Growing pains – when success meets complexity

There is an amazing feeling for the entrepreneur and the onlooker of a start-up business blossoming and growing. We all like to hear of them starting ‘off the back of a cart’ and how they progressed to an established player in their sector. Maybe smaller than the rest, but seen as an ‘industry shaker’. A broad portfolio, employees hired for specific professional roles and ready to take on the world.

Does this resonate with your company?

The Revenue line pointing skyward, healthy forecast and a profit profile matching the upward trend, then something unexpected happens; The growth engine starts to stall, cash flows less predictably and customers drift away. Nimbleness lost.

This is the phase that I term as the ‘complexity point’.

What started as a personal business with a proprietor with focus, common sense and ultimate control, finds itself with a wide product set, creaking processes and an organisation which although taken on as human capital is looking more like a liability.

I’ve tried to reason with when we can anticipate the complexity point starting to kick in, but I have arrived at a summary conclusion that it may be different for each business, but with common attributes to what leads to the hiatus.

It is not a privilege to SMEs, complexity will exist in most of the mid to large corporates too.  And, across the sectors, there are different angles to the complexity, from capital-intensive businesses where the focus may be on the ‘plant’ right through to Professional Services organisations, but common signals will be present for each one.

There are ways of tackling the complexity challenge that requires a retrospective step in order to move forward, but my guidance at this stage is that it is not a one-off event and it happens in cycles. The important role of the Executive is to keep pace with it, anticipate that it will happen and be proactive.

A route out of recession and making it happen

Slide1It is really encouraging to see business contracts being awarded and the flow of wealth starting to happen. I always think that a visit to the local Shopping Mall is a great barometer of feeling and last weekend my local centre in Solihull was heaving. There are no major sales taking place and it wasn’t during the school holidays, just your average wet February Saturday afternoon. In fact, you could be forgiven as a Consumer if you were feeling miserable. It’s been raining for 2 months and the sky has been mostly grey, but despite that, the shoppers looked happy.

Optimism is great for the sole and a lubricator for the wallet!

When fortune returns after a recession, you have to be there to maximise your return from it. In the B2C markets, let’s say you are running a restaurant or a bar, you should be asking yourself, Are your staff ready to provide an even better level of service? Sometimes, a Customer needs to wait for a table, which isn’t a problem for a Consumer, for lots of people that is good as it means the restaurant is popular and probably has an atmosphere. However, when you wait you need to feel that there is a sense of ‘urgency’ going on around you, to look after you, drinks, seat, etc, before being taken to your table.

The above example is a simple one but can be transported to B2B markets and services as a simple model for maximising on Market confidence, through customer experience.

Now, my challenge to everyone; Are we doing enough to help Customers spend their hard earned/scarce money? My argument is, No, we are not.

Urgency doesn’t just happen, you have to make it happen!

During the recession employee training budgets were cut and the focus was on survival. Companies sought to maintain Profits but not staff levels and not staff competencies.

Survival and being Competitive are not always mutual friends, but if you want a slice of sustained growth, you need to go back to the drawing board and you need to take your staff with you. Unemployment levels are high but you will have to try hard to get the right skills to make your company work. You have to look at your business operating model and ask yourself why Customers want to do business with you. Nothing should be taken for granted, leave no stone unturned.

So as you look out at the growing opportunity from the door of your business, take a look over your shoulder at your operation and make a quick assessment whether you think you are ready to compete.

Growth Strategy and Customer Service

Slide1

So, the Politicians, the Press and market commentary Pundits will tell us that 2014 could be the year for continued recovery and a much sought-after increase in company fortunes.

This is the year for Growth.

Developing the options for Growth is quite straightforward even if we have to go back to base marketing principles. Using Market Analysis models, options can be presented of where growth could come from and then your decision is one of inorganic or organic growth, with or without some form of partner. Talking with a group of SMEs recently and taking them through business planning principles, I positioned the old concept of the ‘leaky bucket’, which in a traditional business environment means that you fill up the bucket with new revenue but at the same time observe revenue leaks through customer attrition and price erosion. Murphy’s Law will dictate events.

Growth is good, but smart Growth is better.

What really concerns me is when you go through the effort to win business and then lose it through the performance in your deliver and service to them. But before we point the finger of blame, everyone in a company is accountable for Service Excellence; it is just that some parts of your organisation are more responsible for it than others. The rhetorical question I have behind this challenge is why are we more competitive to win business than maintaining it?

As a Consumer and Management Consultant I can’t help but notice that doing the basics in delivery promises and after-sales service appears to be slipping. Through the 90s and 00’s there were significant steps to develop the need for customer excellence. Phrases like ‘Right First Time, Every Time’ spawned a myriad of programmes to reshape the behaviours of employees and managers and redesign processes to eradicate failure. Then came a movement to right shore to lower costs economies customer things that could be completed on the phone or on a PC and at the same time supported by a move to ‘intuitive’ websites. By the time the 2008 financial meltdown came, companies were already transforming costs and designing their organisations to do more with less. But, at what cost?

The UK Customer Satisfaction Index, which monitors consumer feedback across multiple sectors in B2C markets tracked steady growth in Satisfaction up until 2012, then it plateaued. The average peak being 78.2% Satisfaction. To July 2013 most organisations had seen a 1 point drop in their rating over the year. Now, there is a high end to the result range and there is a low end, but if we are looking at a cross section of the ecomony, the potential for 22% dissatisfaction is quite harrowing. As Service is delivered by your organisation and is not impacted by your Competitors, it’s like taking a pick axe and making your own holes in the ‘Bucket’.

The key linkage on satisfaction is whether a Customer will retain its relationship with you for the longer term and will they advocate (recommend) to buy from you next time. We can draw equal analogies for B2B markets, but if you are in these segments you may want to look at your own Satisfaction and Leakage results to see what the extent of the challenge might be in comparison.

So, let’s have a look at the case for Growth again, where all the hard-found monies will be spent in stimulating markets. You get all your employees excited for the extra push, but forget to secure the revenue base in your existing model. Growth will usually come at a discount on profit contribution. Your existing base would usually be richer in contribution. Add one final cost multiplier to the equation. Popular view across Marketers across the internet would suggest that the cost of a new Customer acquisition is 6-7 times that of retaining an existing Customer.

Growth is critical for economic recover and history will prove that we are great at innovating and communicating. However, this time let’s take a look at the whole end-to-end business model, define the changes and drive the whole organisation in one direction to deliver to the expectation of your customer offers.

Have a nice day.

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