3/30/2012 10:14 AM
Since 2005, the Six Disciplines blog offers posts about performance excellence, strategy execution, business coaching, leadership development, innovation, and business process improvement. With more than 18,000 visitors monthly, this blog has received prestigious awards for leadership and management, and has been syndicated by several major media sources.
By Nate on
4/18/2014 7:11 AM
A previous issue of the Harvard Business Review includes article entitled "Can You Say What Your Strategy Is?"
"Can you summarize your company’s strategy in 35 words or less? If so, would your colleagues put it the same way?"
"Very few executives can honestly answer these simple questions in the affirmative. And the companies that those executives work for are often the most successful in their industry."
"Conversely, companies that don’t have a simple and clear statement of strategy are likely to fall into the sorry category of those that have failed to execute their strategy or, worse, those that never even had one. In an astonishing number of organizations, executives, frontline employees, and all those in between are frustrated because no clear strategy exists for the company or its lines of business."
Leaders of firms are mystified when what they thought was a beautifully crafted strategy is never implemented. They assume that the initiatives described in the voluminous documentation that emerges from an annual budget or a strategic-planning process will ensure competitive success. They fail to appreciate the necessity of having a simple, clear, succinct strategy statement that everyone can internalize and use as a guiding light for making difficult choices.
Understand there are three critical components of a good strategy statement—objective, scope, and advantage. Then, create a great strategy, which requires careful evaluation of the industry landscape, a detailed understanding of customer needs, segmenting customers, and identifying unique ways of creating value for the ones your firm chooses to serve. Then, find the sweet spot that aligns your firm’s capabilities with customer needs in a way that competitors cannot match. Next, leave no room for misinterpretation and cascade the statement throughout the organization.
BOTTOMLINE: "Words do lead to action. Spending the time to develop the few words that truly capture your strategy and that will energize and empower your people will raise the long-term financial performance of your organization."
By Nate on
4/11/2014 7:10 AM
The importance of business planning is frequently misunderstood.
Here are 9 commonly-held myths: about business planning:
- Most small and new businesses don’t need business plans.
- You need an MBA to write a convincing business plan.
- Business plans are only necessary when you need to raise money.
- Business plans need to be long and address every last detail.
- Writing a business plan makes your business less flexible.
- Writing a business plan takes too much time.
- All the details of a business plan are just too confusing for a first-time business owner.
- You can get funding on the strength of a great business plan alone.
- If you’ve already launched your business, it’s too late to write a business plan.
BOTTOMLINE: As Dwight D. Eisenhower once said, “Plans are nothing; planning is everything.” He wasn’t actually saying that plans are worthless, of course. So what did the war hero and former President mean?
It’s the process of planning that is most important: where you consider opportunities and challenges and ways to meet them.
By Nate on
4/4/2014 7:33 AM
In sports, no one questions the importance of having a good coach.
In music, art, science, no one questions the importance of having a good mentor.
If you're running a small business, why should it be any different?
Yet, everyday, leaders of small and emerging businesses continue to waste thousands (if not tens of thousands) of dollars on ineffective means to the end: learning to develop a top-performing business.
We hear it from our clients all the time: "I spent thousands on books, seminars, consultants; we've gone through planning sessions, brainstorming, etc. - and none of it has lasted."
Frustrating? You bet.
Common place? More than we all want to admit.
Are you hoping for the best? Well, hope - is not a strategy.
Well, there's always "business coaching" - but buyer beware: You actually need more than just a "business coach."
You need a holistic approach - a complete program that includes a repeatable business-building methodology, an external business coach (for accountability), execution software that enages every person, every day, and access to a shared learning community for faster adoption and stronger organziational engagement.
Do you - and your organization- need more than a business coach? Are you challenged with any of these?
- A lack of a solid strategic plan - mission, vision, values, strategic position, vital few objectives
- A lack of well-defined goals - specific, measurable, attainable, realistic and tangible (deadlines and attributable responsible people)
- Wasted time and resources - your people are working on things that do not align with your strategy
- Procrastination, distractions and working on "urgent" things - rather than "vital" things
- Lack of individual accountability - and organizational "entropy"
Do any of these sound familiar? How about all of them? You aren't alone. Every client we talk to has one or more (and sometimes, all) of these challenges.
It's time you looked into Six Disciplines....
By Nate on
3/28/2014 7:16 AM
There's a lot of talk going on these days about accountability.
For some, it's important for their professional lives (i.e., setting business goals, keeping on track, being responsible, etc.) For others, it's more personal (i.e., diet, weight loss, exercising, etc.)
Whatever the case, it's important to understand what accountability is, and ultimately, how it works. Here's a short course:
What is accountability? Why is it important? If you walk into a room and ask ten people what accountability means, you’ll likely get ten different definitions. To some, it’s something you make people do, as in “holding people accountable”. To others, accountability means accepting responsibility, but only when a project goes off course, or it’s too late to fix. When it’s all said and done, a workable definition of accountability might include the following elements: Taking responsibility for your own behavior; doing what’s right consistently; demonstrating personal integrity, and actively participating in activities and interactions that support the strategy of your organization.
