DEVELOPING A MINDSET OF OPTIMIZATION

Your workforce is your most valuable asset. The knowledge and skills they have represent the fuel that drives the engine of business - and you can leverage that knowledge. - Harvey Mackay

As a CEO, you need to elevate your mindset and obsess about getting more from your current resources and efforts.  You must ask yourself and others better questions.  You must start to ask yourself, “How can our business get greater results from every action we take, every expenditure we make, every effort we expend, every relationship we have”?  Avoid status quo like a deadly virus.  You must embrace fully the philosophies that, “good enough never is” and “we can always do better”.

Optimization (also known as leverage) is a mindset of maximizing your results while simultaneously minimizing the amount of time, effort, risk, money, and energy you expend.  It’s all about getting greater productivity, performance, profitability and payback from your ideas, assets, knowledge, systems, processes, practices, people and opportunities.  Overlook nothing; leverage opportunities are everywhere.

Optimization is all about using your mind and limited business resources in new and better ways.  It’s about using your creative intelligence as an incredible force to increase your sales, customer satisfaction, profits, quality, etc.  Optimization is about freeing yourself and your organization from limiting beliefs, the “we've always done it this way” attitudes, and established industry practices.  Optimization is searching for opportunities within and without your company where the application of focus or force will yield substantially multiplied results.  For example, if you start using telephone calls to follow-up your direct mail campaigns, you may multiply your sales results by staggering amounts.

Just as a tire jack can lift the tremendous weight of a car for a tire change, so too can the strategy of optimization help you significantly lift your company’s revenues, improve operations, and lighten your daily load.  A lever, fulcrum and slight force can lift significant weight if you know how to use these tools.  Learn about leverage so you can begin to elevate and optimize your business results.

To master the art of optimization, you need to adopt an opportunity mindset.  To leave the status quo behind, you need to ask continually the following types of questions:

• What is the best and highest use of our time, talent, and treasures?
• What resources are we under utilizing?
• How can we maximize our returns/output and minimize our input?
• How can we work smarter, not harder?
• Which strategies will give us super-sized results?
• What processes or departments within our business are under-performing?
• What past or current relationships could we more fully leverage (i.e. customers, employees, vendors, suppliers, advisers, etc.)?
• What other industries could provide us with some innovative best practices?
• Where are the hidden opportunities within our business, our employees, our suppliers/vendors, our business partners, our customer base, our competitors, and our business processes?
• How can we get a greater return/payoff using the least amount of money, time, risk, etc?
• How can we be more effective, more productive?
• How can we get better every day in every way?
• What suggestions from our customers should we pursue first?

Expand your mind and your leadership potential and your business and opportunities expand exponentially.  The more you grow as a leader, the more your business grows as a market leader.  Think optimization, not status quo.   

Keep Business Management Simple

"So much of what we call management consists in making it difficult for people to work." - Peter Drucker 

To be an effective CEO, you must adopt a big-picture perspective.  As leader, don’t overcomplicate business.  Keep it simple and straightforward.  Simplicity allows for clarity of focus and focus allows for superior performance.  Here is a simple framework by which to see and guide your enterprise.

As owner/CEO, you are solely responsible for the company’s leadership process (direction, strategy, focus, goals, accountability) and the business development process (building a systems-based business that is self-managing, self-improving, and nearly runs itself).  As such, there are only a handful of additional major processes you need to ensure are in place, well documented, and working smoothly and optimally: marketing, selling, operations (customer fulfillment), customer service, and back-office functions. 

In brief, the marketing process generates leads, the selling process generates customers by closing leads, and the operations process fulfills the promises made to the customer.  Completing the business cycle is the customer service process that follows up with the customer to ensure satisfaction with the current transaction and uncover any other unmet needs. 

Since the purpose of any business is to find, satisfy and keep customers, marketing, selling, operations, and customer service processes should be your top priorities and areas of focus.  Other functions, while important, should be secondary priorities and support this main mission.  These back-office support functions are: a finance/accounting process to manage money; human resources to manage employee issues; and infrastructure to manage technology, facilities, administration, etc. 

Spend your time and energy focusing on your company’s core processes and competencies – those functions that you do extremely well as an organization and which add real value to the customer.  Keeping business simple will help you stay focused on what is most important.

To simplify your business and your life even more, consider outsourcing (turning over day-to-day responsibility to an outside provider) your back-office functions such as payroll processing, tax preparation, legal, HR, technology, facilities management, etc.  Seek advice from your CPA, attorney, or banker about outsourcing arrangements.

Planning for Results

How do you create a simple business plan?  How do you achieve results?  Again, you must keep things simple and focused.  With your team’s involvement, agree on and set yearly goals.  Then, on a 90-day cycle, gather your team and hold your people accountable for the agreed-upon results.  This implementation process is just as important as the goals.  Do not tolerate excuses; insist on execution and results.

