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Seven Strategies Successful Companies and Executives Always Follow By Bradley E. Hosmer, CMC The following article was published in "Personal Excellence" magazine. "Build a better mousetrap and people will beat a path to your door," goes the Ralph Waldo Emerson quote. What Waldo was saying of course was that, by offering a product or service that is extraordinary and unique, anyone can start and maintain a successful enterprise. Be "better" than your competition and business will soar, now and for years to come. But Emerson, while rightfully considered by many our country's most eloquent essayist, had never been a practicing businessman. And with apologies to his line of thinking, during my nearly forty years in the business world, the last fourteen as an independent management consultant, I have observed something different. For companies to be successful over the long haul, it seems instead that how they behave need not necessarily be unique or better but simply, and steadily, consistent. There are seven strategies I have determined that exemplify this. They range all over the map but nonetheless most successful companies, in my experience, exhibit them. Here is the list: 1. They always maintain an acute awareness of customer needs, tailoring products and services to satisfy those needs. 2. They know when to say no. Successful firms simply do not accept or endure "bad" business. 3. They expect to get paid well, i.e., what their products and services are truly worth. 4. They commit themselves to constant new business development. 5. Their structure is a "flat" organization. 6. They follow a "Joe DiMaggio style of management." 7. Their management behavior is truthful and forthright. In good times, few managers would disagree with most of these strategies. But in tougher times, like now, when desperate for shortcuts to success, it becomes all too easy to let such strategies slide. Genuinely successful companies, however, never do this. Let's look now at these strategies again, examining how each works its magic in contributing to long-term success. 1. An acute awareness of customer needs, with products and services tailored to such needs. Customers don't buy products and services; they buy solutions to problems. That's why our first strategy for success is what I call the "outside-in method." You start outside the company, with the customer, discovering your customer's needs. Then you head back inside the company to create just the right product. By contrast, many companies use the reverse, an outside-in method, creating something with which they are impressed. They then attempt to convince people to buy it. You can see what I mean by contrasting two major choices available today in hand-held computers. Palm Pilot correctly identified the needs of busy people on the go, developing a useful device to meet those needs. Their product is simple, easy to use, reliable, devoid of fuss. Using an opposite approach, Microsoft with its Windows "CE" system began with an objective of crating a fully functional palm-top sized PC. The result was anything but satisfactory. It is hard to use, slow, fragile, and in general does not do its job well. As owner of both a Palm Pilot and a CE machine, I use my Palm Pilot at least 100 times as often than my CE machine. While it's true my Palm can't do a lot of things my CE can do, most times that's irrelevant to me. In addition, my CE has been to the factory three times already for various repairs. 2. Know when to say no. Don't take "bad" business. When business is going well, this one's easy to do. But when your company is having a hard time, it's just as important though much tougher to follow. A former client of mine, finding itself with an eroding customer base and too much manufacturing overhead, made the low bid on a major contract. But the bid was really very low, too low, and my client's customer was ruthless in taking every advantage of the company's desperate situation. The company wasted almost two years fulfilling this profitless contract that kept it too busy to pursue other business. It also prevented the firm from carrying out a necessary restructuring that would have enabled it to better respond to changing conditions in the marketplace. Thus, taking "bad business" hadn't helped and in fact had driven the company into its hole even deeper. 3. They expect to get paid what their products and services are truly worth. One of the most successful companies I was ever associated with had an interesting sales policy. They would produce anything the customer wanted, but insisted on receiving full value for the goods and services they provided. The company was a manufacturer of electrical and electronic components, modules, and assemblies used in industrial, commercial, and automotive applications. Even when business was slow they refused to compromise this principle. Its customers came to know better than to demand price concessions. Since this strategy allowed them to be consistently profitable, they were always able to provide those they served with excellent service, insuring a loyal following. Note: This doesn't mean, by the way, that if a customer can't afford a price you quote for a product or service that the request cannot be "re-scoped." The above company however would insist that whatever product it agreed to provide would be compensated for at full value. 4. A commitment to continual new business development. Here's an exercise to perform on your company. I call it "Offense-Versus-Defense Analysis." It's in three steps: a. Identify your top management group. b. Establish two definitions for your firm's behavior, "offense" and "defense." Offense stands for the efforts spent identifying and pursuing new customers or new markets, or introducing new products and services to existing customers. "Defense" would be everything else that goes on in your company. c. Calculate how much time your top managers spend-- weekly, monthly or yearly -- on "offense" versus "defense." For most companies, aggregate time spent on offense will measure less than the equivalent of one person. When that happens, I ask my clients, "How can you expect to generate new customers, enter new markets, or introduce new products to your current customers if you spend so little resources on these functions?" After one "Offense-Versus-Defense Analysis," a client of mine re-organized its management team so that one of its high-level persons could be assigned full-time responsibility for new business development which was also made a priority reporting-and-discussion item at weekly management meetings. The result? Systematic application of resources to new business development, sharpening the company's focus and markedly improving capture of new business customers as well as substantially increased business with existing customers. 