Now that we understand better what accountability is, now consider what it isn’t. Accountability is not something you “make” people do. It has to be chosen, accepted or agreed upon by the people within your organization. People must “buy into” being accountable and responsible. For many, this is a new, unfamiliar, and sometimes, uncomfortable way to work or live. Learning how to become accountable involves an element of discipline. Most importantly, individual purpose and personal meaning comes from accepting responsibility and learning to be accountable.
Holding people accountable is really about the distribution of power and choice. When people have more choice, they learn to be more responsible. When they become more responsible, they earn more freedom. By being accountable, they earn the trust of managers and coworkers. When they are more accountable, they understand their purpose and role within the organization and are committed to making things happen
How can you learn to be accountable for yourself? In reality, it’s very difficult to be accountable to yourself. Depending on your frame of reference (professional vs. personal) you need to find someone who can help you to stay on track, to stay focused. Accountability can be the catalyst for unlearning old habits, and learning new habits. For weight loss, it's the reason that WeightWatchers is a multi-billion dollar business. It's also no secret that the tremendous growth in business coaching (for example, like Six Disciplines) due to its success in applying the benefits of external accountability coaching.
BOTTOMLINE: Accountability and positive organizational change come through a new set of conversations. So, what are you waiting for?
By Nate on
3/21/2014 7:12 AM
The need for measurement may seem obvious, however, more often than not, it's overlooked as being unnecessary by many leaders of small and midsized organizations.
Let's look at the top 10 reasons why your organization needs to measure its results:
- Measurement clarifies expectations. Measures are a the most transparent and clear means to communicate expectations to employees.
- Measurement directs behavior. Most employees consciously or unconsciously operate on the following assumption: “tell me how you'll measure me, and I'll tell you how I'll behave.”
- Measurement increases objectivity. Measurement is essential to “managing by fact” – otherwise you are left to lead with charm and personality.
- Measurement makes performance visible. If it’s not being measured, it simply can’t be managed.
- Measurement focuses attention. When people are faced with so many competing priorities for their time and activities, what is measured tends to get their attention – particularly when it is linked to a recognition/reward system.
- Measurement promotes consistency. Unmeasured systems tend to be highly variable systems, with all the negatives for quality that implies.
- Measurement facilitates feedback. Feedback in the form of timely, relevant measures is the basic navigational device of any individual or organization.
- Measurement improves decision-making. One of the major causes of failure in decision-making is poor or non-existent use of data. One accurate measure can be worth a thousand opinions.
- Management promotes understanding. Quality guru W. Edwards Deming thought that systematic process measurement led to the “profound knowledge” that was essential to top quality outcomes.
- Measurement improves execution. As former Allied Signal CEO and co-author of Execution Larry Bossidy has remarked “when I see companies that don’t execute, the chances are high that they don’t measure.”
By Nate on
3/7/2014 8:30 AM
The Six Disciplines strategy execution program integrates the business-building elements of strategy, planning, organizing, executing, innovating and learning, and offers a systematic way for organizations to continually improve and achieve lasting business excellence.
You can think of the Six Disciplines Methodology as a series of annual, quarterly, weekly and daily repeatable cycles which, with each successive pass, helps individuals to be accountable, align their activities with organizational goals, and consistently execute on strategy.
So, what are the Six Disciplines?
Discipline I. Decide What’s Important. The foundation of all strategy formulation is deciding what is most important to your organization (and by implication what’s not important) so the allocation of resources—time, money and creativity—can all be aimed toward this end. In this discipline, organizations regularly review and renew their mission, values, strategic position, vision, their most vital few objectives, as well as agreeing what to stop doing.
Discipline II. Set Goals That Lead. Well-defined goals are among the most effective communications tools available to any leader—yet most leaders don’t know how to set goals that lead their people in the right direction. The purpose of this discipline is to produce annual goals that are clear and measurable. Pursuing these goals will lead the people in the organization to align their activities with the vital few objectives set in Discipline I. The result is a brief company goals statement that every team member can understand.
Discipline III. Align Systems. One of the greatest barriers an organization faces in pursuing its goals is itself. For many businesses, the systems that make up the business are often at cross purposes with the priorities of the company. Why? Because most organizations do not have an organized approach to keep their systems aligned with their strategy. Discipline III, taps the knowledge of the whole workforce to identify the areas where the company will get the greatest return on its investment in policies, processes, measures, technologies and people.
Discipline IV. Work the Plan. One of the greatest organizational learning tools ever invented is the quarterly Individual Plan. In this discipline, every person in the company works with his/her team leader to develop Individual Plans for the upcoming quarter. These goals are reviewed and checked for alignment with company goals. This quarterly plan serves as a timesaving template for a Weekly Status report. The result is that every individual in the company learns how to set goals, understand company priorities, takes responsibility for their own activities, and reports progress regularly.
