There is a critical element missing from this story.

For every startup the development of a business plan is a  required first step. It is so obvious – business schools have course on writing the business plan and it is impossible to get funding without one. Teams coalesce around the labor. So, every startup has a business plan.

For the going concern, the ones that are now three or so more years old, the business plan (also called strategic plan -really the same thing) is forgotten, only stumbled on when a move forces someone to pick it up and wonder, “Should I just relegate this to the dumpster?”

This is not a good situation. A business without a plan is like a boat sitting in a pond just waiting to sink to the bottom for nature to compost it. Or, if it has the fate to be afloat in a stream, it will be carried along willy-nilly until it bumps into a stone or dead branch or reaches the ocean where nature will also send it to the big composter.

Every business exists in a world that is changing and filled with opportunities and threats. Your business plan is your set of oars to provide the means to pull in the direction you want to go in, to avoid the rocks. You might even row to shore and portage around the falls, to move to an entirely new river.

But, many people, even accepting the wisdom of having a plan, find it a painful exercise, all too easily avoided. This may be driven by the idea that a business plan involves dozens of pages of writing, lots of spreadsheets with numbers they really don’t believe (sometimes don’t understand). Business plans, strategic plans, these are just the exercises one does in business schools. Or it may be the folk wisdom that business plans are not a useful part of managing and they always end up on the shelf or hidden in a file cabinet only dusted off for display when in search of a bank loan.

However, shift your thinking to view the process of building a plan as a value in and of itself, and adopt a simpler more flexible business plan model you will find that building that set of oars for your little boat is fun and productive.

The Business Plan Model

Lets talk about the business plan model first. Since we are developing a business plan for our internal use it does not need to look like or contain everything that bankers, MBAs, venture capital funders expect. This is a working document to help us move the business in a definite direction.

First, I have found that setting an arbitrary limit of 12 pages focuses the mind and edits out all the useless boilerplate that populates many plans. Second, if you and your team prefer not to write a paragraphed narrative, use an outline, PowerPoint approach. Third, get out your most recent Income and Balance Sheet statements – these will be the starting point for the financials. Fourth, establish an outline of the topics that you feel must be covered and keep to it.

Basically, the plan will include these twelve topics.

1. Describe why you are in business – what value are you delivering to which customers. An important corollary to this topic is to identify why customers buy from you and not someone else?
2. How do you find customers? Who are your current customers? List the big ones and their share of your business
3. How do you produce the service or product?
4. How do you make money by making your customers happy?
5. What are your objectives for growing a larger customer base, adding a new market segment, new products or services, or other growth strategy?
6. What are the external obstacles to accomplishing these objectives and how do you intend to get around them? This is where you might look at competition, SWOT and PEST analysis and apply other analysis tools.
7. What resources do we need to put in place to achieve the growth? Money, people, technology….?
8. What strategies are we going to apply to achieve our objectives over the next year to three years? This should be limited to three to five strategies. State clearly what the objectives are for each strategy – how many new customers, new products, dollars of sales, profits, etc? When will these happen?
9. What key tactics are needed for each strategy? Who is responsible, what resources do they get, when will the accomplish the tasks and what results are you looking for?
10. Build a financial model. The spreadsheet should be not more than 25 rows with columns containing quarterly projections for three years. Starting numbers must link to existing financial statements.
11. What is the schedule for follow up business review sessions where you will examine progress on the plan and take required actions to revise and push the plan forward. The first meeting should be one month after you kick off the new initiatives. The, not less than quarterly.
12. How does all of this fulfill the management team’s personal objectives? The answer to this is not money?

The Planning Process

Now, how do you actually develop the plan?

Four to six two to three hour working sessions with all members of the management team present usually suffices. Some homework will be required between the sessions, typically a  couple of hours. You might imagine a month to six weeks as a useful window of time.

Who should be in the room? Every significant stakeholder – owners, chiefs of marketing, sales, operations, technology or product development, finance, and HR. In small companies this sometimes means that one person has to cover several functional areas. Do not let the group get larger than six to eight people. More than that and you can not have good, deep interactions – the work sessions will be more like a conference or convention. Two or three is fine as long as every key stakeholder in the business is present.

These work sessions are more important, in many ways, than the plan itself. During these sessions, the team will talk out loud and write things down. Arguments, discussions, innovations, deletions, new agreements about the business emerge. These flow out of the group and the whole team understands and owns these discussions and the conclusions.

