Working On My Business: Creative Before Capital Growth Strategy!
Managing Growth - Preparing for Dreams to Come True!
We want to add another two percent onto the bottom line!
We want to erase our debt load within two years. To accomplish this, we must increase sales this year by 25 percent and cut expenses by 10 percent.
We're introducing a whole new thinga-ma-bob that will increase capacity by 60 percent. We want to grow by 30 percent this year!
I think that we can get the entire production volume of xyz products from our customers. That would be an 80 percent revenue growth.
Our strategy is to outsource some of the work, focus on our core competencies, hire three more new salespeople and capture 20 percent of the XYZ market.
If we achieve 50 percent growth during the next two years, I can retire!
Many plans, aspirations, wishes, hopes and dreams! The goals defined above seem perfectly logical. One can employ various strategies, tactics and actions to achieve these goals. You heard me say it many times, "If you can think it, you can achieve it! It's never a matter of IF, but instead WHEN!"
There are many different paths that one can travel. One can jump into a massive capitalization campaign - buying equipment, adding space and hiring more people. Invariably, when these ideas are being formulated, they usually make perfect sense given a company's particular situation at that time.
I've found, however, that a course of action that applies the creative before capital concept tends to reduce risk, reduce stress and increase the probability of success for growth. Knowledge is the key. This is an intellectual asset as opposed to a tangible, structural asset. When this philosophy is used, we often see the strategy executed so well that the company's orders spiral beyond that which could be predicted. Then the question is what happens if you achieve or exceed the goals on time or earlier? What do you do?
The key lies more in what did you do to prepare for success. Ironically, it's the same type of preparation that one needs for survival as well. I call it the five "Ps" to Success: (1) Active Planning (2) Patience (3) Perseverance (4) Persistence and (5) Participation.
Active Planning Is Key to Managing Risk
Active Planning is not a new concept. I've talked about it in this column numerous times. When I work with my clients, I help them sort through their dreams and aspirations and put substance to their goals as part of the strategic thinking and business operations planning process. Active planning is intense because it's not just about business and processes. It's also about people, careers, families, communities, lifestyles, personal aspirations and personal goals. I've found that an outside resource is essential to facilitate this process because the participants have too much vested interest to be totally objective. Further, when the senior management tries to implement this internally without outside support, trust issues usually surface during implementation with the troops.
The key is to step out into time and literally become one with your future. Know how it feels! Know what challenges are facing you, what decisions you must make and what you know today that you didn't know back then. It's a true visioning exercise!
You need to ask yourself a few questions:
- How will the stakeholders (i.e., customers, suppliers, employees and community) see a difference in the company at that point in the future?
- What changes will there be in the working environment? In the attitudes of the people? In the organization's business and social culture? In your non-work life?
- How will the company manage this record growth?
- Will your human capital be able to step up to the plate in this new environment?
- Will your people embrace, accept and be active participants in managing the new changes in operations?
- Will the rewards and compensation for your staff be sufficient to retain this new level of demand?
- Are your processes and core competencies sufficient to meet the new demands from your customers?
- How will job positions and roles change?
- Specifically, how will you allocate your time during the workday?
- What kind of decisions will be required? By whom? Are they prepared NOW for tomorrow's decision requirements?
- Can your current structural capital and infrastructure support the new revenue base? Profitably?
- How will you manage conflicts during the transition?
- Can the company sustain this growth past the initial launch? How? Who will make this happen? What will it take?
- How will the company define leadership in this new environment? Who will be the leaders?
- What happens if there is a merger or acquisition of your lender institution?
- What happens if you lose certain key members of your staff?
Companies that employ active planning and visioning are typically the market leaders in their industry. At the very least, getting new customers and new business is not a problem because they already have made the leap ahead of the market. They also know and have what the customers want. Classic marketing - knowing what the customer and market wants and needs and making sure that you have it! If you can move into the future and experience it now, you have a much better chance of managing the risks later on - by the time that you actually arrive in the future, you will have already seen the risks.
Patience, Perseverance and Persistence - Growth Enablers
These three "Ps" are perhaps the hardest part of managing growth. They must be embodied throughout the entire organization. They are required as bedfellows all along the journey as they ultimately determine whether you will get there. They become even more important when you achieve your lofty goals.
Significant growth is change on a major scale. There are, and will always be, hurdles, successes and disappointments along the way. You can develop the strategies, the tactics and the operations processes, but implementation typically never follows the script since people are the growth enablers. It's these same people who are the moneychangers - turning revenue into profit! Unfortunately, one cannot plan for every contingency (e.g., airplane delays, traffic accidents). This is where the vision comes into play - it helps people keep focused on direction - the what, where, when and whys of their work.
Growth may come in huge spurts. It's usually not a nice linear slope that is easy to manage. Instead, you implement, implement and implement some more and then BOOM - all of it starts happening. These three "Ps" carry you through the period when uncertainty abounds. The leader's role is to keep the team on track. Keep the sense of urgency alive. Keep the positive outlook knowing that it's not a matter of IF but instead WHEN. Effective and frequent personal communication with the team is mandatory. They need to know that the leadership is committed to the vision. The future! Their future! They also need to know what is acceptable. Remember that leaders get what they are willing to accept!
Participation - Essential Leadership Enablers
Planning, patience, perseverance and persistence are handicapped significantly unless the fifth "P" also is embraced - participation by the stakeholders. Strategy, structure, processes, rewards and people must be integrated as part of the whole.
The team must feel that they are on the same journey and that the trip is worthwhile. The leadership must ask themselves some very fundamental questions: Do I want to make all of the decisions? Do I want to be the one who worries about all of the deliveries? Do I want to be the one that takes care of rework? Do I want to be the one who explains to the customer why the job/product was late or not right?
Leaders must decide whether they want an organization of buffalos or geese. (If you have not read the book "Flight of the Buffalo" by James Belasco and Ralph Stayer, get a copy.) Buffalos follow one leader. If the leader jumps off of a cliff, so too does the herd. Geese, on the other hand, take turns at leading the flock, cheer each other on, and soar with an aerodynamic structure that provides endurance, lift and speed.
How do you get your stakeholders involved? Again communication and knowledge are the tickets. You can tell them all you want but, if the people don't see (believe) the connection to their own person, the exercise is pointless. If they are to participate intelligibly, contribute to growth, make good business decisions at the local level that support the strategy without management intervention, then staff knowledge development is essential. Oh, by the way, this is not a one-time occurrence. Staff learning must be a core competency that is fostered and cherished by leadership.
Implement the five "Ps" with a sense of urgency and then nourish it throughout the journey. When you do, growth can occur in stride without the stress - regardless of the magnitude. Or you can stampede out and buy new equipment, hire more people, expand your facility or add any other physical tangible entity as part of your growth strategy. You may even achieve your lofty goals. If, however, the five "Ps" haven't been addressed thoroughly you also may have wasted a lot of money and created a large pile of debris.
This is yet another test of leadership. Take the time now to apply a little creativity before expending capital. When the picture is clear to all of the stakeholders, the future worth the journey, and the team has the knowledge and is working toward the common goal, you have an organization that is prepared for success and able to manage the risks, hurdles and challenges of growth throughout the journey. Without it, you probably have buffalo.
What do you want?
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