Early Warning Signs of Losing Your Competitive Edge

Many leading edge companies know there are a number of key leading indicators that, if monitored, can identify the potential early warning signs of a company losing its’ competitive edge.

            These are strategic measurements included to evaluate their long term competitive health. With this information, management can take early corrective action.

Periodically, I will write about these warning signs in this blog.

The first two measurements are:

·         Sales Lead Effectiveness:  The effectiveness of your sales/marketing teams to turn a qualified lead into a sale. Do you know if this measurement has gone up or down over the years? High quality companies improve this measurement year over the year. Do you? Do you know why you are winning or losing?

·         Retaining Tier One Employees: What percentage of your employees are rated “tier one”. High quality companies improve their average over the years. Do you know why you are succeeding or failing in retaining your tier one employees?

These are just two of a number of key indicators that we believe should be measured to improve profitability. 

Please feel free to contact me if you have any questions.

Joseph Bonocore

jbonocore@bonocore.com

Do You Have A Leadership 2.0 Culture?

Over the past few years, a number of CEOs have challenged their leadership teams with a vision and goals that while some saw impossible or out of reach, they were achieved in record time.

These leadership teams had to develop new skills & techniques to effectively manage and collaborate in the realities of the new economy to achieve these results in record time..

For example, they had to see the everyday recurring problems as possible opportunities for achieving breakthroughs in clarity, creativity, innovation, and common purpose.

With the right Leadership 2.0 techniques, tools, and communication, an effective management team can quickly adopt to this new reality as well and  rally around a clear enterprise vision that is the foundation for inspiring a sustainable shift in your strategic, operational, and financial reality as every new situation warrants..

The bottom line is that once the leadership is aligned effectively, the impossible becomes probable.

BTP’s Leadership 2.0 approach which is based on our firm’s thirty years of experience in working with CEOs and management teams to improve their effectiveness in a wide variety of economic climates.

This approach gives our client’s leadership team the tools to work more effectively in today’s economy. We do this by working with them in a three step development exercise::

·         Step 1: The CEO Reflection Session:  This is a “One on One Reflection Discussion” with the senior leader of the enterprise. The objective is to gain the leader’s perspective on the business and to understand the issues from the senior executive’s standpoint. This discussion becomes a critical foundation for the next step which is the Senior Executive Leadership 2.0 Session.

·         Step 2: Senior Executives Leadership 2.0 Session: This is a “Reflection & Re-thinking Session” for the Senior Management Team. The leadership team experiences a renewed “leadership journey” together.  There is a significant benefit for the group to take this “time out” together  to reassess how they can be more effective in growing the business.. This “leadership journey” is focused on the company’s specific issues with the goal of improving the company’s operations including defining priorities; setting goals; and defining each executive role in achieving them.

·         Step 3: Leadership 2.0 Implementation Session:  This session is designed to follow up on the Senior Executive Session. Additional company staff who will be involved in the changes will be introduced to the process and plans. All  those with some leadership role in executing the tactical steps in the Leadership 2.0 Implementation Plan resulting from Step 2 should be in this session. 

Upon completion of this effort, the company should well on their way to initiating a cultural change and receive at least two major benefits. It should have a leadership team that is more effectively working together and an action plan for performance improvement.

This should be a good  first step in implementing a Leadership 2.0 Culture in the enterprise. 

And it can all can begin with one conversation.

If you have interest in learning more about this  Leadership 2.0 Culture process, we would be happy to answer any questions or discuss how we might be able to help.

Please feel free to contact us if you would like any additional information.

Thanks

.

Joseph Bonocore

jbonocore@bonocore.com

Need for More Strategic Profit Improvement Programs

As we all know, many companies are responding to today’s economic climate by executing a variety of profit improvement programs designed to reduce costs and increase productivity.   

However, we believe that many of these programs would be so much more effective if they were designed to be more strategic in nature. Examples of this are:

1.      Scope of the projects for cost reduction should be broader: generally, the targets of many of these projects are people reduction; and the usual overhead expense items. While these can provide saving for the company, our experience finds that greater additional savings may be found in improving processes; implementing new technologies, and better sourcing approaches. Even greater savings result when you integrate the four (people, process, technology, and sourcing).

2.       Implementing an ongoing profit improvement program rather than a special project: Companies who have been effective in controlling their costs over a long period of time know that these profit improvement programs are not “special projects”. They are “ongoing programs”. These programs require continuous efforts to keep the savings and to continue to identify additional savings over time.  

Companies that have addressed the integration of people, processes, technology, and sourcing and then correlated them into their business have seen these significant profit improvements in their operations. 

