Top 7 Critical Success Factors for Business - Part 2

This week I discuss number 2 on my list of 7 Critical Success Factors for Business:

1. Plan
2. Competitive Velocity
3. Customer Satisfaction
4. Network
5. Technology
6. Culture
7. Global thinking

To maintain an advantage in a highly competitive world a company must move faster and more effectively to outpace its rivals and grow as a business.

Successful businesses not only provide a better product or service than their competition but continue to innovate, by adding new functionality to old products or creating new offerings.

As a result of the GFC many businesses cut R&D costs and are now finding it hard to maintain market share as their products are old and tired.

Jeff Immelt of General Electric said recently that "only optimism creates growth". This is a fabulous statement and for any business that has put off any innovation they should heed these words and create!

Time to gain velocity!

Top 7 Critical Success Factors for Business

I have been asked to join the panel on a series of Webinars addressing businesses concerns post the Global Financial Crisis. See this link for details: http://www.corporatecanary.com.au/uploads/ProtectGrowFly.pdf

In formulating my material for the Webinars I have listed what I feel are the 7 critical success factors for sustaining profitability in business.

Over the next 7 postings I will dedicate each entry to discussing one of these factors.

1. Plan
2. Competitive Velocity
3. Customer Satisfaction
4. Network
5. Technology
6. Culture
7. Global Thinking

First and foremost in my opinion is to have a business plan. They seem to have become a bit passe but given the pace of business today it is imperative that businesses have at least a basic operating plan and budget as the framework to keep things in focus.

This plan needs to be organic, changing and evolving as opportunities and challenges arise. Reviews and updates should happen at least quarterly to keep the business on target. Both financial and operational metrics should be measured to allow for early detection of problems before the business reaches crisis point.

Not sure how to write your business plan so that it is a useful tool that can be used to drive the success of your business, Ivy Business Consulting can assist by either completing the entire project or facilitating your own staff in the compilation process through insightful workshops that will sharpen the focus of even high functioning management teams.

Remember the Peter Principle

I recently came across The Peter Principle again and was struck anew by its aptness.

Formulated by Dr Laurence Peter and Raymond Hull way back in 1969, it is a humourous treatise which essentially states that members of a hierarchy are promoted so long as they work competently, sooner or later they are promoted to a position in which they are no longer competent (their level of incompetence) where they remain, unable to attain any further advancement.

Peter further states that "work is accomplished by those employees who have not yet reached their level of incompetence"

This is the statement that I think both employees and employers need to be aware of. If someone is achieving great things in a role, does it necessarily follow that they should be promoted? The answer obviously is no, but as a society, if we do not achieve regular advancement we presume we have ceased to perform at our best, or worse yet that we have failed.

The best employers find ways other than promotion to solve the stagnation problem, such as:

• to acknowledge and reward performance, with things such as company awards, financial incentives or elevation to mentor status for others.
• provide training in a new role and only promote after sufficient evidence of capabilities have been displayed.

Don't become a company which blindly elevates employees to their level of incompetence, a properly constructed performance management system will identify not only who, but when someone is ready for promotion. To do otherwise only elevates the company to its level of incompetence and reduces its competitive advantage.

Competitive advantage in service organisations

When operating a professional services business the primary means of achieving a competitive advantage over your competitors is to have a better understanding of the needs and wants of clients then the competition does.

The greatest way to learn what these needs and wants are is to listen to your clients. Sounds very simple but many service practitioners do not actively listen.

There are various ways and means to listen to your clients:

1. user groups
2. reverse seminars
3. attending client industry meetings
4. market research
5. senior partner visits
6. engagement team debriefings
7. systematic client feedback

You must also determine the difference between reactions and feedback. Reactions are an immediate response, either verbal or non-verbal, to a communication whilst feedback is a response with logic and reason, or other useful information. Take note of the reactions but to truly learn what your clients want feedback is more useful.

Designing and implementing an active client listening program can have immediate and startling results for any business. Call Ivy Business Consulting for help with developing such a program.

Leadership and influence

Leadership is the ability to influence.

Influence is the art of using power to move people voluntarily toward a certain end or point of view.
Power is useless unless converted to influence.

Organisational application of Maslow's hierarchy of needs

I was recently reminded of Maslow’s hierarchy of needs and realised it can be applied quite effectively to the organisational sphere in many areas.


For example to customers:
The physiological aspects are represented by the basic performance of a product or service - does the product work?
The safety needs correspond to the reliability and security of the product – will it let me down or cause harm?
The belonging needs relate to the social aspects of products of service – is this the brand that everyone is wearing?
Esteem often relates more to the transaction itself than the product – did the sales assistant treat me with respect? However, esteem can also be product related – will people admire me when I buy this product?
Self-actualisation occurs when a product or service allows the buyer to be creative or fulfil capabilities.

Alternatively it can also be applied to employees:
The physiological needs are salary and wages;
Safety is job security;
Belonging means being accepted in the workplace and being part of a team;
Esteem involves being respected by management and colleagues; and
Self-actualisation is achieved when the employee's abilities are fully utilised.

For any effective organisation, the aim is to meet the needs in order, from lowest to highest.

Thus, for a supplier, the organisation would first ensure that a fair price was being paid for the supplies; then offer security to the supplier in the form of long-term contracts; then make the supplier part of the team and involve them in discussion and planning. Treating the supplier with respect and concern is also important. Finally, using the skills and knowledge of the supplier to create higher end-value completes the process.

Many organisations would benefit from looking at what level they are currently meeting various stakeholders needs and committing to strategies to ensure higher needs are met.

The benefit to meeting those higher needs, quite simply – satisfied, loyal customers; engaged and committed employees; proactive and innovative suppliers which will result in improved profits.

Ivy Business Consulting can assist with strategy development to meet the higher needs.

Operating metrics vs. Financial metrics

Many businesses spend large periods of time collecting data and producing detailed reports at the end of each month, quarter or year, containing pages of financial metrics while ignoring operating metrics. There is a profound difference between operating metrics and financial metrics.

Operating metrics are those inputs that drive the financial outcomes.

While financial metrics definitely provide useful measurements of business performance, it is all historical information by the time they are produced. Operating metrics on the other hand provide scope for continual learning and improvement.

Concentrating on operating metrics to improve customer satisfaction by reducing wait times, producing better quality products, providing exemplary after sales service, can all increase customer loyalty, which in turn is likely to increase the value of the customer to the business.

A by product of measuring and improving these operating metrics often results, in this example, in an increase in sales, which will in turn take care of the financial metrics.

Ivy Business Consulting can implement programs to measure and improve operating metrics across all business disciplines.