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

9 Behaviors of Great Problem Solvers

solve complex problems

Dealing with Problems

Problems.

We deal with them all day. Whether at work or at home, they seem to chase us down.

What if our problem-solving efforts could be radically improved?

What if you could increase your confidence in solving hard problems?

What if you could stop wasting time and money and implement the right solution?

Serial entrepreneur Nat Greene, author of Stop Guessing: The 9 Behaviors of Great Problem Solvers , says that we are trained to solve easy problems by guessing, and we often only learn to work around problems rather than tackle them.

Great problem-solvers don’t guess. They use different methods and behaviors than most of us. And anyone can learn to improve their problem-solving ability.

 

“A problem well-stated is a problem half-solved.” -Charles Kettering

 

The Hidden Costs of Bad Problem Solving

How would you describe the hidden cost of bad problem solving?

Most people understand the basic notion that when problems don’t get solved, value is lost—value to your business and life, and to society. These problems are legion. They affect our health and safety, our happiness. If you think of the toughest problems the world needs to solve, or your business needs to solve, I’m sure you’ll come up with many of them. And you’ll have a very clear understanding that solving these could make a huge difference.

These problems persist simply because we’re not solving them. However, bad problem solving is far more nefarious. Bat problem solving means poor solutions—solutions that are wasteful, painful, or make things even worse than the problem. You may know the proverb, “the medicine is worse than the disease.” Think of examples where a famous business or large government has thrown massive amounts of resources at a problem without a real strategy. Or when a major asset wasn’t working, and instead of solving the root cause of the problem, the organization just bought a new one and hurt its debt position.

Such bad problem solving is worse than the problems themselves for two reasons. First, when a problem is badly solved, people stop trying to come up with a better solution. They may have fooled themselves into thinking they had a good solution or decided the bad solution was “good enough” or even realized that by “solving” the problem, they lost political permission to keep working on it. So unlike an unsolved problem, a bad solution is something you’re likely to be stuck with.

The second issue is that we begin to believe these bad solutions are all that is possible. It’s so common for people to work around an issue, patch it, throw money at it, or learn to live with it, that if we are not vigilant, we will begin to believe this is just a harsh reality we must accept. Through their lives, many people will just lower their expectations about what’s possible. They’ll stop trying so hard to come up with great solutions to the world’s hardest problems because they’ve been taught by example that it can’t be done.

 

Why are people unable to solve hard problems?

The most basic answer is that nobody taught them how, and actually taught them how to solve easy problems instead. Easy problems have few likely root causes—perhaps 2 or 3—and guessing can be an effective way of quickly getting to the root cause. Say your light bulb is out—the bulb is probably burnt and you should replace it. If that doesn’t work, try the breaker switch. If that doesn’t work… well, maybe you just forgot to flip the switch in the first place. That’s easy stuff, and guessing works just fine.

We’ve learned to guess at problems because it’s worked for us, but it’s also reinforced everywhere. In school, if a teacher asks a question, we’re expected to shoot up our hand with a guess. If we’re wrong, we’re still rewarded—“good try!” In work, when there’s a serious problem, people get together and brainstorm “ideas” (that’s code for “guesses”) about what to do next. In the haste to solve the problem as quickly as possible, there’s such an urge to act that people want ideas they can try out immediately rather than good problem solving. Even our evolution teaches us to guess: we simply lacked the technical skills to reason out what to do about the saber-toothed tiger that jumped out from behind a bush; thinking too hard about it was pruned from our family tree a long time ago.

Such guessing doesn’t work with hard problems because by their nature they have hundreds or thousands of potential root causes. The true root cause of your particular problem is likely to be hidden or obscure, and you simply won’t be able to guess it. Finding the root cause requires rigor and patience. It requires focusing on understanding the problem and the process itself rather than attempting to come up with solutions right away. What works to solve hard problems is essentially the opposite of what solves easy ones.

 

“I never guess. It’s a shocking habit, destructive to the logical faculty.” -Sherlock Holmes

The First Step in Solving Your Biggest Problems

 

This is a guest post by Mark Miller. Mark is the best-selling author of six books, an in-demand speaker, and the Vice President of High-Performance Leadership at Chick-Fil-A. His latest book, Leaders Made Here: Building a Leadership Culture, outlines a clear and replicable approach to creating the leadership bench every organization needs.

 

“A journey of a thousand miles begins with a single step.” -Lao Tzu

 

Take the First Step

I’m guessing much of your life and leadership is devoted to problem-solving.

If you aren’t trying to fix the problems you currently face, you are probably attempting to anticipate, and proactively respond to, problems on the horizon. Maybe the problem you are trying to address is how to continue to fuel your current success – a good problem to have, but a problem nonetheless. Problem-solving is a part of a leader’s ever-present reality.

I’ve been searching for years for ways to make my investment in this critical activity more fruitful. Today I’ll share some practices that have helped make our team’s problem-solving efforts more effective.

Let’s begin our deep dive on the topic with a mistake I’ve personally witnessed thousands of times. Before I share it, brace yourself for a blinding flash of the obvious! Are you ready?

 

“Problem solving is a part of a leader’s ever-present reality.” -Mark Miller

 

Don’t solve for symptoms.

3 Common Mistakes of Strategic Planning

 

I’m always looking for ways to improve the strategic planning from a dreaded annual activity to a meaningful, helpful process.

Recently, I had the opportunity to read Elevate: The Three Disciplines of Advanced Strategic Thinking by Rich Horwath.  Rich has helped numerous companies and managers with the strategic planning process and evaluating strategic capabilities.  I had the opportunity to talk with Rich about the most common mistakes leaders make.

 

“If your strategic plan isn’t driving daily activities, then you’ve wasted time doing the plan.” -Rich Horwath

 

3 Common Mistakes of Strategic Planning

 

Rich, you’ve worked on strategy both as the CEO of the Strategic Thinking Institute and before that as a Chief Strategy Officer.  What are the most common mistakes you see in strategic planning?

 

There are typically three mistakes when it comes to strategic planning.

 

“The number one cause of bankruptcy is bad strategy.” -Rich Horwath

 

Mistake #1:  Confusing strategy with other planning terms.

 

The first is the group not having a universal understanding of what strategy is and how it differs from other key planning terms such as mission, vision, goals, objectives and tactics. There’s a tremendous lack of precision when it comes to strategic planning and that starts with the fundamental building blocks.

 

“Concepts change thinking and tools change behavior.” -Rich Horwath

 

Mistake #2:  Regurgitating last year’s plan.

 

The second is that most plans are simply a regurgitation of last year’s plan.  This is because managers don’t think before they plan.  I’m a big believer that new growth comes from new thinking.  If you don’t take time and tools to generate new insights, then don’t expect your group to perform any better than the year before, or the year before that.

 

Mistake #3:  Not linking the strategic plan to daily activities.