This past April, TEC (The Executive Committee) was privileged to co-sponsor with Small Business Times and Godfrey & Kahn, S.C. an “Inspirational Leadership” program for 300 Wisconsin-area CEOs and their guests.
It was presented by Bob Prosen, author of the book “Kiss Theory Good Bye: Five Proven Ways to Get Extraordinary Results from Any Company.”
Demonstrating an uncanny ability to reduce complex business concepts to simple truisms, Prosen identified five proven ways to get outstanding performance results in any company:
Superior leadership: Relentless pursuit of vision and results
Nine leadership areas distinguish a CEO who has superior leadership attributes:
• The company has identified its key objectives and communicated them to everyone.
• Everyone in the company can recite the top objectives and understands what they must do to meet them.
• Incentives are in place to reward results.
• Supervisors conduct performance reviews on a regular basis.
• The CEO consistently hires people smarter than him or her.
• The company consistently meets business growth and profitability objectives.
• It sets aside adequate time to plan.
• It holds meetings with clearly defined objectives that are tied to overall company objectives.
• It meets commitments in a timely fashion without “Big Brother” follow-up surveillance.
Sales effectiveness: The company’s lifeline
A company can assure future growth only if it can find new customers to replace lost business, and if it can create more business opportunities to meet the changing needs of new and existing customers. This can only occur if:
• The sales team consistently meets or exceeds revenue and margin goals.
• The sales strategy is clearly focused on selling the company’s existing products and services.
• The sales I.T. monitoring system contains accurate and timely sales data for use by sales management.
• Information about key competition clearly shows how the company’s offerings are differentiated from them.
• Senior management is personally involved in closing new business.
• Unattainable quotes are quickly identified and put aside.
Operational excellence: The secret formula for extraordinary results
Operational excellence is all about how a company maintains its margins. An absolute fundamental key is full knowledge of your cost structure, your true cost of doing business. Too many companies fail to invest the capital in their accounting systems to yield consistent, reliable true cost information. In summary, senior management must:
• Have accurate and timely cost reports to make good decisions.
• Have a detailed understanding of the cost structure of key competitors.
• Manage employee productivity.
• Oversee a process for eliminating corporate and operational waste.
Financial management: Where information is power
CEOs know that financial management is the center of accountability within their company. Unfortunately, in too many small businesses in particular, there is no proactive financial management function. This is a huge mistake.
As Prosen pointed out, financial management must:
• Advise the CEO, proactively, about where profitability can be sustained or improved.
• Capture results and convert data into information and reports that help decision-making.
• Provide real-time data analysis, not historical data that has no correlation with tomorrow.
• Know the business well beyond the ledger sheet to include marketing/sales issues, margin issues and administrative concerns.
• Know how the P&L and balance sheet, and cash flow statements are inter-related.
• Develop “early warning indicators” to help the CEO anticipate changes in the external business environment.
• Develop and maintain sources for business capital and lines of credit.
• Be the chief negotiator for all leases, customer contracts and vendor agreements.
With the CEO, take the lead role in the annual business-planning cycle.
Customer loyalty: The win that keeps on giving
The last attribute of highly profitable companies almost seems like a no-brainer, and yet as most CEOs know, it is highly elusive.
It’s an unfortunate truism that customers can be fickle: they say nothing when things are going according to their expectations, and they scream loudly when things are not. A company can, however, take eight steps to strengthen customer loyalty:
1. Test your customer service and support process on a regular basis (go beyond impersonal written surveys).
2. Link key customers with your key management team to deepen relationships.
3. Take pride in your service capabilities and charge accordingly.
4. Communicate, communicate, communicate, and fulfill the commitments that you make.
5. Keep in regular touch as CEO.
6. Ask your customers for references and testimonials.
7. In terms of trouble, open the communication floodgates.
8. Strangely enough, don’t let your customers use you as a bank. All this accomplishes in the long run is a loss of respect for you and your company.
The bottom line of Prosen’s prescriptive advice is that profitable companies can make choices that unprofitable ones only dream about. And profitable companies do not come about by accident. The markets they serve recognize their strengths. These companies are known innovators. They have learned how to balance short-term priorities with long-term opportunities.
Until next month, may these five attributes represent your success, and not that of your competition.
