Friday, November 18, 2011

Money By Brute Force

Too many businesses focus all their efforts on more sales, more customers but have ever decreasing profits to show for the effort. Why aren't profits increasing along with sales? Because they make money just through brute force. They need finesse to increase profits.

To add finesse to your business, you must root out inefficiency. You also need procedures that reduce error and encourage innovation.

You don't need an MBA from The Wharton School to know that poor planning of resources is wasteful. Anyone that has ever suffered through a remodeling knows the frustrations of missed deadlines and the messy cascade effect that has on the rest of the project. What started as a simple job has turned into a months long nightmare because someone made a mistake early on. And all that adds up to lost profits -- misallocated resources cannot be used somewhere else to make money.

That's why you need procedures in place that minimize these kinds of inefficiencies. Your people (AKA resources) need to know each step in the process so they can map their own progress. These procedures should have error control built in to reduce the cascade effect down the process chain. (Here are 5 ways to improve efficiency.)

Innovation is the name of the game in our rapidly changing business world. Many business owners are uncomfortable with the word "innovation" because they think it will lead to chaos in the workplace. However, a certain amount of chaos is necessary for innovation. The secret is to control the degree of innovation that your employees launch themselves into, and you control that with procedures.

For example, Google's 20% time policy allows employees to spend one day a week working on projects outside their normal job description. This lets people work on projects they are passionate about which leads to greater innovation. Many of Google's most well known products, including Gmail, started because of the 20% time policy.

While I understand you aren't comfortable with giving your employees one day a week to come up with ways to improve your business, there are plenty of other models that could work better. Toyota's model allows any line worker to suggest an improvement which is tried out immediately. If it works, everyone wins. If it doesn't work, someone else recommends switching back to the old way and they do. Workers are proud to be part of solutions that make the company more efficient and it promotes business agility.

If you are interested in adding some finesse to your business, we can help with process optimization, business simplexity, real time intelligence, strategic planning and infrastructure commoditization.

Or just call (305) 423-9574 and we can help you get started.







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