Discipline V. Innovate Purposefully. Innovation is just another name for problem-solving, and everyone in the company has the ability to solve problems. This discipline is unlike the rest in that it provides tools and principles that are used throughout the other disciplines to help people set clear goals and eliminate barriers to progress.. These goals will align with company priorities, and then employees use their innate creativity to meet or beat those goals. Empowering principles, such as Embracing Constraints and Taking Informed Risks, plus tools like the 100-Point Exercise and 5-Step Problem Solving, are but a few examples of what’s included in Discipline V.
Discipline VI. Step Back. This annual discipline helps the whole organization to step back from the pressure of everyday business and gain perspective on the factors that affect business performance. This is achieved through a series of “discovery exercises,” exploring externals (competitors, industry, economic) and internals (goal performance, stakeholder feedback, measures, etc.). In addition to the organization as a whole stepping back, all individual team members are encouraged to do the same by providing input on each other’s performances. This is achieved by completing a 360° and an annual performance appraisal for each team member.
BOTTOMLINE: The Six Disciplines are described in detail in the award-winning book, Six Disciplines for Excellence, available here from Amazon.
By Nate on
3/5/2014 8:08 AM
Most organizations suffer a major disconnect between strategy formulation and its execution.
And while it's more pronounced in larger enterprises because of complexity, smaller organizations need to make sure they do something (anything!) to remove the barriers to execution.
Unfortunately, the research doesn't bode well for most of us. Consider the following:
- 90% of well-formulated strategies fail due to poor execution.
- 60% of typical organizations do not link their strategic priorities to their budget.
- Two-thirds of HR and IT organizations develop strategic plans that are not linked to the organization's strategy.
- 85% of leadership teams spend less than 1 hour per month discussing strategy.
- Only 27% of a typical company’s employees have access to its strategic plan.
- 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy.
- Most devastating, 95% of employees do not understand their organization's strategy.
Strategy must be managed explicitly, like any other major process in an organization. In most organizations, this process either does not exist or is incomplete. However, 70% of organizations that used a formal process to manage strategy out-performed their peers. What formal process are YOU using?
By Nate on
2/28/2014 8:10 AM
Here's a profound observation from management guru, Gary Hamel:
"If you want to understand the real strategy, look at what people are doing!”
Indeed, more often than not, there are disconnects or gaps between the strategy that is formulated by the senior leadership team, and how the strategy is executed by the rest of the workforce.
Why the gaps?
Could be for a number of reasons:
Most likely, the recognition and reward system that drives the daily activities and behaviors of each person in the workforce is not aligned with the strategy of the organization. How to combat this situation?
- The strategy is not accessible/available to the workforce
- The strategy is not sound
- The strategy is not well understood
BOTTOMLINE: What people spend time on should be based on how well your strategy, goals and initiatives are articulated. Reward and recognize workers based on how well goals were achieved (results), not on how much activity took place.
- Make the strategy as transparent as possible. The mission, vision, values and strategic position of the organiztion MUST be transparent and available to everyone within the organization.
- Establish Vital Few Objectives (VFOs). Most organizations have 2 to 5 times as many projects and initiatives going on than they can possibly address. Reduce the number of key objectives. Keep the VFOs simple - financial, customer, production, people - and let everything else go. Be very focused on a few things, and do them well.
- Make the VFOs measurable. Define measures, targets, and create a small number of initiatives that support the VFOs. Assign responsibility and accountability to someone for each VFO.
- Define an Individual Plan for each person. On a quarterly basis, develop a plan for every individual, assigning activities from each initiative. Have each person track time and progress toward achieving the stated outcomes. Measure progress and update status weekly.
- Align recognition and rewards based on the achievement of outcomes. Recognition and rewards systems are not to be based on activities, but results.
By Nate on
2/21/2014 8:46 AM
Here's a real shocker:
In a survey of 3,300 senior managers and human resource professionals reported by Rob Lebow in his Washington CEO magazine
- 75% of all organizational change programs fail
Why is change so hard
Most organizations say their most important assets are their people, but few behave as if this were true. Change initiatives typically devote most budgets to structural issues such as technology and processes, not staff issues. There is still a whole notion of focusing on tangible assets and their impact on the bottom line, rather than the intangible assets, which are people
.Organizations don't adapt to change; their people do
Constant change in the organizational environment mean that leaders must not only learn about change and its impact on people and systems, leaders must be able to master the process of implementing change
, just as their employees must learn to accommodate change.
Why do most change efforts fail? Here's an analogy: As with a transplanted flower, it initially wilts after the transfer. However, in time with proper care, it stands upright again. With continued good care, it blossoms. The same holds true with the introduction (transplant or transfer) of a new system (a new idea, business-building method, best-practices, business improvement processes), the productivity curve drops (wilts) - but given proper support and care, the productivity curve loops upward on a continuous positive trend.
is little understood by business leaders, but it is a fact of organizational change.
Some misread the downward curve (wilt) as failure, often triggering inappropriate actions; rather then understanding it as transition trauma that is a normal readjustment, realignment and adaptive phase of change
that requires trust, patience and on-going support.
