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

Pick the Low-Hanging Fruit to Improve Productivity


Many leaders are looking for the “big” program that will change the game.  They agonize over large scale change efforts, ways to reduce costs, and how to increase innovation within the firm.

What if the answer wasn’t identifying one large project but instead was small issues that employees already knew about?  If the employees had the courage and the power to act on them, what would happen?

It’s the same in business as it is in life.  The little things matter.  Add up the small changes and the daily disciplines and you have mapped the road to success.

 

“The important thing is not to stop questioning.” -Albert Einstein

 

Jeremy Eden and Terri Long are the Co-CEOs of Harvest Earnings, an advisory services firm. They have helped companies like Heinz, PNC Financial, Standard Register and The Schwan Food Company, Energy East, Webster Financial, and Standard Register to reduce costs and increase revenues. I recently had the opportunity to talk with them about their new book, Low-Hanging Fruit: 77 Eye-Opening Ways to Improve Productivity and Profits. 

This is one of the most practical and immediately actionable guides for business leaders that I have ever seen.

 

Embracing Change

 

You have listed numerous ways to make an organization more efficient, more productive, and more profitable.  When you consult with an organization, do managers readily embrace your ideas or do they resist?Low-Hanging Fruit

If we said to our clients’ employees, “Folks, here are 77 new behaviors you need to do now,” there would be mutiny!  So instead we build in the most important behaviors into a process that we provide called Idea Harvest™.  Most managers do readily embrace the process because they see that it is a way for them to get their ideas not only a hearing but a decision as well.  By going through an Idea Harvest™ managers just naturally adopt our ideas without anyone having to learn or accept 77 ways of behaving.  One of the most loved new behaviors is to use simple one-page summaries for most ideas and to stop creating big presentations.  Since most decisions in an Idea Harvest are simple (“low-hanging fruit”), no lives need to be wasted on creating elaborate PowerPoints.

 

“PowerPoint has consumed the best years of too many young lives.” -David Silverman

 

Another example is that an Idea Harvest uses many short deadlines.  Deadlines focus everyone on important activities and give them permission to ignore unimportant ones that might otherwise waste their time.  Some embrace this new behavior immediately because they see that it also means decisions will be made quickly.  Others don’t see how they can meet the short deadlines until they see how efficiently they can work following some of the other rules … which is a perfect segue to the next question!

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Know When Good Enough is Enough

I love the concept of “gold plating.”  Would you explain it and give an example?

Gold plating, also known as “paving the cow paths” is an effort to make something better that is already good enough … and more specifically, spending time making that thing better does not grow profits.  The most prevalent example is the one we describe in Chapter 77 “Mom Should Have Said, Don’t Always Do Your Best.” Managers spend an incredible amount of time perfecting PowerPoints, memos, and emails when “good enough” would have saved time that could be spent on truly important activities.  Many bosses inadvertently encourage this behavior by pointing out meaningless typos or formatting issues in internal memos.  We worked with one client where the employees laughed when we said the senior team would review a one-page summary of their ideas.  They needed to hear directly from the CEO that he didn’t want a full blown presentation for every idea they were going to discuss!  We worked with another where the word went out to reprint hundreds of pages of team reports in bigger font after the CEO made an off-hand comment that the type size was small – luckily the CEO caught wind of this and told everyone he preferred using his reading glasses to wasting time and money!  One engineering department was designing equipment that would last 75 years even though with new technology that standard no longer made sense. “Gold plating” occurs in every large company and is seen as virtuous instead of the resource stealer that it is!

 

“A bad system will beat a good person every time.” -W. Edwards Deming

 

You talk about “embracing conflict” and that can require some serious culture change inside an organization.  How do you change the culture to accept healthy conflict?

Managers bemoan how hard it is to change a culture, but we have seen it happen practically overnight.  Think how quickly a culture can change when a company is bought and merged.  The top dog has culture change within his or her power (but like Dorothy who didn’t know she only needed to click her heels three times, they often don’t know it.)  Company executives who want their teams to embrace conflict must embrace it themselves.  Is there a decision that has lingered because two factions can’t agree on the right course of action?  Executives should adopt the mantra that “everyone is entitled to their own opinions but not their own facts” (courtesy of Senator Daniel Patrick Moynihan).

 

“There seems to be some perverse human characteristic that likes to make easy things difficult.” -Warren Buffett

 

In practice, this means demanding facts before entertaining debate and discussion.  By making sure that everyone agrees on the facts, many conflicts will  be resolved.  In one company, the business line wanted a 24-hour call center because they “knew” that good customers called at all hours while the call center “knew” that staying open overnight was not worth it.  Together, they devised a simple data collection plan and determined that few good customers used the call center late at night.  Again working together, they found a way to form a skeletal staff to take care of the customers with 3am needs.  With common facts, a decade old conflict evaporated.  With facts, conflicts also lose much of their political edge that can turn decisions into power struggles.

lowhangingfruit_memes_rd2_2

One additional simple change can make a huge difference:  Get everyone involved in a decision in the room at the same time.  No serial meetings with differing points of view that the boss is left to figure out.  Ask the conflicting parties to present a single point of view on the issue and 95% of the time they will do it.

 

“There is nothing so useless as doing efficiently that which should not be done at all.” -Peter Drucker

 

Making Meetings Effective

How do you make meetings more effective, less time consuming, and more impactful?