In my experience, if the management team represents all of the key elements, all of the facts and concepts about the business are sitting in the room. Some people think that business planning is a research project. But, with a team, the process is more a sharing around the table of the facts, consensus building about the situation, goals, and strategies to get to the goals. The most powerful outcome of the planning process is that it arms the management team to convert the strategies into actions to reach the goals.

You Need a Consultant

All of this seems quite straight forward. You may be thinking, “Well, I am the Owner, the CEO. I am a seasoned veteran.  I can lead my team through this planning process.” Resist this line of thinking and here is why, and I say this despite the obvious self-serving nature of what follows.

A good strategy consultant who knows how to lead groups through a planning process will do the following, much of which you as the Owner, the CEO can not do just because of the fact of your position. First, the consultant stands outside of the actual business discussions, runs the sessions, and keeps the team moving forward. Second, the consultant establishes an environment in which the team is a group of equals for the purposes of the planning. This assures that one person will not dominate, that the less forceful personalities, who frequently have significant contributions to make, will be heard and participate. This increases the breadth and depth of the team ownership of the plan. Third, the consultant can bring up the elephants in the closet that no one wants to talk about. Overcoming the baggage of history can be difficult and painful. The consultant can drive the conversations to confronting the facts of the business situation. Fourth, the consultant will bring appropriate analytical tools to the table. The bag of strategy tools is enormous. All of this liberates the Owner, the CEO from the burdens of running the work sessions to focus on the content of the process. This is where their highest value is.

How Do You Convert the Plan Into Action?

For most strategic plans and business plans the end is the document itself. This is the critical moment and here is where Step 11 above, that asks about the schedule of review sessions, converts the plan into action. This is where the Owner, the CEO must take the lead. Otherwise the plan is just a plan and is not converted into action. If you have done a good job of establishing the tactics you will know who is responsible, what the success metrics are and the timetable for action. By tying the planning to the existing financial reporting system, you will be able to measure results directly. The review sessions are not designed to be dull reports, but opportunities to understand where the difficulties lie and where new opportunities pop up. A review session brings together the management team to work on the most important strategic activities of the firm.

Summary

Let’s wrap up this discussion.  A business plan is the result of a process in which the management team comes to a common understanding of:

• • the business situation
  • the value the business provides to customers
  • strategies to achieve new goals
  • obstacles to be overcome or avoided along the way,
  • tactics to bring the strategies to life – this includes who is responsible, resources available, timeline, and results expected
  • schedule of review meetings to take corrective action and make course corrections

The business plan is converted into action through the tactics identified supported by active supervision and follow up by the Owner, the CEO. The plan also provides a common language about the business and a platform to communicate the business’s goals beliefs, and values to everyone involved, employees, vendors, and customers.

More information is available on the strategic planning process in our white paper: Introduction to the Strategic Planning Process here

This article was the subject of an earlier podcast of the same title. It is available here.

1. Invest in culture as a corporate asset
2. Make listening an enterprisewide (sic) skill
3. Turn innovation into a continuous process
4. Provide a clear and compelling purpose
5. Extend and enhance the digital fabric
6. Practice good social citizenship

Lists like this one are very popular. I have been known to make lists of key practices and the like. But for the practicing manager lists are frequently tough to integrate into day-to-day work. Mr. Temkin’s six imperatives falls into this problem category. Overall, the six imperatives are reasonable enough as they stand. But I want to take a closer look at each and then suggest a more global approach.

Practice good social citizenship

Lets start with the sixth, “Practice good social citizenship”. This defies the laws of capitalism. Capitalism has never been about doing anyone other than the firm good. In fact, there are enormous built-in penalties for firms that attempt to do anything significant in this realm. One only needs to review the history of the last year or so to see that companies act in their own (management not necessarily stockholder) best interests.

Even today we are being treated a new episode in this  debacle in Europe with the near collapse of the common Euro currency under the weight of Greek financial malfeasance. Would not good social citizenship lead Goldman Sachs and the other big banks not enable the bad habits of the Greek government?

One of the primary rules of capitalism is that every individual firm seeks to externalize any and every cost that it can. You can see this all around in day-to-day life. Why do we have environmental laws that attempt to restrict how companies deal with the waste from their processes? Why do we have Workers’ Compensation Laws? How is it that the largest financial institutions in the country drove themselves into insolvency only because they knew that they would be shielded by the American government from failure? You can add you own examples to this list.

The forces of externalizing whatever a firm can and the desire to make profits wherever possible under any conditions, even outright illegal ones, has always overwhelmed calls for “good social citizenship”. Nothing in Mr. Temkin’s recommendations will change this. This imperative is just window dressing.

