which may not always yield the
desired results. This doesn’t please
shareholders. Boards of Directors,
markets, the press and shareholders (all of whom have 20/20 hindsight) can be
unforgiving when a risk doesn’t pay off and it can cost a CEO his/her job. Better to play it safe, or imitate what
others do?
I have spent more than half my life delivering
change in different world markets from the most developed to “emerging”
economies. With more than 20 years in the world financial services industry
running different service, operations and lending businesses, I started my own
Performance Management Consultancy and work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email .
My website
provides a full picture of my portfolio of services. For strategic questions that you should be
asking yourself, follow me at @wkm610.
Labels: Leadership, Risk, Strategy
Have You Lost Your "Why"?
People
do things because they want to do them, because they’re inspired to do them or
because they see that thing as part of a nobler cause. Sometimes all three.
Great leaders tap into these emotional states
to get “extraordinary results from ordinary people”. As a result, great businesses and other
organisations also inspire their people to achieve what sometimes seems impossible:
profitability in hard times, unwavering customer loyalty, fantastic products or
all or the above.
The key is “emotion”. People do things because they want to do them. You can “manipulate” people to behave in a
certain way, but in the end, it all boils down to a deeper driving force. People will behave in certain “desirable”
ways to earn more money (or to avoid losing their jobs), but this manipulation is
a very short-sighted, and short-term (and potentially expensive) strategy to
achieve one’s ends.
Banks incentivised certain employees at the
beginning of the 21st century through bonuses to increase
profits. The result: a slew of litigation
for unethical behaviour. Settlements to
customers and fines to regulators have decimated those profits. Reputations (corporate and individual) have
been destroyed.
Look at those organisations or businesses
that manage to survive despite
economic downturns (let alone increase profitability, market share or
both). What is it that they do to get
their staff to produce results and encourage staff and customer loyalty that at
times verges on “cult” loyalty?
If you look at non-profit organisations
(e.g. charities), how do they get people to contribute to them, to work for
them let alone go out on the street to raise money for whatever cause they
support? These people don’t get
bonuses. They may work in dingy, cramped
offices. Depending on the charity,
volunteers may face the threat of physical violence, disease or verbal abuse
every day that they go to work.
The reason (in the case of charities) is
that their volunteers and workers see that they’re working for a higher cause
that aligns with their values or what they hold precious in life. That sort of motivation comes from the
“heart”, not from the “head”. It’s the
emotions that are stirred by the “cause” that the organisation represents - the
reason WHY it exists.
Author Simon Sinek examines why many companies these days have lost sight
of the reason WHY they were founded. All
were started by an individual (or individuals) who wanted to make a difference. Bill Gates’ vision was to empower people
through use of PCs. Microsoft was the
result, but since he left, his vision has also gone and Microsoft are “just
another software company”. Walmart was
founded to help people and communities by selling low-priced, affordable goods. With the death of Sam Walton, it lost its
vision and has faced numerous legal actions as the very people it was founded
to support now see it as a predator.
What happens? Companies lose focus on their “Why” and start
focussing too much on “How” they do things to maintain profitability and the
“bottom line”. They cut processes or services,
which seem unnecessary, but to the customers are essential to their enjoyment
of the product or service and the reason they come in the first place. They lose their uniqueness.
Then customers start leaving, or complaints
rise, and these bright managers wonder why…
They justify their actions and decisions in terms of “How” they make
things “better” (mainly for the business).
They can’t relate to “why” customers came in the first place and “why”
the business was set up. They hire
consultants who again focus more on the “how” and the whole cycle repeats
itself.
Companies talk about “sticking to their
knitting” or their core business. What
they actually mean by this is focusing on the philosophy that drove their
founders in the first place. All Fortune
500 businesses started as the idea of one or two people who inspired others to
join them through their unique vision.
As the company grew, that vision got lost.
I have spent more than half my
life delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in the world financial services
industry running different service, operations and lending businesses, I
started my own Performance Management Consultancy to offer solutions for
improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Customer Care, Leadership, Leisure, Productivity, Social, Strategy, Teamwork
Financial Information Is Financial Power...
Some months ago, I wrote a short piece on why it was important for business owners to have a grasp of the financial state of their business.
My view was (and still is) that business owners need to understand the different factors that affect how their business makes money and therefore how much it can make in future. Many tend to focus solely on costs, but this isn’t the be-all and end-all of running a business. If you want the business to grow, the associated costs will naturally grow as well.
I listed several questions that a business owner should be able to answer, the most important of which were:
- How profitable is the business?
- How strong is the business financially?
- How much can it earn in the next 12 months?
Two of the above questions focus on the now; the third on the future.
