Higher Corporate Value Requires Expanding Management Measurements

Is your management performance system effective in helping you to achieve potential corporate value?

            If you are like most companies, the lion share of management’s performance is measured on financial results such as profitability and cash flow.

While items like sales growth; expense control; cash flow or profits are very important and should be measured, there is another basic question that management should ask:  What other measurements are needed to grow the value drivers of the company?

In addition, many leading edge companies are more effectively integrating their management team goals to drive technology and value innovation across the corporation.

Based on the today’s best practices, the most effective approach is a Three-tiered Management Reward System to drive value creation.   The objective of this system is to better align executive rewards with corporate value drivers. The three tiers are integrated goals for:

·         Financial Results;

·         Technology Innovation; and

·         Value Innovation

As mentioned, the first tier, Financial Results, is the most common way that executives are measured in today’s environment. They are usually evaluated by financial goals related to revenue, expenses, cash flow, & asset management and are measured accordingly. In many proposed three-tiered reward process very little changes.

The second tier of the new reward system is for their role in Technology Innovation which is the creation of a new product or service that increases the benefits and/or reduces the costs of that product or service. However, without a corresponding value innovation, this potential is unrealized. It is not just the technology management that can play a major role in successful technology innovation in a company.

The third tier of an effective reward system is for each member’s role in Value Innovation which is simply defined as creating exceptional value for the customer. Value innovation can occur with or without technology innovation in a company by improving processes in product, service and delivery. As with Technology Innovation, most key management team members can play a role in making value innovation successful in the company

We would be happy to discuss with you how many of the leading edge companies are more effectively integrating their management team goals to more effectively drive technology and value innovation across the corporation.

Please feel free to contact us with any questions about this or any other profit improvement service we provide.

Joseph Bonocore

jbonocore@bonocore.com

Are Management Issues Restraining Profit Improvement Initiatives?

One of the most frequent questions that we are asked by senior management is: What can I do as a company leader to significantly improving the company’s process & project productivity?”  

To answer that question, we begin by looking at some of the management issues that may be restraining the company from effectively identifying, implementing, replicating and maintaining profit improvement initiatives.

The five key issues for many companies that lead to ineffective application of profit improvement initiatives include:

1.    Lack of clarity or consistency in division or company direction: In short, a lack of understanding of the goal and the approach to get their results in inefficiencies. Symptoms of this include:

a.    Operations, sales, and marketing have different independent plans with  no mechanism to reconcile differences;

b.    Various company plans between units are not coordinated, so efforts are expended in areas with no impact on increasing company value; and

c.    Long-range plans are not disseminated to the organization, which will continue to work on a short-term, cost-based agenda

2.    Suboptimal measurements are used to manage the business. The result of this is:

a.    You get what you measure,” so standards are met while measures like Operating Asset Effectiveness and Competition performance languishes;

b.    Measurements focus on standards; and

c.    Measurements focus on symptoms rather than root causes

3.    Unable to replicate or sustain improvements. In a number of cases, companies have made some changes and have found they could not be replicated or sustained. This has resulted in management frustration. The causes of this have included:

a.    Improvements perceived as being inflicted on operations;

b.     “Not invented here” restricts dissemination of ideas;

c.    Addressing symptoms rather than causes leads to narrow “solutions” which cannot be replicated in other companies; and

d.    Limited or impenetrable documentation frustrates ability to communicate between departments

4.    Lack of focus: A significant problem in many companies has been a lack of focus of the skilled resources to the specific problems at hand.

a.    Key resources have been spread over numerous projects, until key players do no work on an infinite number of projects; in a number of cases we see few, if any, full-time teams;

b.    Many teams lack rigorous methodologies necessary to address issues and improve success rate; and

c.    Many teams not chartered with clear focus, finite duration, and measurable targets.

5.    Failure to address root causes at the department/unit level. This is a significant problem in many companies. The goal is to correct the symptom rather than take the extra time to find the root cause and correct the problem. The reasons for this include:

a.    Many organizations are good at responding to emergencies;

b.    Personnel are rewarded for excellence in emergency response;

c.    People tend to chase symptoms to obtain quick results; and

d.    There is lack of time and motivation to drive down to root causes.

We have found that these five areas are extremely important in identifying, implementing, replicating, and maintaining process & project productivity improvement initiatives. 

We would be happy to discuss this topic further or answer any questions about our approach to improving profit improvement initiatives or other profit improvement areas. Please feel free to contact us.

Joe Bonocore

jbonocore@bonocore.com

Are You Effectively Using Social Media Marketing?

Whether you are managing a small or a big business, the returns on implementing an effective social media marketing platform are huge. 

When a Social Media Marketing platform is effectively implemented in your business, you should expect the following benefits:

1.      Cost Effective Building of Your Brand:  Social media marketing can play a powerful role in brand building and developing customer recommendations for the company. People prefer to buy from a trustworthy business provider than a faceless company. So, it can be a great idea to build your brand in social media first to gain the trust and confidence of your customers. You can also get the advantage of customer recommendations to friends via the connections

2.      Effective Customer/Market Communication: A Social media marketing platform can be an excellent way to update your customers and the marketplace with your latest online posts on social media networking sites like Facebook and Twitter. This is because, it is only with social media that you can ‘also’ interact with your audience and get first hand and direct feedback in a conversational way. This builds trust amongst your customers and potential customers and returns you instant feedback and suggestions from them.

3.      Reduces Cost: Effectively using a Social media marketing platform tends to have much lower costs than most other marketing platforms. Supported by good marketing skills and an effective approach, these networking sites can reap you additional customers in greater numbers.

4.      Increases Traffic: Social media marketing platforms have a strong history of improving traffic (both primary and secondary). The primary traffic includes the direct visitors to your social networking pages; the secondary traffic includes the indirect referrals directed to your site via the linked websites.

If you are interested in gaging how effective your Social Media Marketing is compared to some of today’s best practices, we would be happy to meet with you to discuss the topic. 

We are also available for any questions or to discuss other profit improvement opportunities to help increase corporate value.

Joseph Bonocore

jbonocore@bonocore.com