Benefits of Running an Excellent Company

Q: OK, I keep reading all this stuff about making improvements so I can achieve “Business Excellence”. Why should I care? 

A: If you are happy going to your company, getting through the day, putting out the fires of the day, making some money, staying late to work on email and personnel issues and bookkeeping and restocking and inventory and paying bills and “oiling the machines” then business excellence is not for you. If you feel unhappy about how long things take and are spending your time on less valuable, menial tasks, then business excellence can help you and your company get better at doing things and get better at deciding which things to do and when.

A good Business Excellence Model covers all areas that produce results for your company. Sometimes the results are not what you want, you’ll want to you take a good look at all things in your company that produce results, those are called the enablers.  Walk with me through a day in the life of a result.

Usually a poor result is a symptom of something wrong upstream. Say you’ve had to drop prices because of increasing competition. Every business has competitors. You probably know who and what they are.  If not, take some time and think about it. You’ll be surprised at how much more there is to know about your competitors. 

A key performance result is profit margin. Yes, your income statement would show this trend. Even if you’ve only had to drop prices on several items or services, knowing what to do about it is key. What margin are you comfortable with? How does it impact your cashflow? Do you rely on your intuition about the numbers? It’s not hard to know that if you drop your prices 10% you can bring in more customers, essentially paying them to learn about how great your company is and giving yourself one chance at convincing them to come back. You know this intuitively. Not a bad decision, right?

Perhaps you’ve noticed that when you lower prices, unless you’ve got a new supplier that costs that much less, your margins are going to be lower. I know, you can make it up in volume. Lowering your prices will bring more new customers so you sell more and make more money, right? Or maybe you should just hire cheaper help, seems like there’s plenty of that available.

People Results. If you have cashflow problems because you lowered prices, how will your employees feel when they don’t get that well-deserved raise? There are many options other than money to consider when rewarding your people, and it pays to know what things motivate each employee. Each one will be different.

If you hire cheaper help, what will the other, not-so-cheap employees think? What will the cheaper help feel when they find out they’re, well, cheaper. Did you even ask your employees for their ideas? Will their morale cause other key results to change?

Customer Results. Just because you lowered prices there is no guarantee that more customers will buy from you. Is price the only thing you have to offer against your competition? Your good customer service is a much stronger force against your competitors. Do your customers get treated as if they alone pay your salary? I’ll bet if you did a survey, your customer would have some things to say, so go ahead and ask them, in person, what they liked about their visit today. Ask them what you can do to improve their experience when doing business with your company.  If your employees aren’t willing to ask these questions during their conversation with them, and feed this information back to you, hire ones that really care about people (your customers).

Processes. If you have no process in place to determine what your competitors are doing to bring in more customers, then create one. Have you bought anything from your competitors? Those businesses that intimately know what their competition is doing and how they do it will produce better results. I have one business I buy from every couple months. I spend a couple hundred bucks each transaction. I have no problem telling you who they are and giving them free advertising. iHerb.com. Wouldn’t you like your customers to say that about your business? I have bought very similar products from their competitors but found they never came close to the level of customer service as my favorite. They have earned my business and they know why because they asked me, in more than one way. On my order, on the phone, in emails, and in their packaging. I feel they know exactly how I want to experience a transaction of this sort and they go out of their way to provide that experience for me.  How many businesses will publish their electric bill? iHerb does, to prove that their warehouse is air conditioned to give the freshest product available.

They email me every step of the way, so I know exactly when my product was packed, shipped, and when it should arrive. I have never paid for shipping with them, and they have always shipped my orders overnight. I save more money because I’m a frequent online shopper. I even get a bonus 10% off if I spend over a certain amount on an order – hence the reason I order every couple months.  I also signed up for their referral program and get a check every so often when others I tell buy from them. Oh, and they have exactly the products I want at the lowest prices. I have tried to find the same or similar products for less money. I take this particular supplement every day. It’s a fairly pricey one, so I created a spreadsheet to determine price per dose - my common denominator and decision making criterion. When I see a sale somewhere for that supplement I don’t just buy it. I go home and pull up my spreadsheet and enter in the data. I have yet to find it for less. I am up to potential 19 suppliers in my spreadsheet. Even if I do find it for less, I’ll still buy from iHerb because they continue to earn my business. I feel that if I do find it for less, they’ll care enough about my loyalty as a customer and take care of me. I would say they are a well-oiled machine and have their processes well defined. Do you know what processes your customers use in making buying decisions for your products?  

You already have processes for selling, accepting orders, getting payment and fulfilling your orders. A process is broken if your customer has a worse experience when you lower prices and have to handle more orders and payments and fulfillment. Are you still buying their loyalty with processes that enable extreme customer service, like iHerb has for me?

 
Partnerships & Resources.  This key enabler can make or break a business. If you have positive, productive relationships with all your suppliers, than you’ve got a good foundation for success. Do your suppliers participate in your price reductions? Have you ever asked them to?  It’s amazing what you can get a supplier to do, if you have a great relationship. I’ve gotten them to split the difference to netting 20% discount on my 10% price reductions. Almost all suppliers have marketing budgets to help their resellers promote. Even if your supplier provides raw materials or services, they can get creative with you, if you care to nurture the partnership and address it with them.

Information is one of the most important resources for any business. This includes financial information, management information, competitive information, and the technology that enables your business to make sound decisions based on your information. If you don’t get accurate financial reports at least every month, then you won’t know what the key financial results are. If you don’t know how your projects are doing, you won’t know what the key improvement results are. If you don’t have access to your cashflow information, you won’t know how much you can spend on important things. Excellent companies view information as an important resource, just like electricity and heat, like employees and customers, like cash and suppliers.  

Conclusion. There are many questions to consider when making a decision that impacts a key result. I’ve briefly addressed a handful of them in this article. Each result you want to change needs some exploration into the depths of your enablers. Businesses that spend the effort and brainpower to figure out  problems this way set themselves up to achieve excellence as they enhance their business, and they leave the oil can in the garage.  

Oh, and CxO To Go can help you have Business Excellence.