By Nate on
2/14/2014 8:34 AM
What is the difference between a business coach and a consultant?
A consultant completes projects for you based on their own technical expertise. Often, a consultant will provide suggestions and direction for what needs to be fixed, however, rarely will they help the business leader actually implement the fix.
A business coach guides you in growing your business:
BOTTOMLINE: Not every business needs a consultant, but EVERY business needs a business coach.
- Business coaches provide business leaders with awareness, education, and accountability through regularly scheduled coaching sessions and other proven, best-practices business performance tools.
- Instead of getting paid for billable hours or project work like consultants, business coaches get paid for the value they deliver to clients.
- Business coaches help business owners become aware of their blind spots, and leads them to discover the possibilities in their business.
- Business coaches provide information to help build business best practices and close the gaps and accountability to meet performance objectives.
By Nate on
2/7/2014 8:12 AM
Many of the top-performing organizations we work with every day - have expressed a real need to build accountability into their organization.
Take a quick minute – and consider the following key questions:
- Does each of your team members understand exactly what they are responsible for?
- Does your leadership team set consistent expectations for accountability?
- Do your new team members know exactly what’s expected of them – Day 1?
- Are all of your team members self-managing?
- Do you have a standardized way of monitoring progress? Weekly? Monthly? Quarterly
- Does your hiring process focus on attracting individuals who can be self-managing?
Here are some steps to consider when considering organization-wide accountability:
- Understand your company's core competencies
- Validate your team members
- Create a culture that grows and develops its people
- Identify the systems and processes that are now in place throughout your company and rely on your team members to make the systems and processes more efficient and more effective
- Get the right people in the right place
- Get all team members to understand that what they do affects everyone else in the company
- Build a strong second-tier management team that can take the company to the next level
- Hold everyone, including yourself, accountable
- Raise the bar by bringing in top talent
By Nate on
1/31/2014 8:24 AM
Scott Cleveland reports that a managing director of the Palladium Group (think: balanced scorecard) conducted a survey that compared two groups, one with and one without a formal strategy execution process in place.
A formal process in their terminology means "strategy maps, derived projects and process improvements from it, and associated key performance indicators (KPIs) with targets reported in scorecard dashboards and cascaded down into the organization."
- 70% of organizations WITH a formal process were exceeding the performance of their peers in their industry, while in contrast only 27% of those without a formal process were.
: The overwhelming majority of businesses (and particularly, small and midsized organizations) do not have a formal process for strategy execution. They do not have strategy maps, derived projects, process improvements and associated key performance indicators (KPIs) with targets reported in scorecard dashboards and cascaded down into the organization.
What kind of strategy execution process is your
By Nate on
1/24/2014 8:49 AM
Is your organization "drowning" in too many strategic initiatives?
If you're evaluating far more opportunities than your team can realistically handle, it's time to do a serious screening of those initiatives.
According to Robert W. Bradford, President/CEO of the Center for Simplified Strategic Planning, your organization should only take on between 3 - 10 strategic opportunities, depending on the size, breadth of your team and its resources. (We've found the fewer, the better.)
Bradford recommends a senior team exercise in which you simply ask the team to rate each opportunity on two dimensions – resource requirements and strategic impact on the organization.
- For resource requirements, you may want to anchor the rating on a one to five scale. In a medium sized company, a one might indicate resources commensurate with an individual employee’s initiative – requiring little management of either manpower or money. A two could correspond with departmental level resources, a three with two or more departments, and a five would indicate a need for co-ordination of resources across the entire company.
- For strategic impact, we used one for “nice to do”, three for “important” and five for “critical to our future”. Note that we do NOT rate on a purely financial basis, and in practice, opportunities with a strictly financial payoff were generally given a three impact rating – that is, a simple boost to profit is not enough to earn an opportunity high marks on strategic impact.
BOTTOM LINE: "If your organization is plagued by a surplus of incremental projects or “just do it” items that are overwhelming mid-level management, this approach to opportunity screening may give you one more way to rationally say “no” to things that will impede your strategic progress."
By Nate on
1/17/2014 8:24 AM
Are strategic thinking and strategic planning - the same thing?
While they certainly related and complementary, thinking strategically and planning strategically are two different concepts.
Let's first consider strategic thinking
, which involves viewing your organization from a holistic perspective.
Research has determined that strategic thinking can be explained through seven dimensions:
- A vision of the future
- Strategic formulation and implementation
- Managerial role in making strategies
- Managerial role in implementation
- Strategy making
- Process and outcome
Strategic thinking is extremely effective and a valuable tool, and requires developing skills in creativity, problem solving, teamwork, and critical thinking. The good news? It's a skill that can be learned.
Steps in building strategic thinking skills:
- Critically examine and evaluate the existing situation. Understand what is being done, if it needs to be done that way, and fight hard against the "we've always done it that way" mentality.
- Look at your business as a holistic system. Strategic thinkers view their businesses as a whole: its strengths, weaknesses, opportunities and threats.