5. Maintain a "flat" organization. I have always advocated a flat organization, earning me the moniker of one of my former bosses as a "member of the Flat Earth Society." But my feeling has always been that, with as few layers as possible, not only productivity is promoted but also job satisfaction and better management as well. My inclinations have been confirmed again and again by the prevalence in many organizations of too many small departments or sections. Whenever you find one person supervising as few as one, two, or three people inside a firm, generally you have identified a compartmentalized organization with very little teamwork. This type of organization breeds supervisors who become very protective of their limited turf, with a high ratio of supervisors-to-subordinates (who do the actual work) and are thus less than optimally productive. But in a flat organization managers have to plan, think, lead, coach, encourage, and challenge. This is because they have more direct reports and can get more done by facilitating the productivity and performance of their people. If they spend too much time "doing," the subordinates get too little direction and their performance and productivity fall. Instead, in a flat organization, managers learn to make their contribution to the unit's success through the management function, increasing the number and level of concrete results. 6. Follow a "Joe DiMaggio management style." The great Joltin' Joe rarely got ruffled or showed any emotion at all. And he also made everything look easy, only occasionally making a spectacular play since he always managed to put himself in the right place at the right time. Hence, the ball typically came right to him. The best managers I've known over the years managed a lot like Joe DiMaggio played. They make it look easy. It usually seems that they aren't doing anything. There are seldom emergencies. When an emergency occurs, it is easily handled because everything else is solid and under control. Three behaviors stand out: · They anticipated future events, making small changes today that improve things tomorrow. Joe could do this by astutely positioning himself before the ball was hit. · They allowed some problems to solve themselves, understanding enough of the big picture to realize that some other event might end up eliminating the need to solve the problem. The Yankee Clipper had the ability to see the entire playing field and as a play developed being able to do the one thing that would do the most good in a given situation. Sometimes that could even mean doing nothing at all. · They identified the root causes of problems in order to decisively correct them. This approach has the effect of calming things down and greatly improving the way an organization functions over the long haul. Joe was famous for identifying and correcting his weaknesses through hard work and determination. As he performed better it had a strong influence on the rest of the team. You could count on Joe and everyone saw that, so all worked hard to improve their skill and performance levels as well, so that the whole team, because of Joe, played better. 7. Manage truthfully and forthrightly. One of my worst experiences was getting caught up in the corporate raider era of the mid 80s. The company I was with had been taken over by one such raider. Though he assured us, "I'll never lie to you," he made sure not to tell us the whole truth, either. The best managers do not engage in parsing their words. They speak forthrightly and they adhere to clear principles. This will win customers over every time. Consider what client once told me about why they continued to use me: "You'll never know as much about our business as we do," they said. "You sometimes miss subtle points relating to our markets. However, we overlook these small points because we can count on you to be honest and objective in your recommendations. That's why we keep hiring you." In the same vein, now consider these examples from the Wrigley Company, the famous makers of chewing gum: Example #1: When asked to join an industry cartel some 100 years ago, William Wrigley replied: "If we cannot do business by fair and square methods we prefer not to do business at all." Those words set a tone for the company that has endured to this day. Example #2: During the second World War, Wrigley stopped production of chewing gum for the civilian market because he could not get all the ingredients he needed to make a quality product. Though he could have made an even larger fortune by substituting inferior ingredients, he chose to let his competitors follow that path. When he once again could get the ingredients he needed, he came back in full force and blew away his inferior competition. In a crisis, the best managers lay the cards on the table and bring all of their employees into the picture. They are forthright and open about the problem and share their concerns and their ideas for what must be done. There is no "hidden agenda." In some ways, the most successful management strategies will consist of those that treat all parties concerned-customers, employees, other managers, even themselves-with respect and grace. Whether it's attending to customer needs, leading and encouraging colleagues and subordinates, maintaining decorum (like Joe) or speaking the truth, companies and managers who adhere to such principles, even in hard times, will rise to the top and remain there. Way back in 600 B.C., Chinese philosopher Lao-Tzu put it this way: A leader is best when people barely know that he exists;
not so good when people obey and acclaim him, worst when they despise him. Fail to honor people, they fail to honor you; but of a good leader, who talks little, when his work is done, his aim fulfilled, they will all say, "We did this ourselves." A successful strategy then, and practical savvy business sense today. Bradley E. Hosmer, CMC, heads The Beta Consulting Group in Concord, NH, specializing in improved sales, marketing and new business development for generating profitable growth. For further information please contact Mr. Hosmer at Beta Consulting. |
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