Invest in culture as a corporate asset

Every manager knows that company culture is important. Mostly, this awareness has grown through learning to manage in environments that are toxic or moderately negative at best. So this imperative makes some intuitive sense. A central problem emerges when you try to develop a strategy and tactics to carry out this imperative. Without an actionable definition of what corporate culture is, it feels like pushing the proverbial string towards an unknown objective.

So, lets step back a moment and ask, “What does ‘corporate culture’ mean?”

Wikipedia suggests some of the complexities in its definition of “organizational culture” in the following quotation from the beginning of its discussion:

This definition continues to explain organizational values also known as “beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals. From organizational values develop organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another.”

Organizational culture is not the same as corporate culture. It is wider and deeper concepts, something that an organization ‘is’ rather than what it ‘has’.

Corporate culture is the total sum of the values, customs, traditions and meanings that make a company unique. Corporate culture is often called “the character of an organization” since it embodies the vision of the company’s founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behavior.

Mr. Temkin suggests tactics for managers to use to “manage their corporate assets”: ^[[2]]

1. Track employee goodwill
2. Develop a Voice of the Employee Program
3. Establish a vocabulary around culture
4. Actively manage it.

There is merit in each of these but without a useful understanding of the existing culture and a definition of the corporate culture you are trying to build. These programs will lead nowhere.

Here are a few references to statements by companies about their culture:

• Google
• Bunker Hill Home Insurance
• Kaplan Real Estate (PDF download)
• CareerBuilder.com
• Altera

As you have discovered there is considerable variability in what is, and is not, included in the actual day-to-day usage of the term “culture”. Nevertheless, there are lots of common threads here. The question then becomes how do you define the culture of your organization, and how do you make changes that respond to the gaps between the future states and the present state? More on how I might respond to this below.

Make Listening An Enterprisewide Skill

Listening as an active skill is required at the personal and organizational level. Every good and great manager is, by definition, a great listener. So, this imperative fits into the obvious category. The Web has opened new avenues to practice listening and made it possible for listening to the outside world, to customers, competitors, technologists, and so on, accessible far inside every organization. And, in parallel, the Web has made it possible for employees and managers to listen to each other in ways not possible earlier. Tempkin’s suggestions for how managers can cultivate listening are good:

• Listen in a variety of ways
• Listen by example (senior managers need to demonstrate active listening)
• Listen to employees
• Listen for soft voices
• Listen to online communities
• Actively encourage listening

But, Tempkin’s claim, “The bottom line: enterprise listening allows firms to embrace change”, is not satisfying. Listening is a way of engaging with those around you. It is a methodology for discovering what is going on and why. Listening supports real engagement by employees and stakeholders. Listening opens the social space to the creation of new ideas and connections. Listening provides moments when the brain of listener is taking information in instead of thinking about the next point they want to make. But, the connection between listening and embracing change is not causal nor even necessarily suggestive of a significant link. Embracing change requires an understanding of either the opportunities to be gained or disasters avoided. Listening is simply one of the many activities that might go on while change is considered, put off, avoided, or rushed towards.

Turn Innovation into a Continuous Process

Here is an imperative chock full of key words, innovation, continuous, and process. These are bread and butter for every high performance organization. There have been, and continue to be, significant experimentation worldwide in how to foster and drive innovation. Many of these encompass far more than individual companies. Whole countries are trying to foster innovation through combinations of academic, government, and private sector assets. But, to focus on the company level, there are numerous models of innovation. One thing they all share is a view of innovation as a process, a continuous process. Despite the use of the words “continuous process” in Mr. Temkin’s imperative, there is only a hint that a company has to define its own innovation process^[[3]].

As with other of Mr. Temkin’s imperatives the suggested tactics are good, just lacking a strategic and process based context. And this is why most companies that are serious about innovation answer Temkin’s closing challenge, “The Bottom Line: innovation is too important to leave to chance.”, by building a continuous innovation process into their overall company architecture.

Provide a Clear and Compelling Purpose

Temkin hits squarely on the central issue with Mission, Vision and Strategic Plans and Statements of all varieties.  “Just about every large organization has vision and mission statements floating around their hallways. But when it comes to making decisions on a day-to-day basis, these documents are no where to be found. They play NO Role in how the company is actually run.” Unfortunately. Temkin offers us a less then compelling set of recommendations.