In short, you must select a few key strategies and implement like mad.  Success is more about execution than anything else.  Focus on the vital few instead of the trivial many.  Energy focused on a few highly important goals is powerful. 

Please note, we are not talking about setting goals to achieve incremental improvements in performance or processes.  We are talking about big and bold goals – goals on steroids.  Be innovative and think big.  Go for breakthroughs, not mere incremental gains.  Realize there are no rules or restrictions.  As long as what you do is moral, legal, and ethical, do not be shackled by company history or industry standards or practices.  In short, kill the “we have always done it this way” mentality.  Shake habitual thinking patterns.

Performance goals, at a minimum, should be set in the critical success areas we just discussed, leadership, business systemization, marketing, selling, operations (fulfillment), customer service, and back-office operations.  In fact, your yearly business plan could be nothing more than 3-5 monster-size goals in each one of these key areas.  Once you have your yearly goals established, assign a person to champion each cause.  Give each person the authority, time, and tools to make things happen.  On a 90-day cycle, hold each person accountable for progress on his or her goal(s).

These audacious, challenging, and adrenalin-inducing goals should be SMART (specific, measurable, aggressive, realistic, and timed).  Force your people to stretch.  What gets measured gets done.  What gets rewarded gets repeated.  As a leader, insist on aggressive implementation, follow-up, follow-through, and results.  Intentions and plans are mostly meaningless; implementation is where success is found.

Shape Your Business: Become a Sculptor to Strike it Rich

It is time to mold your business to run more efficiently, effectively and consistently.  Don’t let your business evolve haphazardly and re-actively.  Proactively shape it or re-shape it to make for smoother operations, consistent customer satisfaction and profitable results.  You must turn chaos, confusion, and anarchy into order and discipline.  Time to standardize and document your business.

Challenge your old beliefs about how your business should work.  It is never too early to shape or too late to re-shape your business.  It doesn't matter if your business is 20 years old, 2 years old, 2 months old or on the drawing board, start shaping the company to run without your being woven into the very fabric of the business.  Design it to run without your supplying all the effort and energy.  You cannot control everything, you cannot control everyone.  Let go!  Start behaving like a strategic business owner.

You do not want to create merely a job for yourself.  The ultimate goal of creating a business is to sell it one day, at the highest premium possible, to your employees, family members, or an outside buyer.  You deserve an acceptable return on your investment of time, talent, and treasure.

No matter what size, age or industry, every business should be prepared to be sold.  Yours is no different.  This “start with the end in mind” strategy should help focus you on building an effective business model that doesn’t have you at the center of its universe, relying on your presence, personality and perspiration for its success.  Again, you should not be the business and the business should not be you.  This work-in-reverse approach not only maximizes your selling price, but also minimizes your hassles and headaches while you own and run the business.

As stated earlier, your goal is to design or re-design your business to work without you.  Your business model should be sculpted in such a way that it can be easily replicated dozens of times in cities around the country or world, requiring only your vision, not your physical presence and exertion.  Whether you ever expand or not, such an ambition should help you focus on building a systems-dependent (not owner-dependent or people-dependent) business that generates repeatable performance and consistent results.  You must help others get results.  Without other people, you don’t run a business -- you work a job.

What is an effective business system?  It is simply an integrated web of separate processes, procedures and policies.  A business system allows you to get consistent results through other people – tremendous leverage and freedom!  The business system is your documented instruction manual for “this is what and how we do it” at our company.  Some typical operating processes are as follows:

·         Selling

·         Marketing

·         Manufacturing

·         Inventory management

·         Order processing/customer fulfillment

·         Customer service

·         Billing and accounts receivable

·         Procurement/accounts payable

·         Facilities management

·         Accounting/finance

·         Human resources (i.e. hiring, firing, reviewing, promoting, paying, etc.)

·         Information systems

·         Store opening and closing procedures

Your business with such processes fully identified and explained will allow your employees to deliver amazing consistency.  Employee discretion is minimized.  Such a system will also free you from having to touch every transaction, make every decision, answer every question and solve every problem.  You can manage by exception!  Such a carefully crafted enterprise will also give you breathing space to think and act like a strategic business owner as well as the time to do personal activities that matter most to you. 

Without such a business system in place, no one will want to pay a premium for your broken business.  They would not want to buy a dysfunctional business that is solely dependent upon you for its day-to-day operations and survival.  If it were obvious that you are a prisoner to your business, why would anyone want to buy into such a life sentence?   They would not or would pay very little for such a systems-deficient business.  Please grasp this; no one wants to buy a job, a series of headaches, or an owner-centered and owner-dependent business. 

To maximize your company’s eventual selling price, realize that buyers want to acquire a smoothly running, money-generating machine.  Buyers want to purchase a business system that runs on near autopilot, foolproof status.  They want to buy a fully documented, organized business system that gets predictable results.  They want an asset that has proven processes, predictable revenue streams, and strong growth potential.  They want to buy a well-designed, hassle-free, cash flowing asset, not a “pain in the ass”.