9 Steps to a Better Bottom Line

profit

How to Improve Your Bottom Line

In the last several years, businesses have faced smarter competitors, continual change, technological innovations, and uncertainty.

It seems more difficult than ever to both grow the top line of a business and the bottom line, too.

That’s the challenge that Dr. Dorriah Rogers, CEO of Paradyne Consulting Works, takes on.

From her work with some of the most complex projects and organizations, Dorriah has developed a 9 step program to grow net profit. After reading her new book Decide to Profit: 9 Steps to a Better Bottom Line, I asked her to share more about her research and experience.

 

“The man who removes a mountain begins by carrying away small stones.” –Chinese Proverb

 

Tell us more about the 9 steps and how you arrived at them.

The 9 steps are the result of many years of implementing various profit-focused solutions and systems across many different types of industries and companies.  At one point in my consulting career, a senior executive (almost, but not quite) jokingly asked me if I could develop an “Operations Manual” of all the tools I had at my disposal.  That was the genesis of the 9 Steps.  From there, I kept refining the steps, making sure they were interrelated, and asked for real-world feedback from my clients, until I had it down to a system as simple as I could make it.  I wanted to create a process that was not overly complicated to understand or use, and I wanted to create something that both managers making decisions and employees wanting to make an impact could readily implement to help their companies improve profitability.

 

“Whenever man comes up with a better mousetrap, nature immediately comes up with a better mouse.” –James Carswell

 

Identifying the system that needs improvement seems straightforward, but it isn’t as easy as it sounds. What if you can’t seem to identify which one is off course?

Agreed.  It is not simple to get started.  And that is why so many of my clients struggled.  They either focused on too many improvements or the wrong ones.  In many cases, most managers and employees inherently know where they need to start, or in what general area, and that is as good a point to begin with as any.  It may not be as tight a starting point as you might want, but the 9 Steps will help to define and clarify if it is the right place to focus your attention and resources as you progress.  Keep in mind that a “system improvement” could be as big as an entire corporate overhaul (like the Lego case study in the book) or as small as an internal vendor payment process.  The idea is to find those things that are impacting your ability to make money.  So the first place to start is to discuss internally which things are impacting your ability to generate profit.  Not revenue, but profit. 

Companies have a choice: keep doing what you’re doing and make incremental (or no) improvements to your bottom line, or tackle your best estimate of the system within your organization that could potentially have the biggest impact on profit.  You might start out with the wrong one, but the beauty of the 9 Steps is the iterative process built into it.  Along the way (and fairly soon) you will realize that the system you chose to improve might not be the right one because it is NOT positively impacting your financial goals, and the steps will prove that out for you through the ROI process.  At that point, you simply readjust, and the 9 Steps will guide you closer to those areas that will have the biggest impact.  So in short, start somewhere and the 9 Steps process will get you where you need to be.

 

“Creativity is thinking up new things. Innovation is doing new things.” –Theodore Levitt

 

Beware the Expert Loop

What is the expert loop and how does it often cause problems?

The expert loop was first coined by Alex “Sandy” Pentland in his November 2013 HBR article entitled “Beyond the Echo Chamber.”  In it, he posited that within organizations only a handful or individuals are viewed as the experts and the only ones who are capable of making important decisions.  I agree with his conclusions that, in fact, seeking information outside of this expert network is often much more valuable.  Time and time again I have seen the phenomenon of top executives sitting in rooms with the same small group of people as they rehash both problems and ideas in a tired, circular rhythm. The same ideas are beaten to death, and the same people are heard.  Even when new people are brought into the conversation, their ideas are often dismissed or even scoffed at as the experts re-establish their positions of authority at the top of the food chain. The problem this creates is twofold: a lack of true innovation and the stifling of a culture of continuous improvement.  While it is true that experts should (and do) have great ideas, it often requires a fresh perspective or a dissenting voice to shake things up and move the company in a new direction.  Some of the best ideas I have ever heard have come from the most unexpected voices.

 

9 Steps to Improving Your Bottom Line

  1. Identify the system that needs improvement.
  2. Put the right team together.
  3. Identify the goal.
  4. Observe the system.
  5. Identify bottlenecks within the system.
  6. Brainstorm.
  7. Select optimal solutions for improvement.
  8. Implement one change at a time.
  9. Sustain a culture of continuous improvement.

 

Unlock the Power of Brainstorming

How to Set and Simplify Business Strategy

stand out strategy

Making Big Decisions Better

All organizations are faced with decisions. What to focus on, what to invest in, how to get to there from here are all common questions when approaching strategy.

I’ve read many books on strategy. There are many that are theoretical. I enjoy them and think about the implications. But there are a few that are actionable. As a CEO, I can use aspects of them immediately. That’s what I found when I read Tim Lewko’s new book, Making Big Decisions Better: How to Set and Simplify Business Strategy. Tim Lewko is the CEO of Thinking Dimensions Group, and his book goes right to the core of setting strategy that you can implement immediately.