• Rediscover your brand
• Look for alignment
• Market to employees
• Make decisions purposefully

The corporate world has been filled with experiments on how to solve the problem of putting strategy to work. It is clear that bridging the gap between vision and planning and day-to-day tactics requires a structured business process and  a lot of management energy to assure that the process is working continuously. Speaking of decisions, Peter Drucker pointed out in his 1967 book, The Effective Executive^[[4]] “”Unless a decision has ‘degenerated into work’ it is not a decision; it is at best a good intention.” This is still true and points to the fact that visioning and planning are the easy part, the tough work is putting the plans into action and having them become the day-to-day work of the company.

Here are a few names and phrases that you can investigate to learn more about current business processes that address this issue:

• MBO (Management by Objective – one of the original concepts)
• Hoshin Planning
• Balanced Scorecard

“Market to employees” is an unfortunate phrase. The very word ‘marketing’ inspires nothing but cynicism from every person on the face of the planet who has ever been exposed to the dreadnought of corporate pr, advertising, and general corporate manipulation. Management needs to communicate transparently and honestly with its employees and simultaneously try to be honest about the limits of its transparency and honesty. Almost 30 years ago, one of the original high-performance systems management gurus, W. Edwards Deming, in his 14 key management principles wrote:

Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

Now, you may object that marketing is not “slogans, exhortations, and targets”. However, there are very few, if any, managements that do not descend to exactly this when addressing their employees. And focusing on this part of Deming’s principle is to miss the perhaps more powerful idea, fact perhaps, that the “causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.” Management controls the design and deployment of the company’s systems. They set the rules of work, provide training (or not) and guidance to getting the work done. Until management accepts its true responsibilities for the success and failure of the company, marketing to employees will always be seen as the manipulative cynical act it is.

Extend and Enhance the Digital Fabric

There can be no arguing with the momentum of the pervasive Web. The visible opportunities here are so numerous and the ones yet to be discovered likely to be just as numerous, so the imperative for every organization to engage is obvious. Temkin states four ideas for executives to keep in mind:

• Understand digital economics
• Assume increasing adoption
• Improve usability, a lot
• Connect online with offline

One point concerning Temkin’s view of digital economics is that business model making should never be left to finance people. Managers must take the initiative here because no finance team will reliably understand customer interactions and operations. Without the input from those directly involved at the front lines, finance driven business models almost invariably look good, even very sophisticated, but are usually disconnected from the realities of the business.

Temkin’s comments about connecting online with offline bring to mind again a guiding principle, one that is at the heart of his work. Every effort to design systems must begin with the requirements of customers, whether these are end customers or intermediary internal customers. Only by beginning with the customer view can you sort out the correct balance of system functions and user interfaces, whether online or offline. This process starts with customers, and only then involves others who play a role in creating and refining a company’s operational systems.

Epilogue: It’s Time To Reinvent Management

There is much that could be said about this call for reinvention. One thought stands out. Real change in management comes from two sources, the external realities that impinge on companies and senior management’s attention and approach to how to respond to the external realities. The first, the external realities, are uncontrollable, though at times unknowable, facts. The only controllable factor is senior management’s approaches to their work. Only when senior management brings new, more powerful models of management to bear on their work do matters like what MBAs learn, or how, and to what extent, the company trains staff have meaning to the results.

I have argued for years that the best systematic models of management are to be found in the arena of high-performance business systems. These are now widely known and globally deployed through models like Toyota Production System^[[5]], Baldrige Criteria, EFQM Excellence Model, and ISO9001-2008 Quality Management System. Though they differ in many siginficant ways, there is also substantial overlap, particularly at the top level of guiding principles and practices, All of them are widely used and under continuous improvement by users and experts.

If you would like to begin the journey towards high performance management consider these 14 management principles from The Toyota Way^[[6]] :

I. Having a long-term philosophy that drives a long-term approach to building a learning organization

1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals

II. The right process will produce the right results

1. Create a continuous process flow to bring problems to the surface
2. Use “pull” systems to avoid overproduction
3. Level out the workload (heijunka). (Work like the tortoise, not the hare)
4. Build a culture of stopping to fix problems, to get quality right the first time
5. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment
6. Use visual control so no problems are hidden
7. Use only reliable, thoroughly tested technology that serves your people and processes

III. Add value to the organization by developing its people and partners

1. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others
2. Develop exceptional people and teams who follow your company’s philosophy
3. Respect your extended network of partners and suppliers by challenging them and helping them improve

IV. Continuously solving root problems to drive organizational learning

1. Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).
2. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (Nemawashi).
3. Become a learning organization through relentless reflection (hansei) and continuous improvement (Kaizen).