The host of ratios and statistics that most business analysts produce answer the three questions above. Any competent accountant should be able to produce similar statistics (no doubt for a fee) and should also be able to advise business owners every year when they audit the accounts.
Not understanding your financial state results in:
- Making pricing decisions that aren’t backed up by facts;
- Choosing finance that may not be appropriate for your needs;
- Paying more than you need to for finance;
- Accepting terms or conditions from lenders that you don’t need to accept.
One of my first jobs as a consultant was to assist a client who felt he had to raise his prices. By taking him through the questions above (and a few more), we determined that he didn’t need to. This was just as well as the economy wasn’t doing well at that time and raising prices would have made him uncompetitive.
Having a good understanding of the financial strength and drivers of your business means that you can evaluate offers from a stronger position. In the event that you’re lucky enough to have competing offers, you can compare one against the other from an informed and objective point of view.
If you’re used to asking questions about your own business’ finance, you can then ask the right ones about the offer, such as:
- What’s the effective interest rate you’re being asked to pay (and how does it compare)?
- Can you afford it?
- What effect would any charges have on your total finance costs?
- Is any security requested reasonable in the circumstances? Some banks simply “lend to security” (in other words, as long as they have the owner’s guarantee and 100% tangible security, they’ll lent without really evaluating the risk involved).
Equally, when considering new offers from suppliers or buyers, you'll be doing so from a stronger position in that you'll know what impact the pricing suggested by suppliers (or buyers) will have on your own business.
Some businesses will be lucky enough to afford their own accountant (or book keeper) who may be able to manage most of this kind of analysis. Otherwise, it’s up to the business owner.
I have spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy to offer solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610
.
Labels: Financial, Strategy
Sorry's Not The Hardest Word...
… but
doing something about the problem is much harder.
“Customer Service” departments or their
equivalent are now very good at apologising for mishaps that have given their
customers cause to complain. We all need
to accept that mistakes can, do and will happen whenever human intervention is
required (and even when it isn’t).
The problem is often not so much in the
errors, but in the follow-up (or lack of it) that occurs to solve the problem
in the first place. Failure to follow up,
resolve the problem and (hopefully) prevent it from occurring again all combine
to create a lasting negative impression of a provider’s goods or services. Word of mouth publicity can now spread easily
thanks to the internet, meaning that the “multiplier effect” of a dissatisfied
customer can do real harm to a business’ ability to survive.
By the time you come to realise there’s a
problem, you’ll need to spend a lot of management time and energy (as well as
real dollars and cents, pounds and pence or whatever currency you work in)
restoring reputation and persuading customers to return. Meanwhile, the business is loosing reputation
and money…
When asked what businesses can do to
correct the situation, my response is that there’s a short-term and long-term
process. The short-term process is
relatively simple:
- Clarify the problem
- Clarify what caused it;
- Apologise to the customer;
- Put things right (whether by refunding the
customer, sending out the goods they ordered promptly, etc).
The long-term solution takes more time,
energy (and money) to implement, but starts off the same way:
- Clarify the problem
- Clarify what caused it (care, there may be
more than one cause!),THEN:
- Identify solutions (care, there may be more
than one!) to eliminate the cause(s);
- Implement the agreed solution;
- Check that the solution is actually working (many often forget this in the
excitement of and pressure to “find a solution”).
For things to work, communication is essential.
The departments (or “stakeholders”) that need to talk to each other (to
name but a few) could be:
- Sales
- Customer Service
- Finance/Accounting
- Suppliers
- Printers
- Production/Manufacturing
- Quality Control
- Shipping/Despatch
- Warehousing
- IT
- Legal
- HR
A solution that solves Warehousing’s
problems may create more work for, say, Accounting. Take into account also that parties outside the business may also be involved (you’ll notice I mention “Suppliers”
in the list. Equally, if you rely on a
third party to make deliveries (e.g. a courier company) then they also need to
be involved in any solution.
It’s hardly surprising that some
businesses don’t seem to “get it” when it comes to service issues; the list of
potential problems, causes and stakeholders is enough to put anyone off. Much cheaper to let the customer suffer?
The thing is, if you don’t look after your
customers, someone else will.
I have spent more than half my
life delivering change in different world markets from the most developed to
“emerging” economies. With more than 20 years in the world financial services
industry running different service, operations and lending businesses, I
started my own Performance Management Consultancy to offer solutions for
improving performance, productivity and risk management. I work with individuals, small businesses,
charities, quoted companies and academic institutions across the world. An
international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of
services. For strategic questions that
you should be asking yourself, follow me at @wkm610.Labels: Crisis Management, Customer Care, Productivity, Selling, Strategy, Teamwork