- Focus on the future. Strategic thinking is future-oriented. Before considering the viability of ideas, consider their potential contribution to the future of your organization.
- Continuously ask for feedback from your customers. Strategic thinking cannot be effective if done in a vacuum.
- Get realistic data for confirmation. Strategic thinking requires making predictions about the future and forecasts must be realistic. Gather reliable data to justify and confirm your predictions.
- Align your thoughts to your organization. Review your organizational structure to determine if the organization and key leaders are in place to fulfill your vision, otherwise it's a pipe dream.
- Be ready to consider change and unexpected challenges. Flexibility is a critical element of strategic thinking.
Strategic planning, on the other hand, is a continual planning process that relies on strong strategic thinking. When done correctly, strategic planning is not a one-time or annual event. It's an on-going process, reviewed quarterly, that affects the organization's initiatives, plans, and activities.
: Both strategic thinking and strategic planning are important - even vital to your organization - and neither can be ignored.
By Nate on
1/10/2014 8:17 AM
“Why is strategy execution so difficult? …Let’s look at managing change. It should be hard: success means growth, growth means change, and change means uncharted territory. If these more obvious changes aren’t enough, every individual in your organization is growing and changing, too. Also the industry and your competitors are growing and changing—and you can’t afford to be left behind. “Without change,” warns C. William Pollard, Chairman of The ServiceMaster Company, “there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”
But, in the midst of all this change, how do you keep everyone on the same page? (My family of five can’t even agree where to go for dinner!) When we consider each business individually, we might conclude that the obstacles to executing strategy aren’t just complex, they are downright daunting.”
- Six Disciplines Execution Revolution by Gary Harpst.
Management leadership is one of five levels of leadership that Six Disciplines helps organizations develop. To learn more about the impact that Six Disciplines has on the five levels of leadership, Click Here
By Nate on
1/3/2014 8:30 AM
While the Baldrige framework offers proven characteristics of world-class organizations, it doesn't provide you with an implementation model that shows you how to develop and maintain these characteristics, behaviors, and processes.
To achieve the benefits of Baldrige faster, Six Disciplines provides the perfect complement to the Baldrige framework, by showing you exactly how to implement a performance excellence program.
By using Six Disciplines, you get the benefits and the value of Baldrige in one unified program: leadership, strategic planning, customer focus, measurement, analysis, and knowledge management, workforce focus, operations focus, and results.
EXCLUSIVE: Watch an extended interview with the CEO of a Malcolm Baldrige Performance Excellence award-winning organization, as he describes the journey and how Six Disciplines helped along the way.
By Nate on
12/20/2013 8:48 AM
Six Disciplines® is a total performance excellence program. By integrating a proven best-practices methodology and innovative Outlook software, we help you to build an effective culture of continuous improvement, enabling you to achieve predictable and measurable growth.
The desired end result is different for each of our clients, but it's usually centered around growth, higher productivity, improved profitability and greater overall goal accomplishment.
We're often asked by prospective clients about the ROI of the Six Disciplines program. The best answer is to look at our clients. Their results speak for themselves.
In a recent interview with Eric Kurjan, President of Six Disciplines NWO, he shared just a few of his clients' improvements that can be directly attributed to using Six Disciplines during 2011. (the names have been changed to protect the successful...)
- Company A (Mfg)- 110% achievement of Revenue and Profit, 79% achievement of all 2011 Goals
- Company B (Mfg) - 110%+ achievement of Revenue and Profit
- Company C (NFP) - 87 % achievement of all 2011 Goals
- Company D (Service) -100 % achievement of all 2011 Goals
- Company E Mfg) - from 2007 to 2011 - increased Revenue for $35M to $56.5M and Profit from 4.5 % to 8.8%
- Company F (Mfg) - from 2007 to 2011 - increased Return on Assets of 5.6% to 15.4% and Profits from 4.8% to 11.4%
- If these results from Six Disciplines clients don't tell a compelling enough story, try this one.
According to a study conducted by Quality Progress Magazine, the results reveal that those organizations that followed a defined process, (in this case TQM) Total Quality Management made a marked improvement in their quality but also their financial performance. The article makes a direct correlation between a solid process implementation and their significant success in numerous areas - Operating Income, Sales, Total Assets, Return on Sales, Return on Assets. These improvements are a result of following a systematic performance excellence approach.
The study points out that this systematic approach (a method) to planning and execution (a holistic, total approach to performance excellence ) works. In the study, they examined over 600 company's results over 10 years.
What the results showed was that it doesn't depend as much on what system they have, but that they HAVE a system.
- It doesn't depend on the industry. This study covered over forty 2-digit SIC codes.
- It doesn't depend on size, as both large and small companies were examined in the study.
- And it doesn't depend on capital intensive or non-capital intensive businesses.
Following a systematic approach to performance excellence results in huge differences in performance. Let's begin to have the conversation with your organization - today.
