Why is business improvement so important to owners looking to scale? Let’s compare growth and scaling. Growth without scaling increases the number of staff with turnover. That means if you divided the turnover by the number of staff, you’d get the same amount of revenue per employee. Scaling involves increasing productivity to get more revenue per employee. That doesn’t mean driving staff to work harder, which aside from ethics results in increase staff absence due to stress and faster staff turnover. The answer lies in business improvement.
Design is the key to business improvement. Our Business System: An Essential Guide to Growth guide will help you design a robust system for better results.
Can technology solve everything?
Can technology solve everything? In short, the answer is no. Scaling a business involves people, process and technology. People are vital to building a team that will serve customers, investors and others. People without process will cause a scale-up to fail. One classic problem is hiring people too early. Technology provides the tools to do things easier, better and faster. Tools help you get things done with less people. Of course, better tools influence the business process.
Let’s look at how technology influences processes. Imagine digging a trench to lay a cable. The business problem is to lay a cable underground between two points. The basic business process is to dig a trench, lay the cable and re-fill the trench. Digging the trench by hand might take days compared to a machine that might take a few hours, the techniques are different, however the basic process hasn’t changed. However, the expectation is dramatically different, each job takes a few hours instead of days. In this example, better tools influences this and other processes in subtle ways.
We might ask, how did the machine get to the site? How is the machine managed by the business? What are the skills to operate the machine? Having invested in machinery, how can opportunities to complete several jobs a day happen? There might be a need for a better booking and logistic system. Improving the business in one area drives improvements in others.
Delivering the same value quicker
In the above example the customer received the same or better value in less time and at less cost. There is a risk that efficiency drives can damage the customer or business. Owners fear changes to culture or way of working might damage the business. Owners must ask what is most valued by stakeholders. Using this as an input into business improvement can lead to better outcomes. What’s important to stakeholders also provide guard rails for change.
New markets
An Arizona man discovered a bomb shelter under his lawn. Whitaker Pools built the shelter in 1961 during the cold war. What struck me was that Whitaker Pools realised that the know-how and tools for digging a pool were the same as for building a bomb shelter. As a business catalogues their capabilities, there’s scope for reusing and adapting what’s already there for new markets. Thinking about reuse during business improvement offers new opportunities.
Threats and opportunities
Changes in the business model, innovation or social evolution might drive improvements. The business is constantly adapting to change. I’m excited to see businesses that turn threats into opportunities. One potential threat is how our workplace is changing with the need for flexible schedules, remote working and changes in working times. This is a threat that is driving digital transformation. Another might be increased data privacy regulation which is driving quality personalised experiences, transparency and trust.
How do you plan a route?
I remember sitting on an aircraft in Newcastle when the pilot announced that they couldn’t take off because the aircraft thought it was already in London. Before satnavs, we’d plan a route by putting a finger on the starting point, another finger on where we wanted to be, and look for the easiest way to go. Business improvement is an A to B thing. If you already think you’re at your destination, then there’s no point. The problem with most owners is that they are so busy they don’t get a chance to think about where they want to be. Once you know where you want to be, then you can plan a route rather than being stuck on the ground.
Planning your journey
When we plan our annual journey to the Lake District, I’m already thinking about choices of route if it looks busy, where we’re going to stop for breakfast, and stop for driver changes etc. Samantha is thinking about passenger welfare (two teenagers), making sure we have drinks, snacks and entertainment. We both want the journey to be smooth and keep everyone happy. Owners will want to plan the journey to make sure everyone’s on board and people arrive at the destination in good shape.
If you’d like to explore the ideas in this article further or need help and advice, please contact Rogan at rhounsell@kr5consulting.com – to arrange an informal chat.
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