1. experiencematters.wordpress.com
2. I will not provide citations for mentions from Mr. Temkin’s book. It is only 15 pages long and so you can figure out the citations by just downloading and reading it.
3. the hint is in his last suggestion, ‘manage an innovation pipeline’
4. Peter Drucker, The Effective Executive – the definitive guide to getting the right things done, (Harper Collins, NY,  2006) p. 114
5. TPS and further expanded in scope in the Toyota Management System
6. adapted from Liker, Jeffrey. The Toyota Way. 1st ed. McGraw-Hill, 2003.

Ms. Doyle’s concatenation of “delegation” and “outsourcing” is a very productive idea. Delegation is normally seen to be a personal act by a manager. A manager delegates certain tasks or responsibilities to someone else in the organization. Outsourcing is most frequently the retention of a third party, external to the company, to perform a function or tasks. Setting these two side by side provides an interesting example of the overlap between the personal skills and attributes of the manager and the larger practice and processes of the organization.

Delegation and outsourcing share many management requirements

Delegation and outsourcing share many management requirements. And they illustrate the overlap between the personal and organization spheres. Both benefit from a more nuanced use of the general management maxim, “Build on Your Strengths”. Both require a substantial understanding of what needs to be done, how it should be done, the results required, and the needed timelines. And, finally, both require ongoing management involvement to assure that those responsible for the tasks or functions, whether individuals or vendors, succeed.

Discern Your Strengths

Ms. Doyle argues that we should examine ourselves to determine our strengths as an initial step. She even provides a link to a tool to help in this adventure. I have talked about this earlier in my posting “Managing for Weakness – a mis-management myth“

“What are my strengths?”

The simplest way to answer this question is to look at the activities where you have had the most and best results. These are your strengths. You might enrich this line of thinking by asking which activities make you happy, put you into a state of flow where you really concentrate and loose track of time? An external, third party assessment can be helpful. I have used StrengthsFinder 2.0. It is good, adequate detail without overreaching. There are others.

Then ask this question:

“Am I spending most of my time working on my areas of strength?”

If we turn to the classical argument for outsourcing, companies are encouraged to define their core competencies (strengths) and strategic must do functions and outsource everything else. This quickly became reduced to a simple examination of the relative cost of doing a function in-house versus via a third party.

At this point delegation (here Ms. Doyle uses the term “outsourcing”) becomes an obvious solution to increasing the amount of time and energy spent doing work that fits into your strengths by offloading tasks.

Focusing on Strength Is Not Always a Good Idea

Although in general it makes eminent sense to focus on your strengths, this is not a rule that should be followed without some thought.

In my practice I can think of numerous examples where the business owner is doing a good job of obeying the “follow your strengths” rule, but, in fact, not achieving the results that the market opportunities are providing. For example, some business owners who are highly detail and control oriented find it easy and fulfilling to remain intimately involved in all sorts of processes that fit into their strengths profile like bookkeeping, inventory control, purchasing management, human resources administration, etc. They are happy doing this work because it feeds into their need for work that is detail and control oriented. Here is a case where I argue that even though they are comfortable following their strengths, they need to drop many of these tasks and devote their time to driving the marketing and sales efforts. For these particular owners, this is uncomfortable territory. This is work that focuses on some of their weaknesses. But, in small firms, even medium size firms, there is no replacing the impact of the owner/CEO in the mind of the customer. So, even though the owner may not be the best possible person to do this marketing and sales work, they are the resource available. And, the impact on the marketing and sales results will show the wisdom of this refocusing on weakness.

I would also note that managers do learn new skills, even in areas of weakness. though your natural bent may not be the world of sales and marketing, for instance, the approaches and skills required are not particle physics. There are plenty of learning tools and business coaches who can help you become more than competent even in fields that you might describe as weaknesses.

In an example of strength misdirecting, I recall a large size electronics firm, a Fortune 500 company, in the 1980s and 1990s. The great strength of this company was manufacturing. Almost all of the managers in the top ranks came from manufacturing functions. Manufacturing widgets was what they did really well. As the world of electronics evolved, they kept doing what they were good at and let product and market development work, activities critical to the future of the company,  take a back seat. Soon market share fell from 45% to 20% and the game was over. There were certainly managers at this firm who intellectually understood that they needed to make product development work and marketing a strength, knew that they needed to make these core competencies, but the inertia of the past strengths was too difficult to overcome.

So, one can not follow strengths blindly.

Three Questions for Success in Delegation and Outsourcing

What Needs to be Done, When, and What are the Results Required?

