This is my second article, in a series of three, on CLARITY, CONTROL and CHALLENGE. These are the three pillars I focus on when working with a business owner to help them achieve success, whatever that may mean for him or her.
This article is focused on the second point, CONTROL, what the benefits are, what it could look and feel like, and what your role is in all of this as the business owner.
There are several benefits of introducing control into the management of your business. These include
- allowing you to make better informed decisions
- allowing you to act on opportunities quicker
- eliminating surprises
- identifying where resources should be focussed to achieve the results you want
In practice it could feel like this
- always knowing the current health and strength of your business, having information at your fingertips
- you have an early warning system so you know when things may not go to plan
- you can take control of situations where there is an early warning, and put interventions in place to get back on track
- you and your staff are engaged and know what the next set of actions are, for you and them, to keep the business on track to deliver the results you want
Control does come at a cost and requires
- time out from the day to day to review progress, re-forecast and decide on interventions
The thought of this may not excite you but aren’t the benefits and how you will feel worth it?
In my article “Four lessons from the corporate world”, I include discipline, process and engagement as lessons learned. These are all required to have effective control of your business.
I recommend that if control is not your ‘thing’ then you find someone whose it is, so they can help you. Whilst someone else can facilitate this for you and make recommendations you have a vital role to play in this for it to be effective. More on that later.
I have spoken above how this could feel in practice, so how could it look in practice? In the first article in this series, on CLARITY, it describes how the plan is the link between clarity and control. Your plan is your starting point for introducing, what I call, the performance management cycle, to your business.
This is illustrated in the diagram below with the arrows indicating where you play your part, willing to have an honest conversation and make the decisions required, to stay on track to deliver the plan.
For this to be effective you need to MEASURE the ‘right’ things.
You may think of measuring outputs such as cash flow, profit, production or sales volumes.
While it is good to know if you are on track to deliver, for example, cash flow for the year, if you are only measuring the cash flow, the outcome, it can be difficult to avoid missing your target if you do not have the opportunity to intervene and influence the outcome. In other words, you do not have that early warning system.
This is where the concept of ‘lead’ and ‘lag’ indicators are introduced
- a lead indicator measures something that leads to the goal and is something that you can influence – an early warning
- a lag indicator measures the goal
In the example above cash flow is a lag indicator whereas the value of overdue payments from clients may be a useful lead indicator.
I would recommend measuring a mix of lead and lag indicators, making sure that the lead indicators are key to you achieving the results you want.
“The 4 Disciplines of Execution” by Chris McChesney, Sean Covey, Jim Huling discusses the use of lead indicators.
Once you have set a plan for the year and are measuring some lead and lag indicators then it makes sense that you pause to REVIEW progress on a regular basis.
The benefit of conducting regular reviews are
- You gain an updated view on the health and strength of your business, avoiding surprises in the future
- It gives you the opportunity to review your key lead and lag indicators and identify interventions required to achieve the results you want
- It is an opportunity to keep you and your staff engaged and motivated
I would suggest the following for a review, even if it is just you,
- Set regular dates for reviews at the beginning of the year – if they are not in the diary they won’t happen
- Develop a standard report or presentation pack for the review – a page for each key element. Focus on the elements that are important for achieving your goals for the year.
- Agree an owner for each element, it is their responsibility to prepare the information and talk about it at the review. This is where you can keep staff engaged, listen and learn from them, and maintain alignment on the way forward.
This is where it is vital you play YOUR PART, which means
- actively participating in the reviews
- understand what the lead and lag indicators are telling you and the implications for achieving the results you want
- focussing on what the next steps are rather than wasting time disputing the data, or making excuses, when you do not like what it is telling you
- inviting and listening to the views and recommendations of your staff, they may well know more about an aspect of the business than you do
- identifying where and what the interventions are required to stay on track
- being willing to make and act on decisions to enable interventions
Setting up the routine of measuring performance to date, reviewing the data and its implications, and most importantly, identifying and acting on the required interventions, is setting a rhythm or cadence for your business.
This may take up to 10% of your time but it does mean that you know the other 90% is being spent on what makes a difference to deliver the results you want – sounds like a good investment to me.