I have helped many companies identify and leverage their core competencies through the years, and doing this can really make a difference in the products or services you provide to your customer. Core competence is a concept introduced by C.K. Prahalad, professor at the University of Michigan, and Gary Hamel, management expert and founder of Strategos. They define it as “a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace.”
It is important to grow the top line of your business on an annual basis, but you also need to make sure the bottom line is healthy which can help fund that growth. This is particularly important if you are a manufacturing company and need to be efficient in your production process. In most cases, the two biggest expenses in your manufacturing business are labor and raw materials. There are exceptions, of course, in machine intensive automated manufacturing environments, but let’s focus on the former. So how can we make sure the production line is running at peak performance? One very effective way is to put the right balance of production KPIs in place. Some of these are leading indicator KPIs that help provide insight into future performance and some are results KPIs that tell you how you have done. It is good to have both, although I always prefer giving my production managers a good set of leading indicator KPIs as these drive the results.
Here are some of my favorite KPIs and metrics that I used when I ran or set up manufacturing companies.
Two key concepts in manufacturing that often get misconstrued or even used synonymously are productivity and efficiency. Do you know what the difference is? Despite these two words pertaining to improving the production process of a manufacturing, agriculture, or service sector company, they refer to different things. Once you think about the differences, you can better utilize productivity and efficiency in your business.
One of the things I have to do as a business consultant is to be a great listener. This is a key leadership and communication skill for anyone. Sometimes effective listening can be a challenge because, like most people, I can fall into the trap of thinking about my response and how I would like to help the individual with whom I am communicating. One of my pet peeves has always been that many people begin developing their response as soon as the other person starts speaking rather than truly listening to the message spoken to them. As I was going through some information this weekend, I came across a great one-page paper on four steps to effective listening, a key tenet of developing accountable leaders and teams. Permission was given to use the information as freely as possible and so I am sharing the main points with you.
So, you had a great planning session with your team. Everybody left the 3-day session pumped up and ready to hit your targets for the year and move the company one step closer to achieving your Big Hairy Audacious Goal and other long term strategic goals. You've done the strategy work extremely well? What could possibly go wrong?
Unfortunately, even with everyone’s good intentions, running the day-to-day business can get in the way of making progress on your annual and quarterly rocks if you are not intentional about your execution or operation planning of all of your important projects to help you achieve your vision.
I have written previously about the importance of identifying your core customer because I have seen far too many companies waste their valuable time and resources selling to and serving the "wrong" customers. They haven't taken the necessary steps to identify their most valuable customers that purchased the primary product and were highly satisfied.
Your core customer is the one who values what you offer at a price and quantity that is good for both you and the customer and will take you into the future successfully. This is the individual that uses the product, the one you look in the eyes and can put a name to and the one you can’t live without. Knowing who the core customer is will impacts sales in a positive manner.
Philip Kotler implores us to do a better job of understanding “who” our valuable customers are and then to deeply please them, rather than trying to please everyone. It is much better to serve your Core Customer completely and fully, than to try to be everything to everyone. It will create a core market that you can please and creates a loyal fan base.
Every company should have a brand promise that it makes to its customers. The promise should differentiate you in your market and support the sales process by making it easier to close deals. The first step in developing your brand promise is to identify your core customer. The better job you do with this step, the more effective your brand promise is going to be and the more likely your prospects are to purchase a product.
It is very common to develop a Big Hairy Audacious Goal (BHAG) for your business. What is not so common is to develop a BHAG for your personal life. Before we get into that, let’s define what a BHAG is (pronounced bee hag) for those not familiar with the concept. A Big Hairy Audacious Goal is term coined by the professor, management consultant and author Jim Collins and Jerry Porras. Jim has written several books with the most popular being Good to Great. A BHAG is a 10+ year visionary goal that describes your envisioned future, and is one of the successful habits of visionary companies. A BHAG should stretch you and guide you while unifying on a focal point of effort to help you determine what to say yes and no to as you forge ahead to accomplish your goals.
Peter Drucker stated that ”the best and most dedicated people are ultimately volunteers, for they have the opportunity to do something else with their lives.”
One of the best articles I have read on Core Purpose is Jim Collins and Jerry Porras article titled “Building Your Company’s Vision.” The authors explain that a well-developed vision consists of two parts, core ideology and an envisioned future. The core ideology consists of two components, Core Values and Core Purpose. The envisioned future has two elements, The Big Hairy Audacious Goal (BHAG) and a vivid description of what it will look like when you achieve your BHAG. The former should never change, while the latter may, once you have accomplished your long term 10-20 year goal. These should be your guiding purpose to go above and beyond the status quo.
Driving new sales revenue is a common theme that comes up with the clients I work with. In fact, I can’t think of many companies that have more sales activity than they know what to do with, and most are always looking for ways to build or grow their sales pipeline. One of the first places we start is taking a look at their Sales KPIs to ensure that they are measuring the right metrics to grow their revenue by producing enough qualified leads for their sales managers to distribute to the team.
There a lot of variables that go into building a great sales pipeline, and marketing plays a big part in developing marketing qualified leads (MQLs), but another big variable is measuring the right behavior that drives the right results with a great sales KPI dashboard. To do this, we must put the right leading indicator KPIs in place. It’s one thing to measure results indicators like Revenue booked, but unless the right activities are taking place, you are not going to hit your targets and your stakeholders are going to be disappointed regardless if they are internal or external. You need to develop the right sales leading indicator KPIs for your team to track your customer acquisition.