By Nate on
12/13/2013 8:14 AM
Those who have worked both in small and large organizations have a much better appreciation for how fundamentally different large companies are from small ones. Each has its strengths, and the savvy small business owner understands what those are and takes advantage of them aggressively. They include:
1. Connecting People to Purpose
People are creatures of emotion and reason. The best performers want to belong to an organization that’s on a mission, and they need to see how they’re contributing to that mission. Small businesses have an enormous advantage in their ability to help people connect to the purpose of the organization, AND enable them to see that what they’re doing is contributing to that purpose in a meaningful way.
This importance was hammered home to me in a lunch meeting with “Sandy,” who recently moved to a much larger organization. She commented, “It’s just not the same. I feel like a number. It seems like nothing I do will make a real difference in anything. And if it did, it probably wouldn't be noticed.”
Another businessman understood how to use this advantage. He set up a 50% profit-sharing program in which a portion of the profits was retained by the employees themselves and the remainder was given away by the employees to charitable causes. This small team was one of the most productive, spirited and lively groups I've ever known.
2. Effective Communication
Someone wise once said, “The biggest problem with communication is the illusion that it has taken place.”3 The larger the organization is, the greater this illusion becomes. As organizations grow, communication challenges grow, as well; in fact, they grow dramatically faster (exponentially) than the organization headcount does. To illustrate this, the following table shows that when there are only three people in an organization, there are three possible communication combinations (persons A&B, A&C, or B&C). However, if you grow a 3- person organization to 25, there is an 8-fold increase in the number of people but a 100-fold increase in the communications combinations! A 100-person organization is 33 times the size of a 3-person organization but 1650 times more complex from a communications perspective.
Organizations respond to this increased complexity by creating business units, divisions, departments, groups, etc. In other words, more layers. When you add to this challenge the fact that experts believe that 55% of communication takes place through nonverbal body language, it becomes clear how great an advantage it is to be able to gather everyone together in one place quickly and easily.
3. Timely Decision-Making
Decision-making is also dramatically different in smaller organizations. As organizations increase in size, the leadership team moves from generalists to specialists who are responsible for a particular business area. Because top decision-makers in a larger organization are more insulated from the day-to-day activities of the company, they no longer have the first-hand knowledge to make decisions without the input of several other specialists. The result is slower and often lower-quality decisions.
In small businesses, however, there are fewer decision-makers, and they’re so close to customers, employees and daily operations that they can get a sense of whether a decision is right or wrong very quickly.
4. Customer Intimacy
In smaller organizations, a much greater percentage of employees work with customers directly. This includes the leaders in the organization, who frequently are still involved in closing sales or supporting clients. This kind of closeness to customers means the people in the company know customer issues and they can spot changing market needs earlier. And because their decision-making is more timely, they can act on those trends earlier.
5. Attracting Team Members
Small businesses don’t have to take a back seat to larger organizations when recruiting top people (and they shouldn't). The advantages already discussed—connection to purpose, effective communication, timely decision-making, and customer intimacy—when explained very carefully to all candidates, can provide a great draw to the most talented prospects. It’s important to recognize that many people who haven’t worked in large companies may not understand these advantages. Yet for people who are experienced in larger organizations, the advantages will be obvious and often quite welcome.
The point of all this isn't that small businesses are better than big businesses, but that they’re different than big businesses. And learning to leverage differences is what competitive advantage is all about. Yet many small businesses don’t consciously develop strategies that use their advantages. As you read on, you’ll begin to see how the Six Disciplines Methodology helps small businesses systematically take advantage of their strengths.
-From Gary Harpst's Six Disciplines for Exellence
By Nate on
12/6/2013 8:17 AM
Even though small businesses collectively generate $5 trillion in sales in the U.S., the biggest challenge of an individual small business is “survival.” 80% of all new business start-ups are out of business within five years. And if that doesn’t get your attention, 80% of the 20% that survive the first five years don’t survive the second five!2 That means, on the average, 960 out of 1,000 businesses that start this year will not be around in 10 years. This is proof that you’re in an elite group if you’ve just survived (let alone “thrived”)! What makes it so hard?
After working with thousands of small businesses for many years, we’ve learned that the top issues small businesses struggle with can be grouped into the following general categories:
- Financial Issues. Includes finding adequate funding, getting billings out on time, collections, and credit management. In a word, a top problem is CASH.
- Customer Issues. Includes understanding what the customer really wants, finding enough of the right kind of customers and keeping them happy, so they don’t turn to competitors.
- Production Issues. Varies by type of business. In general, businesses of all types struggle with being able to give customers what they want, when they want it, at the price they want it, and at the highest quality levels. Doing this predictably and repeatedly is a tremendous challenge.
- People Issues. Includes finding the right people, keeping them happy, compensating them, motivating them, training them, and getting them to deliver quality work.
- Limited Resources. Small businesses usually don’t have large cash reserves, dedicated research departments, fully-staffed IT functions, strategic planning functions, etc., to address challenges or opportunities.