Once you have made decisions about what to delegate or outsource, a key to success is developing a clear statement of what needs to be done, when, and what are the results you want to achieve. The answers to these three questions arm you to select the best person or organization to perform the work and the basis for useful discussions of progress. Nothing like having a clear statement of the results expected to focus the collective minds. With a clear definition of what needs to be done and the results expected you can make the best choice for whom to delegate a task to. Has this person had success in achieving results in the task area defined, do they have the functional expertise required to produce the results? If you are looking at outsourcing, the same information arm you to ask questions about the track record of the various vendors. Do they have the capacity to deliver the results on time? And so on.

Taking Responsibility for the Results – Delegation and Outsourcing Do Not Get You Off The Hook

I wrote recently in a posting, “Outsourcing – not a strategy that is as simple as a make or buy decision“,

However, people may think that outsourcing gets you off the hook and solves all of the problems involved in the outsourced functions. The truth is that whether as a one armed paper hanger or a global giant like Boeing, outsourcing must be managed.   You can not manage functions that you do not understand. So, the executive level of any organization (back to the single entrepreneur to global giant span) must understand all of the basic functions of a business (strategy, sales, marketing, product/service development, personnel, operations, finance, information systems, and legal (these are the most important ones)) in order to decide which must be internal and which can be outsourced. Then, you have to have enough knowledge of the outsourced functions to decide on the desired results required, choose vendors, and manage for the results. This may seem to be daunting for the low end of the size scale, but most of this stuff isn’t rocket science at the basic concepts level and one can always draw on people in your network and consultants (like me obviously) to help out.

The same line of thinking applies to delegation. it is simply not acceptable to delegate a task and then not come back to the person tasked for six months to ask, “How are things going?”. Just as with new hires or promotions attentive, timely, and responsive supervision is required. The same rules of responsibility apply to delegated tasks. You made the choice of the person, defined the task and the results required and established a timeline for the results. It is your responsibility to assure that the person succeeds. You have the power and resources to assure that. Although I doubt that delegation is as fraught with failure as hiring new personnel, the failure rate is still high and you can not afford to simply through up your hand six months into the mission and say, “Why did you screw this up?” More here about this management issue, “It’s Always Your Fault – taking responsibility for personnel“.

Mammone’s argument is captured in capsule form here: “Every skill set required to form a startup should be subjected to a make-or-buy decision process. In other words, if you don’t have it, outsource it. Let me just stop here for a moment and mention that outsourcing is the strategic entrepreneur’s solution to most problems.”

Outsourcing is a great strategy. In fact, outsourcing is a fundamental component of every business strategy. Outsourcing decisions reflect the fundamental values of the organization.

However, people may think that outsourcing gets you off the hook and solves all of the problems involved in the outsourced functions. The truth is that whether as a one armed paper hanger or a global giant like Boeing, outsourcing must be managed.   You can not manage functions that you do not understand. So, the executive level of any organization (back to the single entrepreneur to global giant span) must understand all of the basic functions of a business (strategy, sales, marketing, product/service development, personnel, operations, finance, information systems, and legal (these are the most important ones)) in order to decide which must be internal and which can be outsourced. Then, you have to have enough knowledge of the outsourced functions to decide on the desired results required, choose vendors, and manage for the results. This may seem to be daunting for the low end of the size scale, but most of this stuff isn’t rocket science at the basic concepts level and one can always draw on people in your network and consultants (like me obviously) to help out.

Outsourcing is tricky business as demonstrated by Boeing’s Dreamliner problems^[[2]]

1. Since Mammone’s article may not always be accessible where I found it, you can download a PDF copy here
2. here is a link to an article from Reuters about Boeing’s outsourcing issues. And here is a PDF download of the article.

A Google search for the phrase “time management” returns the droll news that there are more than 14,900,000 responses. Amazon lists 448 books with ‘time management” in the title or subject line. A similar search on Youtube.com returns over 2,000 videos about time management.

But, what can this really be about? Time is a concept we use to delimit the past from the present, and whatever future there might be. Einstein is reported to have said, “The only reason for time is so that everything doesn’t happen at once.”^[[1]] Perhaps because we, as human beings, are a fleeting moment, we have a special focus on time. We are very aware that our time is limited, unknowable.

In any event, as is obvious, yet easily ignored, time, just speaking of it in the world of business and organizations, is not an inventory item. Nor is it a piece of capital equipment. No one has figured out how to make it intellectual property. Time has no place on any financial statements as an asset nor liability. Time only appears there in the sense already mentioned, as a way of differentiating what has already happened from the present moment, coupled usually with suppositions and claims about what will happen in the future. Time is not a process to produce value for customers.