I followed up with him to discuss his new book and his strategic work.

 

“Strategy is decision-making.” –Tim Lewko

 

Develop a Common Definition of Strategy

Why is it problematic that most of us don’t share a common definition of “strategy”?

Not having a common definition of strategy creates all the problems CEOs, executives, managers and people who want to make their mark are trying to avoid in the critical areas of:

Purpose

Growth

Profit

 

What are some of the common misconceptions about strategy?

The list could be quite long but I will share the top three that trip up firms in setting a quality strategy—and that are easy to fix if the CEO and leadership chooses to. They are:

  • EUREKA – It’s a magical idea that just comes to you
  • SINGULAR – One person holds the key to the great idea
  • BYPASS SWEAT EQUITY – Outsiders can tell you the answer and it should work

 

“Cause is king for sustaining results.” –Tim Lewko

 

Be Wary of Outsourcing Strategy

Why is it often problematic to “outsource strategy” work?making big decisions better book jacket

There are many large successful firms that come and provide the “answer” that shows up as a long set of PowerPoint slides – and this prescriptive approach is the choice for many CEOs.  However, the approach which I practice is process based – where we bring a proven strategy system that “forces tough tradeoffs” and leaves them in a better place because they created the strategy and understand how to modify the choices as events fold.  This process approach helps to avoid the problems associated with outsourcing strategy including:

  • DEFAULT on sweat equity – missing out on working through, understanding and deciding the key things that matter from EXTERNAL and INTERNAL standpoints
  • TOLD WHAT YOU ALREADY KNOW – in my experience, clients already know 85% of what’s holding the business back (outsiders may give you 60%) so why pay for what is already known?
  • DELAY or DESTROY BUY-IN – if you outsource strategy, you have already short-changed your ability to implement the strategy – because you have side-stepped the most important people – your executive team and workforce who need to intimately understand the why behind the PRODUCT, MARKET and CAPABILITY choices that are being made. Sure, a great CEO communication or town hall helps to sell the outsourced strategy, but deep down those closest to the issues feel side-stepped – and it takes an awful lot of time to get them to buy in to something that is not theirs.

 

“Unwarranted complications are killing strategy in organizations.” –Tim Lewko

 

Have a Visible Process for Strategy

The Mythical Leader: 7 Myths of Leadership

mythical leader

Misunderstanding Leadership

My friend Ron Edmondson is a pastor, author, blogger, and consultant. After reading his leadership book The Mythical Leader: Seven Myths of Leadership, I followed up with him to discuss the many misunderstandings people have about leadership.

 

“Leadership is influence.” -John Maxwell

 

Avoid the Boss Mentality

I often say that leadership is personal, not positional. Myth number one hits this immediately. What are some of the problems with the “boss has ruled” mentality?

I so hate the word boss. Maybe because I’ve had one and, no, I never want to be seen as one. Frankly, from a purely practical standpoint, the “boss has ruled” mentality simply doesn’t work. It might get the job done for a while, but it will wear people out over time. We don’t get the best people have to offer because they will only do what has to be done to meet the “boss’s” expectation. But, I think there is a bigger reason. It’s wrong. At least from my Biblical perspective, we are all – regardless of title or position – ultimately to be servants of others.

 

“The culture the leader creates impacts the feedback a leader receives.” -Ron Edmondson

 

Myth number two says that if you’re not hearing complaints, everyone must be happy. Tell us a little more about this observation.

I’ve learned even in the best organizations and on the healthiest teams, the leader only knows what they know. And, people may be either hesitant to share what they are really feeling for fear, or retribution or they assume the leader already knows the problems. I go through seasons, as the leader, where I’m simply getting the required things done. I’m traveling a lot. I’ve got a lot of projects on my plate. If I’m not careful, I can assume silence means agreement. I must consistently be asking good questions to make sure I know the true pulse of the organization.

 

7 Myths of Leadership

Myth 1: A position will make me a leader.

Myth 2: If I am not hearing anyone complain, everyone must be happy.

Myth 3: I can lead everyone the same way.

Myth 4: Leadership and management are the same thing.

Myth 5: Being the leader makes me popular.

Myth 6: Leaders must have charisma and be extroverts.

Myth 7: Leaders accomplish by controlling others.

 

 

How to Lead Creatives

Your Playbook to Digital Transformation

Digital Business Transformation concept with arrow of compass (3

Reach for the Future

Nearly every business is impacted by digital transformation.

The key question for leaders is how to overcome the pull of the past to reach for the digital future. The authors of Digital@Scale: The Playbook You Need to Transform Your Company have developed a playbook based on years of McKinsey experience and research.