- Growth. Growth brings the challenge of change. It’s one thing to get good at something when you can hone your skills through repetition; it’s a completely different challenge to get good and stay good when the rules of the game keep changing with regard to competition, customer expectations, globalization, people issues, finance, technology, etc.
At times, these challenges can be daunting, indeed overwhelming. It’s encouraging to know that the struggles we encounter every day are normal. All small businesses face them. And like other “heroes,” we continue the fight because the cause is worth it.
Check out the Six Disciplines Organizational Performance Assessment to benchmark your small business.
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By Nate on
11/15/2013 8:12 AM
On the National Baldrige Performance Excellence website, there's a great article entitled "Why Take The Baldrige Journey?"
Organizations everywhere are looking for ways to effectively and efficiently meet their missions and achieve their visions. Thousands of organizations use the Baldrige Criteria for Performance Excellence to guide their enterprises, improve performance, and get sustainable results. This proven improvement and innovation framework offers your organization an integrated approach to key management areas:
- Strategic planning
- Customer focus
- Measurement, analysis, and knowledge management
- Workforce focus
- Operations focus
Improve Your Performance
The Baldrige Criteria can be adapted to fit your unique challenges and culture and help you evaluate performance, assess where improvements or innovation are most needed, and get results. By taking the Baldrige journey, you become part of a national effort to improve America’s performance and its competitive standing in the world. You can be proud to know that your employees, customers, board members, and other stakeholders are all better off—and that America is better off.
Need help implementing Baldrige criteria in your organization? Six Disciplines helps organizations implement Baldrige - faster
. Watch this short video
and contact Six Disciplines today.
By Nate on
11/1/2013 7:18 AM
The Six Disciplines Solution
By implementing the Six Disciplines Total Performance Excellence program, Hollington says it allows CapitalWorks the ability to have a productive owner/manager relationship without micromanaging each acquisition.
Six Disciplines’ program combines continuous business improvement methodology based on proven best-practices, an innovative add-in for Microsoft Outlook, and coaching services to increase self-leadership effectiveness. One of the initial steps in the Six Disciplines process is analysis of the Business Performance Assessment (BPA) service. BPA is one of the most powerful methods available for determining an organization’s health and planning for improvement. It brings clarity about the performance of an organization; identifies strengths and “at risk” areas; and gives immediate focus and attention to a problem area that needs to be fixed and a way to correct the issue. CapitalWorks companies have seen a significant increase in each organization’s level of performance excellence.
Eric Kurjan, President of Six Disciplines, said BPA maps directly to the Malcolm Baldridge Quality Award Performance Excellence criteria and is the quickest, most effective way for a leadership team to rate its organization’s performance on the dimensions of: leadership/culture; strategy; customer focus; measurement/results; people; process; and key metrics.
In all seven categories, Bluffton Motor Works has seen a marked improvement. One of the largest areas of growth is the key measurables category where Bluffton scored a 13 in 2010 and is now at 40 out of a possible 60 score. In the leadership area, Bluffton currently achieves a 23 out of a maximum 25 score. Prior to starting the program, Bluffton scored at 15.
Kurjan says the BPA allows for immediate outcomes by identifying strengths and weaknesses as the process identifies priority areas for improvement. After identifying the shortcomings, those areas are prioritized and solutions determined.
While Bluffton Motor Works has several years of data to analyze and measure results, the other CapitalWorks companies—KKSP, Gallo and Magna-Tech—are in the beginning stages of the process, but have already seen a steady climb in numbers.
For Hollington, the proof of the importance of Six Disciplines philosophy is easy to measure.
“The difference between Six Disciplines and other strategy consulting firms is their focus on execution and accountability. They achieve this through their software tool that creates a management tool to track progress and their ongoing coaching. This keeps the strategy from collecting dust on the shelf and teams execute their plans," Hollington said. “It is not an easy process to undertake and takes a significant commitment from the CEO and leadership team of the business. With that commitment, there are substantial results. I highly recommend their process for organizations aspiring to improve performance.”
By Nate on
10/24/2013 3:32 PM
Bluffton Motor Works in Bluffton, Indiana, is a global leader in custom-engineered fractional electric motors. The company serves a wide variety of OEM manufacturers and industrial production facilities.
KKSP Precision Machining in Glendale Heights, Illinois, is a manufacturer of high-volume, precision made-to-print automatic screw machine products for automotive, medical/veterinary, appliance, HVAC and aerospace markets.
Gallo in Cleveland, Ohio, is a marketing communications company providing design, engineering, production and service of three-dimensional exhibit and digital displays for museum, tradeshow and traveling exhibits.
Magna-Tech in Muncie, Indiana, is a premier provider of vacuum impregnation of castings for automotive, marine and electronics markets.
Bluffton Motor Works has been involved with the Six Disciplines program for the longest period of time, implementing its program in the beginning of 2010.
In the first stage of ownership by CapitalWorks, performance strategies were developed internally, but never really put into practice. Then, the Six Disciplines program was initiated and continuous improvement of the manufacturing operations, the commercial sales strategies and the development of the sales force have taken place.
