Success is achieved when a predefined goal is met within a predetermined timescale.
If we review the steps that the last four Margin Improvement posts have followed we can see a very specific path.
As tempting as it is to simply state “we need to make more money” and head straight for that objective,
It’s not very inspiring on its own. Without setting out an understanding the current state it’s impossible to set the objective in real terms, taking into consideration critical elements such as suppliers, customers and internal stakeholders.
OK, so first things first, we need to set the Situation, find out where we are in relation to the objective. Let’s put it below the objective; it makes the other diagrams work better.
Then linking them together is where the Strategy fits together, getting from where we are to where we want to be, the point where we are making more money.
So far so simple; we are where we are and we need a plan to get to where we want to be. Except whilst a strategy is a plan designed to achieve a long term aim, it is not a detailed plan of engagement, it is open to interpretation. Also, if we agree that success is achieving a predefined goal but needs to be completed within a predetermined timescale, then we need to add a timescale.
In the previous post we looked at the tactical implementation, the steps needed to achieve the desired outcome without detriment to our stakeholders and customers. So we put these in last.
OK, so that is a long winded way of stating the obvious, we all know this. It is not rocket science, and frankly, the fact that you’ve made it this far without muttering the words ‘patronising idiot’ under your breath at your monitor is awesome.
The reason for going over this is twofold, the first is that I love diagrams, the second is to highlight the one thing that is missing from all of this, which is how to measure the progress.
I asked Matt Tibbles, Senior Billing Analyst at Nine Group for his opinion on the importance of measurement.
“When a decision is needed or a new requirement arises, do I tend to go with how I feel or look to facts and figures for the way forward?
It can be very tempting to go with your gut feel on a situation. Similar to the draw of the roulette table at a casino, the thought of hitting the right result from the ‘genius of your intuition’ alone is a powerful vision. Indeed, many entrepreneurs often mention that they go with their instinct and judgement on a situation.
Yet a lot of successful entrepreneurs also often cite value in a great deal of market research before starting a successful venture.
Imagine James Bond lying in wait on his latest assignment. Cool, calm and collected. He has been well briefed on the situation and has digested the known facts before selecting the precise tools needed to get the job done. In the films, the decision is made and the silence is shattered by a concealed Walther PPK. Whilst your next business decision won’t necessarily be as dramatic, fully understanding the details of the situation will enable you to take the best action and avoid falling foul of Blofeld’s evil machinations, or the business equivalent.
Don’t forget that instinct and analysis don’t have to be mutually exclusive either.
If you struggle to let go of the desire to act on impulse try allocating some time to look at the details first. Make a record of when your first thoughts align with the logical way forward and see if you can spot any trends in your approach.
For those that tend to spend more time analysing, try asking yourself at the start of a project what option you would take if you had to make an immediate decision. Without letting the idea influence your final decision you may have a basis for action if there is no clear logical best.
After all, James Bond can also handle the pressure when the casino table is the only option.”
I think Matt’s point about using a combination of experience and analysis is perfect here. It is important to know when to use each one. Measurement throughout the SOSTT process is going to allow you to adapt the tactical approach to meet your objective. The one thing that shouldn’t change, unless it is deeply flawed or based on an incorrect understanding of the situation, is the strategy.
And of course what is measured was set out during the objective setting exercise and worked on during the implementation stage in the form of better relationships with the suppliers and customers and improvements to processes and product commercials.
During the objective setting phase there was an opportunity to assign very specific numbers to these KPI’s, now that the time element is added, the process mapping is complete.
As a final point I recommend the book Exponential Organizations by Salim Ismail. The author makes a number of superb points on the traits of companies that excel, particularly the communication of the organisations massive transformational purpose. Whilst the entire book is worthy of attention the chapter that deals with internal processes through interfaces, dashboard, experimentation, autonomy and social interaction is particularly relevant here
Reporting to internal stakeholders and making the organisation as a whole aware of the progress can only be done through effective and transparent measurement.