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When all the talk and fancy theories are done, there is only one fundamental differentiator of successful and unsuccessful businesses and that’s efficiency. It’s not complicated, although executives and consultants around the world like to build mystique around it.
Business is simple. You put money in one end, invest it in a process to create something people want and churn out your original investment, plus a profit at the other. The ratio of input to output is entirely dependent upon the efficiency of the process in the middle. As I said, simple – as long as you understand the term “efficiency”.
Efficient means being quick to identify a need, which is about understanding consumers. It also means meeting that need before anyone else does and doing that as well as it can be done. It involves keeping abreast of developments that influence your sector and adapting your business to maximise the opportunities and neutralise the threats they represent. Above all, it’s delivering your solution with the least possible investment of time and money, facilitating the lowest possible sales price and the biggest profit.
However, don’t confuse “simple” with ‘easy’. Many business leaders do and that’s why not every business is a success. These days success is made increasingly accessible by technology that speeds up processes, provides intelligence and reduces the number of employees required, but using this technology requires deep understanding of many, very narrow subjects and therefore demands a lot of experts, albeit usually for a short period of engagement.
I had a conversation recently with a business leader who was telling me how successful his business had become. When I asked how he measured this, his first response was to tell me that he had doubled his number of employees. This isn’t necessarily a bad thing, but it transpired that in the same period his sales had also only doubled, which led me to ask “What’s the point?”
People are increasingly expensive and most traditional businesses are packed with them. In fact, many of us make the mistake of viewing growing head-count as evidence of success and some organisations have inadvertently pursued over-staffing as an objective. In fact, the measurement that counts is the ratio of employees to turnover and in the digital era if that isn’t reducing you are in trouble. Technology allows us to do more with less. We are not far away from realising John Chambers’ prediction of global businesses with just two employees and if you are a hands-on organisation competing with one of these, for sure you won’t last long.
Businesses have struggled to keep their eye on the real objective for generations and as a result we have far too many traditional businesses with lots of employees following complicated and unnecessarily labour-intensive processes, slowly grinding out mass-produced, irrelevant products and services. Furthermore, because workforces aren’t really engaged in what they are doing, the output is uninspiring, and often poor quality. It’s no surprise that the UK, for example, has low unemployment figures and among the lowest productivity in Europe. What’s more, nobody seems excited anymore, yet employers are comfortable with the environments they have created – at least for now.
The largest part of every market is now digital natives who are driving the growing realisation that life should be better. They have access to all the information they need to inform their own views and decisions. They know how consistent the quality of products emerging from digital businesses can be. They understand there is no necessity, other than that imposed by suppliers’ convoluted processes, to wait for service or product delivery. They realise switched-on businesses are listening and learning from the things they say and do and producing the products and services they really want instead of serving up only what it suits the organisation to deliver. They don’t want conversations with you about stuff they are not interested in and top of that list are stories of how great your organisation is or how you are the answer to their prayers – THEY’LL tell YOU if that’s true.
This is the more for less society. People want more satisfaction, with less bullsh*t, better products at lower cost, faster fulfilment with less hassle. They know that a digitised business has the potential to drastically reduce their cost, they don’t recognise your excuses for not doing so and it’s obvious that if you have and you are still selling at last year’s prices you are screwing them over. They want you to pass the savings on and if you don’t there is always a digital alternative that will.
It’s time for every organisation to cash out or jump on board the more for less economy and that means working out the most efficient way to deliver what your customers really need. This is transformation and there’s a right and a wrong way to set about it.
Depending on whose figures you accept the current failure rate for transformation programmes is between 70% and 90%. What’s more between 40% and 60% of the businesses that do fail cease trading. Failure may be because the organisations concerned see transformation as an IT project, they start in the wrong place or they believe it’s just a matter of digitising the processes they already have in place, but in most cases behind all of this there’s a fundamental lack focus.
Fear comes into it too. Fear of getting it wrong – remember most senior execs don’t have a clue about this stuff – fear of the unknown, fear of the absence of structure – because a digital business responds in real time to changing circumstances and processes get in the way. It’s also a major undertaking, bigger than most organisations have faced in their lifetime. Most organisations can count the time it takes to transform in terms of years not weeks or months and there’s a tendency for senior executives at the end of their tenure to try to sit it out on the basis that they won’t be a round when the sh*t hits the fan. Even then, when you have gone through all the soul-searching, discomfort, argument and cost of transformation, you are still only on the starting blocks because transformation is no more than a shift from order to a state of constant change. It’s a mind-set change, more than it is about structure and practices, although it involves both.
It’s also understandably difficult for an organisation to maintain its focus over such a lengthy period. Side issues, changes in key personnel, even changes in ownership, not to mention plain fatigue will conspire to make you want to give up, but you will improve your chances of seeing it through and getting it right if you start by defining your brand, because a properly defined brand will give you a clear and unmistakable target to aim for and that all-important sense of purpose.
If you think a brand is a logo, you are seriously mistaken. A brand is a community of people who share values and beliefs. It comprises your investors, suppliers, partners, distributors, employees and your customers to whom it makes the same promise. It may be that the promise resonates with them in different ways, but it’s the same promise because that’s the only way you’ll achieve the authenticity essential to success. This promise should drive and inform every initiative your organisation engages in. Things you do that don’t contribute to the delivery of that promise might be nice to have, but are probably a waste of time and resource no business in the digital economy can afford.
Your brand model, which defines your brand using a number of coordinates should be familiar to every one of your stakeholders. What’s more they should understand its rationale and be fully committed to playing their part in the delivery of its promise. This unity is achieved through continuous and consistent, internal marketing and marketing communications. I’ve been telling my clients for years that switching a proportion of your marketing investment from external to internal marketing will bring you a far bigger return and that’s never been more compelling than right now.
The kind of change every organisation needs isn’t going to happen in the boardroom. Senior executives need to understand their role is facilitator. The real work will be done on the shop floor, but to maintain the essential level of efficiency the objective – that promise – should be a beacon for all concerned. Leveraging this requires sophisticated internal marketing that drives, knowledge, motivation and training and, most importantly, provides feedback and insights on your internal stakeholders.
Once they understand your promise and buy into its rationale, internal stakeholders will commit to playing their part in its delivery. This is where your transformation really happens, with employees, suppliers, distributors and other partners re-inventing their function in the context of the new digital environment.
If you want to triumph in the more for less economy you need to place greater emphasis on developing your brand. This will give you the focus you need to achieve the efficiency that’s essential to success. So, start by defining it.
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