“It is very hard for CEOs to stay focused on these kinds of things because there is so much that demands their attention,” Hollington said. “Management teams need to continue to stay focused on a plan. It’s one of the things Six Disciplines does best, monitoring progress and results to make sure the path is clear, well defined and within reach.”
David Nussear, President and CEO of Bluffton Motor Works, agreed.
“Several other companies provide strategic planning services. Most of those help you develop the plan and leave it with you,” Nussear said. “With Six Disciplines, it’s a process. They not only help you develop the plan, but they stay with you during execution of the plan. It’s easy to have a plan, but not always easy to put it into practice. The coaches are great as they help you crystalize a plan and execute it.”
With 300 employees, Bluffton Motor Works relies on strategic planning daily.
“The Six Disciplines plan creates alignment throughout the entire organization. It creates a unified vision and goal,” Nussear said. “We are all busy and this ensures we are all working on the same goals. We have a 10-15-year vision that is broken down into segments. We have an annual strategic review, monthly reviews and weekly goals that all go back to the master 10- to 15-year plan.”
By Nate on
10/18/2013 6:58 AM
CapitalWorks, a private equity firm located in the Cleveland suburb of Beachwood, has found its niche in the Midwest market. Primarily focusing on acquiring manufacturing and distribution companies in the lower end of the middle market, CapitalWorks learned it needed to offer a management program to help these acquired companies achieve growth and success. They have found measurable success with Six Disciplines’ Total Performance Excellence program.
Dick Hollington, CapitalWorks President, is the first to admit it is sometimes difficult for the management teams of the acquired companies to develop and successfully execute strategic plans for growth.
“Our belief is that many of the businesses we work with are under-managed,” said Hollington. “A lot of what we can bring to the table is management discipline. We want them to develop a clear strategy and hold them accountable to that strategy. Six Disciplines provides one of the best coaching programs out there.The program allows for development of a strategy and mentors the tools on how to execute and monitor the results. “
Currently, four CapitalWorks portfolio companies have implemented strategies by Six Disciplines with impressive results. All portfolio companies are presented the option of working with Six Disciplines, but it is up to each individual company’s management team to make the commitment to the process and program.
Learn more about how Six Disciplines is easily implemented Here
By Nate on
10/11/2013 7:04 AM
Excellent small businesses should have three primary attributes. First, they should be learning organizations. Individuals in the organization should be like members of an Olympic team, where the best keep learning how to get better.
Second, excellent organizations should have clearly defined areas in which they have chosen to be leaders, and they should be relentless in their pursuit of those areas.
Third, the ultimate mark of business excellence is the ability to sustain success—to handle the difficult times well and to continue to grow stronger and better. As you read on, you’ll learn a step-by-step approach that helps your organization learn, lead and last.
Over the next three weeks, I will be going more in-depth with these three attributes.
Click here to Check out the Six Disciplines books
By Nate on
10/4/2013 8:25 AM
Excellence, like beauty, is in the eye of the beholder. Different people have different standards of excellence. If you’re serious about pursuing excellence, you must decide what excellence means for your organization. You also need to be prepared to have your definition change, because as you learn and grow, your expectations will change as well. For businesses, it’s useful to think of excellence in terms of two broad categories. The first is customer excellence and the second is business excellence.
Customer excellence has to do with those attributes that are of direct interest to customers, such as quality, price, reliability, taste, speed, etc. This is the type of excellence that wins product reviews and is featured in advertisements and promotional material. One of the primary functions of business strategy is choosing the dimensions of excellence in which the company will pursue leadership. For example, some businesses may focus their efforts on price leadership, some on full service, or some on convenience.
In contrast to customer excellence, business excellence is more transcendent and includes characteristics which are valued and highly desirable, regardless of business type: growth, profitability, predictability, longevity, etc. Business excellence and customer excellence are mutually dependent, because neither can be sustained without the other. In other words, satisfied customers drive business success and business success enables investment to satisfy customers.
We can learn much about achieving excellence—not only for our customers, but for ourselves—by taking a lesson from franchises. The franchising concept has been wildly successful over the past 40 years. The appeal of a franchise is rooted in two promises. First, there’s a very clear promise to the customer that’s reflected in the brand. What comes to mind when you think of Starbucks?
Second, there’s a promise to the business owner (franchisee) of a well-considered and proven business model that delivers on the customer promise. The result is two-fold. It delievers something of excellence to the customer—a steaming hot, fresh-brewed cup of coffee. It also delivers something of excellence to the business owner—a predictable return on investment, established business procedures, employee training, staffing plans, marketing strategies and interested customers.
The point isn’t that all businesses should be franchised; the point is that all businesses would benefit from taking the same holistic approach to excellence that franchises take. Franchised businesses recognize that there really are two products—the product or service which the customer buys, and the business which the investor buys. The goal of Six Disciplines for Excellence is to help business leaders work on their businesses so they can be as satisfied with their businesses as their customers are with their products.
-Gary Harpst in Six Disciplines for Excellence