Basic Business Cents
The last Basic Business Cents article discussed the ancient Chinese Tao Te Ching or translated means Way, which is the essence of understanding of Lao Tzu and very famous in China. It also discussed “The Toyota Way” which is the way of doing business by Toyota Motor Corporation. It has two main points, continuous improvement and respect for people. The question now is, what should be “Our Way”?
Our Way should have three major components: grow the business, grow the customers, and grow the employees.
Growing the business will, of course, have two parts-increasing revenue and cutting expenses. To increase revenue a clear vision of what you want the organization to be at a point in the future, usually about five years out is clearly stated. This vision must be fully understood by all employees so they can all pull together for a common aim. Then a concise strategy must be developed to reach that vision and progress managed to ensure the strategies are achieved in a reasonable timeframe. Approval of major expenditures should be determined on the basis of whether they would help to achieve the vision.
A good financial projection of a running twelve cycle is a valuable tool for management to understand the health of the organization. Tracking actual versus projection and updating monthly helps to avoid getting into trouble and provides a guide for decision-making.
Understand that products and services have lifecycles, which need to be replaced when the cycle starts to trend down. We often fall in love with what we are doing and miss the point that customers no longer care. This means we have to understand the true needs of our customers and those who we wish were customers. This entails going beyond what they are telling us they want and understanding what they really need.
We need to continually study new trends and technology so we do not get left behind. For example, we need to capitalize on electronic marketing techniques. The Park Rapids Area Chamber of Commerce, the Hubbard County Regional Economic Development Commission, and the Minnesota State College all provide training courses locally to help us learn about this rapidly expanding technology.
Growing the customers is the second leg of our growth triangle. It makes sense if they are more prosperous they will purchase more of our products or services. Good organizations make a point of understanding their customers and prospects real needs and, if they sell to other than the ultimate consumers, even to understand their customers’ customers’ needs. Working to improve the entire system from raw material to consumer is in everyone’s best interest. Sam Walton of Wal-Mart was a pioneer in this thinking.
Not only should we be helping customers improve revenue but also helping them increase productivity by continually improving the efficiency and effectiveness of their work processes. They can be invited to participate in training sessions on process improvement, provided with free consulting, sharing useful bits of knowledge, and given application ideas.
Growing our employees is of equal importance to the other two growth areas. Employees are a treasure to be nurtured, grown, and protected. Turnover is a huge expense in many organizations and why do people leave? The reason usually given is for more money but that is rarely the main reason. It is usually to receive more satisfaction from doing work that provides pride in accomplishment. Training and education help them to be able to do more and feel better about it. Job skills training on an ongoing basis is a given but the employees need to also be encouraged to continue their education with financial support. They need to be challenged to solve problems. They need to be taught a standard problem solving method and coached in the application and receive positive reinforcement for their efforts. Mutual trust and respect-up, down, and across the organization, each to the other in equal amounts, defines a great organization. The result will be a loyal workforce working their level best to achieve the vision of the organization.
The three-part activity of growing the business, customers, and employees is the foundation of “Our Way”. Following this guideline will result in a growth organization with continued improvement in satisfaction, loyalty, and pride in work of owners, customers, and employees. It provides a sense of pride of accomplishment for all.