All of this is just chewing around the fact that time appears to be important to our work lives, but it is ineluctably, and unmanageably drifting on.

Then we have this other word, “management”,  in the phrase, “time management”. Management is about goals, direction, focus, persistence, process, enrolling and enabling the work of others, and results. No where in the work of management is there a focus on controlling, directing, or managing something uncontrollable. In fact, when it comes to uncontrollable elements in the life of a firm or organization, the most applicable maxim is: “Control the controllable and forget about everything else.”

When I think of this phrase, “time management” I get brain hurt. The two concepts just can not occupy the same space in my mind. ”Time management” exactly demonstrates the meaning of the word “oxymoron”. The Greek roots are “sharp” and “dull”. Are you getting brain hurt now?

Figure out what is important and getting on with doing that. What results are you striving for?

The real truth is that we should drop the phrase “time management” from our vocabularies as meaningless, or  worse, a distracting mental construct. So, what is all of this about? Even a casual glance through the vast literature of “time management”, or just a quick remembrance of our own thinking about this specious “time management”, reveals what this is all about. It always come down to figuring out what is important and getting on with doing the important. What results are we striving for?

Seize the Moment for the Important

The strategy is to determine what is really important for your business and simply seize time and work on that. All of those other activities that are less important must not really need to be done when you really are focusing on what is important. And, we know that all that other day-to-day work will always overflow any available time. The only strategy to follow is to focus on the important. Generate real results around the important. Following this approach will both improve your productivity and the company’s results and shed very interesting light on all of those day-to-day meetings, conversations, and other tasks that now are getting crowded off your plate by your focus on the important.

1. I could not find a reference citation for this quote. It is ubiquitous on the web. Perhaps it is apocryphal? In a recent re-read of David Allen’s Getting Things Done Penguin, 2001), he has a side note (p. 5): “Time is the quality of nature that keeps events from happening all at once. Lately it doesn’t seem to be working”. – Anonymous

This podcast is 12 minutes 41 seconds long.

A text version is available here

Here is a conceptual model for improving how customers value services.

There are three basic phases in a service event or client engagement:

1. Pre-service awareness – establishing expectations
   
2. Service engagement – making the process visible
   
3. Post-service follow up – the ongoing engagement

Lets walk through each of these phases and explore opportunities to increase customer perception of our value to them.

Establish Expectations

Typically we think of marketing as a tool to attract customers to our services. Filling the sales funnel with leads is what marketing is all about. If you think this way about marketing, you are missing an opportunity to radically improve your success rate.

Inevitably, the initial contact with potential clients establishes in their minds expectations about who you are, what you do, and how they might interact with you. There is no escaping this fact. First impressions do count. You had better manage them.

A first step in managing customer expectations is for you to understand your value to customers and plan to develop the set of expectations you want to set based on that value. If you do not have a clear and convincing value statement your prospects will fill in the blank with whatever assumptions are already in their heads. Why should a client engage you instead of someone else? Once you have this figured out,  your marketing needs to establish these  expectations when you make the initial contact with a potential client.  If you introduce your company simply as “wealth management firm”, “web design”,  ”financial planning”, “estate and wills”, or, the one closest to my heart, “management consultant”, you are immediately allowing the prospect to imagine what you do and who you are. As soon as you utter that first phrase they put you in a mental box. This is true whether the message comes verbally or visually.

Lets look at an example, to shake up our thinking a bit. What do you think of when you hear the words, “I am a general contractor”? For some of us, this will be an image of a guy with a tool belt, hammer dangling off, with whom you have had unpleasant  conversations about why a remodeling project is late and over budget. Think of what iamge comes into your mind when you hear the words, “general contractor”?

Here is what a general contractor really does (thanks to Rob Ferree at the Ferree Group in Boston, MA^[[1]]  for this):

• Accountable for project results
  • Schedule
  • Budget
  • Quality
  • Overall client satisfaction
• The more complex the project, the more value a GC should deliver
• Healthy and productive relationship with client (and other constituents)
  • Communicate, communicate, communicate
  • Manage expectations
  • Wear the client’s hat / work in the client’s interest
  • Be discerning with client’s budget
  • Problem solve the inevitable glitches
• Organize the project and manage the work flow
  • • Team building (and bench building)
  • • Planning and scheduling
    • Phases
    • Trades
    • Materials
    • Inspectors
    • Client meetings
    • Invoices and disbursements
  • Constantly strive to deliver time efficiencies - Deliver upon commitments
  • Plan for zero punch list
• Trade experience and understanding of dependencies
• Financial and accounting skills
• Attention to detail
• Completion orientation
• Strive for the “Wow Factor”

How would you set client expectations for a general contractor?