Examples include:

·         Rationalization of processes and eliminate redundancies by merging processes;

·         Technology rationalization and level of automation existing versus actually needed;

·         Analyzed company procurement and sourcing. Evaluated shortening company supply chain.

 Please contact us if you would like to discuss this or any of our other topics further.

Joseph Bonocore

jbonocore@bonocore.com

Staff Motivation is Critical to a Successful Profit Improvement Program

There is a lot being written about productivity in the workplace these days. Most is related to the need for new strategies, policies, procedures, systems and measurements to improve operations.

All of these are very important. However, it is also critical to recognize the critical importance of staff motivation to achieve a successful productivity improvement project.

Research shows that one of the biggest management challenges is solving the staff motivation issue to effectively implement and operate the recommended new changes in these projects.
Two ideas we believe can help improve staff motivation on these projects are actions we take on each of our client projects:

• Make Sure Each Staff Person Understands “Their Part in the Big Picture”.  Each person should understand how their goals and the timing and how it connects to the high-level strategic goals of the project and the goals of the company.   You should show each staff person that they don’t just do something independent of others.  You should show them how everything they do influences the whole company’s performance.  It is important that they can see this interdependency in action, and check it for themselves.  Seeing that they have an important influence is a great motivator!
• Give Effective Feedback to Each Individual. In some companies, the staff members do not get the feedback they need, or the feedback they do get is not clear.  They do their jobs, but they are never sure if they’re doing them well.  A successful project requires clear individual delegation of work and scheduled feedback sessions to assess individual efforts. .  Each staff person can see how their tasks affect the overall performance of their project/ unit, and of the whole company.  This gives the staff member periodic feedback, shows interest in their career development, and is also a great motivator.

We would be happy to answers questions or discuss any of the issue you are having related to profit improvement or revenue generation. 

Joseph Bonocore

jbonocore@bonocore.com

Reduce Costs by More Effective Spending

 Is your company as effective as it can be in managing corporate spending?

            According to a recent Aberdeen Group research study, an average company can save 11% of their annual spend with better spending management. That is $11 million in savings for every $100 million in spend. 

            However, please don’t think that controlling these costs the “traditional way” will result in achieving these savings. History has proven it will not. That is because traditional approaches have usually ended in less than satisfactory results. This is because:

1.    A limited percentage of the potential savings were usually achieved. Even many of the achieved saving did not last very long. History has demonstrated that in many of these situations, the costs reappear because many of these reviews addressed the symptoms and did not address the causes; and

2.    Relying on a “new system” alone to solve your problem. It is not the only answer. Implementing a system alone is not the total answer to this very complex management issue. For example, a recent study by IBM interviewed 400 supply chain executives in 25 countries. 70% of these executives said they were “overwhelmed by data”. To effectively manage the corporate spend, they need “to make sense of the information” in order to take any corrective.

Does your Spending Management Strategy (SMS) support the strategic objectives of your business? Do your spending policies & procedures support your Spending Management Strategy? Are they all maximizing your profits?

Our firm’s Spending Effectiveness Diagnostic Review reviews our client’s present spending management strategy, policies, and procedures to identify opportunities for cost savings. 

Examples of cost savings that have been identified in past diagnostic reviews include:

1.    Vendor consolidation opportunities;

2.    Identifying overcharges & overpayments;

3.    Fraud detection & regulatory compliance;

4.    “Sacred Cow” spending;

5.    Product & part rationalization;

6.    Risk reduction opportunities.

If you would like to learn more about our work in this area, or have any questions about any of the projects that we do to help our clients increase revenue, reduce costs, or improve competitive advantage, please contact me.

Joe Bonocore

jbonocore@bonocore.com

Are Your Pricing Strategies Maximizing Your Profits?

Are Your Pricing Strategies Maximizing Your Profits?

    Are your pricing strategies maximizing your profits and positioning you to gain market share or…… does your company employ an inflexible “one size fits all pricing strategy” for all your products and services?

    Have you developed a variety of price strategies tailored to meet the objectives of each of your products and services?

      The present business environment requires that you critically rethink your present pricing strategy continuously to be competitive.

However, many businesses take an educated guess to determine their prices. This guess is determined by estimating the cost of delivering the product or service and adding a targeted mark-up. The result is measured against the expected competitor’s pricing and adjustments are usually made to be competitive. Once a price is set, critical evaluations to determine appropriateness are usually few. In many cases, price variations are very large with no clear explanations given or understood.

Many of the most profitable businesses are very deliberate about developing and periodically evaluating and updating their pricing strategy. They do their homework, and make pricing changes quickly when necessary. They are continually evaluating their pricing strategies and practices.

 

Have you recently evaluated, updated and modified your pricing strategies? 

Which of the following pricing strategies is best for each of your products and services? 

