Wednesday, November 24, 2010

By the Numbers

According to Verne Harnish, author of "Mastering the Rockefeller Habits", business success boils down to 1% vision and 99% alignment.

That is, you need the inspiration and direction of brilliant visionaries; but either within the discipline of those leaders, or hired to balance them out you must have strategists who know how to execute and track progress towards that vision.

You need dreams and ideas... and you need plans and performance management systems.
You need goals and strategies... and you need progress reports and accountabilities.

Any business worth their price of admission is able to manage above, and while doing so make the numbers come alive for everyone from the boardroom to the mail room.

Jim Pattison's auto business, for example, was famous (if not infamous) for inspiring performance in their sales team because each reporting period, the bottom 10% of their sales team was let go. Whether it was fear-based or incentive-based, no one could doubt the impact of living by the numbers no exceptions allowed.

Other companies, especially internationally-known brands like Disney... have a tougher task. "Make people happy" is their vision. How? Well they have hundreds of ways, but each one, no matter how hard it is to do logistically, must be tracked in order for the Disney company to know they are delivering on their vision. And they are! Other than their direct competition, how many people frown when they see Mickey Mouse or consider a family Disney cruise?

One of the biggest challenges most leaders face is a disconnect between the management team and the team at large. One of the best ways this can be overcome is through a strong culture, and within that culture, making every effort to take all things complex and 'big' in the business and turn them into bite-size relevant chunks that every foot soldier in the business understands and wants (for at least some reason) to improve.

The how-to is as diverse as one business is from another, but some key pointers are as follows:

- identify your target market
- identify your business' key difference makers in attracting and/ or retaining this target market
- identify a numerical relationship between how improvement in the above 'X factors' improves your bottom line
- identify key departments and the driving force(s) they contribute to the success of the organization at large. Numerically track these
- identify key performance indicators for all staff (ideally similar, but if not, departmentally or positionally defined)
- set up daily, weekly, monthly, quarterly, and annual reporting periods with as much rhythm of communication of all above data and how it ties to the big picture.
- ensure all above is communicated through every level of the organization regularly, and that incentives (financial and otherwise) are tied to meeting and exceeding goals set therein.

Numbers may not be a strong suit for all leaders, but whether they learn how to make numbers come alive, or hire someone who can do this - all companies are bound by numbers at the most fundamental level. Revenue - expenses. Either find a team of employees wholly motivated b y making you as much money as possible, or learn to motivate and educate through the power of making the key metrics in your business come alive.

The world is just too competitive today not to.

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