I recently spoke to author Anand Swaminathan, Senior Partner in McKinsey’s San Francisco office, about the book and his work in the area of digital transformation.

 

“Change is the end result of all true learning.” -Leo Buscaglia

 

3 Barriers to Change 

What do leaders need to know about identifying the barriers to change?

In our experience, executives face a fundamental conflict: Change requires a sense of urgency while highly-efficient organizations tend to have high levels of inertia. When business is going well, managers and employees generally only pay lip service to change requirements. Knowing that, there are three barriers we’ve identified:

  1. The good is the enemy of the better: Efficient, currently successful organizations often slow down the necessary change: Why cannibalize what is successful today? Why destroy efficiency gains of a ‘well-oiled machine’?
  2. Watch out for your top team: Ironically, today’s most successful managers might be the ones slowing down your transformation efforts since they have the most to lose. Transformation needs to start with the person at the top, and it’s often those who have grown accustomed to success that find it most difficult to change course.
  3. Your DNA takes time to change: Don’t underestimate the time and effort required to change deep-rooted mindsets and ways of working. Your legacy business exerts a natural gravitational pull that will stop all meaningful change unless you’re persistent and change at enough scale to break through

 

“Transformation is often more about unlearning than learning.” -Richard Rohr

 

What is the role of the CEO when it comes to digital transformation?

The successful digital transformations we see out there have one common denominator: the CEO spearheading and promoting the digital transformation. They are making it front and center of their personal agenda. Only if change is demonstrated and exemplified by the top management will the necessary changes to structures, processes, management instruments, as well as the establishment of new skills and new IT systems, be successful. That can mean using new technologies, challenging existing ways of doing business, and making the bold decisions necessary to change the trajectory of the business.

 

Assess Your Readiness

How can management assess the current strategy of the company and its readiness for digital transformation?Digital@Scale book cover

That’s two questions. The first is understanding your strategy, and that requires looking at sources of value – where they’re created in your business and in your sector. Most important, you need to look at where sources of value are being created outside of your sector – that’s where some of the biggest changes (and challenges) might be happening.

Then you need to look at where you are today and what needs to change. There are lots of assessments and diagnostics out there, but you need to take a cold-eyed view of where you are as a digital business and what needs to be in place to drive value at scale. As an example, we have developed a comprehensive benchmark to derive a company’s Digital Quotient (DQTM), road-tested with several hundred organizations across the globe. It helps leadership to take stock compared to best practices across sectors and within its own industry.

In addition to the benchmark, some questions that management should start with to determine the urgency and their organization’s readiness for change include:

  • Are we assessing whether we can use our strengths to penetrate completely new industries within the current rules?
  • Are we actively creating an ecosystem of partners, customers and suppliers that will last into the digital world?
  • Have we defined a feasible timescale and meaningful KPIs to reliably measure success or failure?

 

“Transformation literally means going beyond your form.” -Wayne Dyer

 

Break the Silos

How to Manage to Make a Difference

make a difference

Make a Difference

If you’re a new manager, you may find yourself in unfamiliar territory faster than you can imagine. How do you handle the gossiping employee? Or the top performer about to jump ship? How do you develop a high-performance team?

Larry Sternberg and Kim Turnage have literally packed numerous tips, strategies, tools and techniques for managers into the pages of their new book, Managing to Make a Difference: How to Engage, Retain, & Develop Talent for Maximum Performance. I recently spoke with Larry about their new work.

 

“We can change the world and make it a better place.” -Nelson Mandela

 

Why Employee Orientation is All Wrong

Your book starts out saying that we have employee orientation all wrong. We too often start with scare tactics and explaining what will result in termination. What does this do to new employees?

Frankly, the gratuitous negativity turns people off. The new employer is building the case for termination on day one! Also, it’s just plain boring. Negative and boring are not strategies to increase engagement and positivity about starting a new job.

You might say that these kinds of statements are necessary in our litigious society. We happen to disagree with that point of view. But even if we were to agree that they are necessary, they diminish your efforts to engage and retain people.

Imagine you’re dating someone, and you start a discussion about being exclusive and moving in together. The other person replies, “I’d love to do that! But first I want to make sure you understand the reasons I might decide to end this relationship.” How would that make you feel?

 

Go Ahead: Get Close to Your Team

I loved your advice on getting close to people. I’ve long advocated this. What are the benefits of getting close to people at work?

When you cultivate close, positive relationships with your employees (and among your employees), every employee spends his day with people he really likes and cares about. This increases job satisfaction, engagement and morale. Teamwork improves because employees are more likely to go the extra mile for people they care about. When problems occur, employees with good relationships will resolve them more easily. A leader who has close relationships with her employees can exert more influence on them without using her power. For instance, when she asks for extra effort, they’re more likely to give it.

 

Leadership Tip: the closer you are to someone, the easier it is to influence that person.

 

Talk about the importance of setting expectations.