“One of the distinctive features of business development and successful functioning in the new economic reality is its optimal sufficiency”.
Optimization in the trend! Such a conclusion can be made if we analyze in retrospect the actions of many strong players of the domestic and world market over the past few years.
Almost every second company in one way or another is trying to optimize something, improve efficiency and more competently begin to dispose of its existing tangible and intangible resources (to apply the so-called Lean Approach), to reach a new level of development.
The same development is based on changes that primarily begin and end in the head. They begin, as a rule, in the head of the owner or top manager, and end in the head of an ordinary employee. And this is the most ideal option.
A variant in which the goals of optimization are clearly understood and what new result should be achieved, actions are agreed and understood by all participants, resources are sufficient, and risks are taken into account and calculated. But in reality it does not always happen so.
Over the past few years, I have often been invited by influential players on the European business market as an independent financial consultant to analyze their current situation. This weighty practical experience and inside view allowed me to structure the main and most popular mistakes made by “reformers”.
Typical “reformers” mistakes
Very few companies think about the timeliness of changes in order to strengthen their position in the market and ensure their sustainable position.
And when everything is going well, when the sales plan is fulfilled, when the profit is growing (though at a much lower rate than the revenue), there isn’t much need to think about what’s going to happen tomorrow and how sustainable your business will be in this “tomorrow”.
But as soon as the situation worsens and the profit starts to melt before your eyes, then many people start to “optimize” their business and do it as they think necessary.
Most often, they resort to the method of sharp reduction of all costs and apply the so-called “method of mathematical equality”, the essence of which is that the result in the form of “Profit” remains unchanged for all values of “Revenues” and “Costs”.
At the same time, the result becomes even worse and the company enters a “planning” state (if aviation terminology is used), when “engines” are practically no longer working and the fate of the entire “aircraft” depends only on the ability and competence of the only person – the pilot – the leader.
Among the typical mistakes related to the business optimization process we can single out a few most typical ones:
Lack of clear and correctly formulated goals for changes. They can be started under the auspices of “something needs to be changed – so let’s do something”. And sometimes it seems to such reformers that the more they change, the better the result. And they are wrong;
The emphasis on secondary indicators and evaluation criteria. The case when it seems that the situation is not so critical anymore, and we use secondary indicators only for one purpose – to calm ourselves a little, thus not recognizing the true state of affairs;
Trying to optimize the chaos. In other words, if you don’t have business processes described and don’t even have minimum regulations and you’re trying to optimize something, you’re trying to optimize an empty one;
Insufficient competence of the personnel involved in the transformation process to implement these very changes. Either raise the level of existing employees in the company, or involve experts in cooperation;
Eliminate the top management of the company from the process of change. And this, in my opinion, is the most frequent and widespread problem when a “sorrow-reformer” considers his mission accomplished by simply announcing in the company that “a new reality awaits us all, and you will need to work a little more”;
The change “from top to bottom” when the management of the company, without consulting the line employees who are directly involved in the process, brings down a solution that is based solely on the desire and vision of the “boss”. As a rule, it has little in common with reality.
The negative effect is amplified by the desire to do it quickly and with a minimum level of training.
As you understand, you do not have to expect the situation to change, let alone improve it. At best, everything will return to the circles of its own and the company, making ends meet, can still exist for some time in the market. In the worst case – termination of operations and bankruptcy. And such examples are not small.
And it is the crisis that is a good indicator of a company’s stability and its readiness for change. This is what happened. Many companies, which thought that “nothing can happen to the market”, have ceased to exist.
Many companies, which even in the most stable and highly profitable periods thought about and prepared for changes, are now market leaders. And here I would not talk about “luck”.
No, this is the result of consistent and substantive work on continuous optimization of their business and work with a high level of efficiency.
I’m sure now your brain has asked you a quite logical question: “How can you effectively optimize your business, so that you and your company could benefit from it? I think that every professional businessman has his secrets and “coded” ways, but I am ready to share the experience of optimizing his investment business, which is more than 10 years old.
Successful optimization using the example of the investment business
What is the secret or reasons for successful optimization? How to organize this process correctly so that your ideas can be 100% successfully implemented?
You cannot start a change without understanding what the result should be. I refer to the reference points from which you can and should be guided:
Openly admit the problem. At the same time you should be ready to do two things – to take full 100% responsibility for the situation and openly announce the current state of affairs in the company. Several years ago I launched a mechanism to optimize all the processes of my business.
Of course, there were some weaknesses in my business structure. And I could have blamed these shortcomings on top managers. But I took a different course – the first thing I decided was that only I was responsible for the current situation in the company and only in my power to launch all the important changes;
Analyze and act on the facts. Get your opinions and advice out of your attention. Operate only with verified data and trust in verified sources. It was very easy for me personally at this stage. My business philosophy is to make decisions based only on proven facts and accurate investment stock exchange figures, so any advice is immediately filtered out based on these two components;
Involve the right people in the change plan and delegate some of the tasks to them. Make them your agents, sell them the need for change in the same way as you sell your business plan to investors, be sincere and open, gather all fears and concerns and find an answer for everyone.
For every fear you must have a solution, every fear must be neutralized. Only then you will look forward and go to the goal, not look around constantly.
The team in our company has always been strong and united, so our teamwork just incredibly accelerated the whole process of optimization of all business processes;
Develop a change plan and start implementing it. Do not stop. Even if someone doesn’t agree with you (and there are sure to be some), don’t stop. Remember the main thing – changes come first! Frankly speaking, I have planned the optimization of the company six months before its implementation. I have created an effective plan and clear timings for the transition to the new functionality of my business;
Always start with yourself! If you are not ready inside, do not start with yourself.
And if you take these rules as a basis, I can confidently guarantee you a positive result.
In addition, I want to share with you some of the techniques that I personally used to optimize the business processes of my company and my clients, on which the whole business and all corporate governance is based:
“Optimal end result – OCD”. Abstract from the current situation and opportunities of your business at the moment and look no RESULT from the other side – the eyes of your clients, the eyes of your partners, the eyes of your competitors. You may be surprised to learn that the boundaries of your transformation are much wider than you previously imagined;
“the extra link.” Simplify and eliminate unnecessary (embryonic duplicate) steps, actions or employees from the process. In doing so, you must keep in mind the balance and separation of execution and control levels;
“Blur”. Simply changing the sequence of execution of steps can free up additional resources or increase overall efficiency;
“Profiles instead of universals.” Splitting processes into smaller ones and engaging additional employees dramatically reduces your personal dependency on universal employees, who are very difficult (or sometimes not at all) to replace.
“Master and Apprentice.” Give the supporting processes that take a lot of time, but do not bring tangible results, less competent employee. While your highly paid pro will earn money. At the same time, the result is usually increased by 30-40%;
“Everything a robot can do must be done by a robot.” Automate your processes wherever possible. Take the routine off your employees, give them interesting and developing work. But do not forget to set markers and control points on which you can quickly and easily influence the situation and the result in general.
And if you have done everything correctly, then in 2-3 months you will see new results. Not before. In general, if we talk about timing, well planned changes in the average company (from 50 people) will require from you at least 6 months of daily, hard, systematic and painstaking work before you see the first results.
Be prepared for this both morally (for many it seems too long) and materially (you must have sufficient financial stock).
Look for reserves in staff efficiency, optimize business processes and be ready for change!