1.    Be the low price leader and sell what are essentially commodities;

2.    Be the industry service leader;

3.    Establish  first-mover advantage and deliberately price low in order to penetrate the market quickly;

4.    Price high to attract the early adopters at a premium profit;

5.    Bundle several products in order to make a greater profit; or

6.    Obtain premium price for a new or exclusive product that you can market. 

As previously mentioned, a company’s pricing strategies should be developed with two key strategic goals in mind:  

1.   Maximizing profits. The most profitable companies usually follow a very simple vision in developing a good pricing strategy. The goal is to maximize as much money out of each product or service sale as possible, even though fewer customers may make a purchase. They may even end up with fewer customers. But then dealing with a lot more customers can also add to your operating problems. For example, a fair number of companies have proven that making more profit off each customer can increase profits even with fewer customers.
2. Gaining market share. Another key strategy is to price your products or services lower to gain market share. For example, a pricing strategy for an online business can be to maximize the number of subscribers, even though their margins will be lower on each customer. The objective would be to gain additional profit by offering these subscribers additional services such as web hosting and e-commerce after they are customers.

 In developing a pricing strategy or evaluating the effectiveness of your present pricing strategies, we recommend benchmarking against the “Strategic Pricing Three Cs”. They are how pricing compares to meeting the customer’s expectations related competition. This is measured by:

1.  Customer Demand: Customer demand is a crucial factor in determining appropriate price. Demand is driven by factors such as customer need, customer ability & willingness to pay the amount for such a service, and the availability of other products at a different price, etc. Are you aware of your products or value added features where customers are willing to pay a higher price.
2. .Cost of Delivery:  Cost of delivery is another critical factor in your pricing. Do you know the cost of delivery of each of your products & services? Can you be more competitive in certain product or service areas where your cost or delivery may be lower than you think?
3. Competition: Do you know enough about your competition’s pricing? Analysis has shown that many companies could do a much better job understanding the competition and especially the competitive pricing environment.

 Please let us know if you would like to discuss how to we work with our clients in evaluating the effectiveness of their strategic pricing strategies & practices. We would be happy to help in any way we can.

Joe Bonocore

jbonocore@bonocore.com

Effective Supply Chain Management: A Leading Indicator of a Company’s Success

In many companies, supply chain performance is a good, early indication of the business’ overall success as well as its’ long term sustainability.

What makes a successful supply chain? How do you know if your supply chain is under performing? 

The objective of Supply Chain Management is to optimize activities across various partners, to satisfy a customer’s needs in the most effective and efficient way.

Basically, Supply Chain Management refers to all of the aspects relating to the buying, making, moving, storing and selling of goods and services. This includes the flow of information, goods/services and the financial assets to support these activities. The process usually requires managing multiple partners, located at multiple geographical locations and over an extended period of time.

In many cases, businesses are simultaneously involved in a matrix of various supply chain activities occurring over different time horizons. These activities could include:

·         Strategic (i.e. design of the distribution network, capacity and location of facilities) which could take typically 1-10 years;

·         Tactical (i.e. planning of operations) which could typically take 1-12 months; and

·         Operational (i.e. execution of activities) which could typically take 1-30 days.

Evaluating the Effectiveness of Your Supply Chain

In our experience, effectively managing your supply chain ultimately requires that all players in the supply chain have a close, open relationship. This provides accurate, timely information to everyone so each partner can best plan and execute their activities.

A few of the key indicators that we look for to identify if there are opportunities to drive significant supply chain improvement include:

• Unnecessary high stock holding (raw material and/or work in progress) are required as buffer stock;
• High levels of redundant/obsolete stock and finished goods;
• Longer than expected lead times for both raw material supply and delivery of finished goods;
• General uncertainty by, up and down stream supply chain partners on future business activity levels;
• A high level of goods returned for credit, delays in payment and cash flow unpredictability;
• Poor performance in “on time, in full” delivery metrics, leading to poor customer satisfaction and delays in payment;
• A mismatch between resources available (equipment and people) and resources required, leading to low utilization and/or availability percentages;
• High transportation and warehousing expenses due to wrong location decisions and multiple handling activities;
• Inaccurate demand planning (forecasting of requirements);
• Inability of the organization to driving just-in-time supply/replenishment decisions with company partners (i.e. procurement of raw material or components);
• Ineffectiveness in optimal manufacturing of components or assembly of products related to demand; and
• Untimely movement to points of expected consumption.

            World class supply chain management can not only reduce cost and greatly enhance an organization’s ability to sustain operations but can also lead to differentiating you from your competitors. 

            If you have any questions or would like to discuss this topic or other profit improvement topics with us, please feel free to contact us.

Joe Bonocore

jbonocore@bonocore.com