The benefits I expect from  a general contractor include:  WOW (Wow, this remodeled kitchen looks super!), on time, no surprises, within budget, and the comfort that someone is looking out for my interests. I think a great way for a general contractor to introduce themselves is: “I create WOW for homeowners.”

So, to repeat the rhetorical question: “How can you set client expectations from the very first meeting?” I am not going to explore how you set client expectations from the very first meeting here. Determining your value in customers’ eyes and coming to a useful marketing strategy is outside the scope of this discussion. You might take a look at Stephen Melanson’s Jaw Branding for a challenging approach to the branding portion of this task.

As an aside, when formal proposals and contracts are used, they should carefully reflect the expectations that you have so carefully worked to establish.

Use Processes to Engage and Transmit Your Value To Customers

So, now you have set your customer’s initial perceptions of who you are and how you create value for them. For example, if you are a business lawyer, they understand that you will help them prevent future problems by putting the right legal structures in place now. They don’t think of you as the guy who turns on the clock each time the phone rings.

How do you make your value visible during your engagement with them?

Before getting to visible professional services, we need to reemphasize that value is entirely determined by the customer. This means, reflecting back to our general contractor example, they are not thinking about all of those tasks Rob Ferree outlined. Customers think about the benefits delivered, not how the benefits are produced, nor the features of a service. Customers perceive and buy benefits. So, as we go through this upcoming discussion of processes, think about how you can demonstrate the end benefits to the customer, not every task and technique you use.

A useful approach is to develop a clear process that encompasses your value creating work. A process is all of the steps required to create the service value. We won’t spend time here describing all of the details of how to develop a process description. But, keep in mind that a component of your process description must be describing how you work with clients and how this reinforces the expectations you set in the marketing phase of your relationship. Consistency and honesty are a must. People are very sensitive to anything that even hints at deception. Do what you say you do.

A simple block flow chart is the single most useful way of presenting your process to your clients. Keep it simple and high level. This is not a cook book nor should it look like a checklist or template^[[2]]. Emphasize the steps where you help your clients to create a new vision of the solution to their problems. Then you can move on to the steps where you add specialized information and analytical tools that bring the solution to life. Don’t forget the final steps in which you help the client to convert the work into actionable tasks. For instance, an estate planning attorney can make part of their processes steps that put the state planning into action, like funding the trusts, assigning trustees, and establishing anniversary dates for planning reviews.

A General Rule of Professional Services Production

In general, in professional services, the more you engage the client in the production of the service the higher the level of satisfaction and engagement by the client with the end result.

Follow Up – The Ongoing Relationship

In professional services the service event or engagement should never be thought of as just a one-shot activity. A professional service is best thought of as an ongoing series of services, ideally a working relationship with a long life. One way to accomplish this is to build follow up into your business process. In this age of the Web, it is extremely easy to communicate new, useful information to your clients. However, too many newsletters and emails contain old information or worse information that is readily available elsewhere. Regurgitating the Wall St. Journal is not a good approach. If you are in a niche, exploit it. On another hand, make some part of your newsletters actionable and clearly connected to your core business values for clients.

In many cases you have legitimate, if not compelling, reason to contact the client again to assess results and make course corrections. By making this a visible part of your service process your clients will understand why, how, and when this will occur. Even if your service is like that of a general contractor where you might imagine the service to end when the owner takes occupancy, there are still opportunities to contact them in the future. Just be aware that if you contact them it must be genuine. If there are problems with the service, you had better be ready to tackle them.

Summary

You can get your profesional services’ clients to have a stronger perception of your value to them by:

1. Manage their expectations of what you will do and they play a role through good fundamental marketing. Think through your fundamental value proposition and make sure that is on display the first time you met a prospect and at every step through your services to them.
2. Make  value creating processes visible to the client. Engage your clients as much as possible in the value creation process. The higher their engagement the higher their valuation of it merits and the more likely they will follow through.
3. Follow up after a service engagement. Many professional services lend themselves to long life cycle management.

1. Rob can be reached at rob@ferreegroup.com
2. Lisa Morrisey at Lido Consulting Group pointed out to me how important it is that clients not think that simple cookie cutter templates can solve significant business problems.  There certainly are areas of business in which templates are very useful and appropriate, for example small company employee procedures and rules. However, fundamental value-creating business processes are far more complex and interwoven.