Steps to Turn a Business Around

If you run a business that is struggling then I have a simple step by step process for you to follow that will make a huge difference. I will spell it out here and expand on each section over coming posts:

1. Create a compelling vision or goal for your business
2. Analyse where you are currently in relation to your vision
3. Set a strategic management plan to bridge the gap between where you are now and where you want to be
4. Set up a kpi system to track all the important key performance indicators so you know if you are on track or not
5. With the information create a balanced scorecard system to prioritise your energies (focus on the 20% that gives you the 80%)
6. Constantly monitor the information to ensure you are on track or not and adjust when necessary

There is much more detail neede than this but this is the outline, stay tuned for more.

More Balanced Scorecard Detail

As I have stated earlier, the balanced scorecard can be a very useful mechanism for keeping track of important information. If this system is set up correctly with thought and implemented with care then it can increase a businesses returns.

If your business has a strategic plan that you are happy with then that is a good head start, you can then use the balanced scorecard to implement this strategy. You will be able to compare the 'score' this month with last month, you can compare your business with others in the same industry (benchmarking).  This way you can track the effectiveness of your business overall or even the component parts of your business such as marketing for example. You might have key performance indicator of a set number of new leads acquired each month, if you have this target being met each month you should be on target to achieve your results, if you have the required conversion rate (another kpi).

The real value of the balanced scorecard is when it is used to weight the importance of kpis, or outputs of your business. If this element is truly understood and applied (rarely in business is this true) then it will revolutionise your results. This is because not all elements of a business or output of a department have the same impact on the results.

The balanced scorecard can really be this simple and powerful. Don't underestimate it.

The Balanced Scorecard Basics

I will today give you a bit of detail about the different aspects of The Balanced Scorecard which is a simple way of keeping track of progress towards your strategic vision and/or your kpi's.

What is this balanced scorecard? How can it help my business? Is it hard to understand? Is it difficult to implement? How is it going to help my business?

The answer could be yes to all of them! It varies and is determined by how well the system is planned, why you want to try it and how it is rolled out. When it is developed as strategic planning process it can unite an organisation behind a common vision of success and have people as a team and focussed on their progress to targets. It really should be more than just a scorecard it is a system, which is made up of strategy, processes and people.

The balanced scorecard was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework.  They describe it like this:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Their theory is that to map a company’s results purely on financial data is limiting and focussed on what has already happened. The balanced scorecard model looks at business centred on the vision and strategy with four commonly overlooked measures to track the progress towards the business goals. These categories are:

1. Internal processes to create total stakeholder satisfaction
2. Learning and Growth, ability to learn, adapt, be innovative
3. Customer focussed
4. Financial, a business must of course make a profit to exist.

In my next post I will expand on these 4 categories and the best way to implement The Balanced Scorecard system to increase your business efficiency and results.

KPI's and How to Track Performance

Ok in part two of my map to business success I am going to cover Key Performance Indicators (KPI) and how you can measure performance to track progress towards your business vision identified in your strategic plan. This is a very important concept for a business and one that is not easy to get correct. If you don't know whether you are closer or further away from your target you are wasting your time and money. As Harold Emerson succinctly put it " If you are not keeping score you are only practicing".

The vital aspect that is easily overlooked when developing a kpi system, performance management system is that there must be a connection between the strategy and the actual work the people are doing. That is do the actions of the staff get us closer to our target or not? If the strategy is set from the top and then handed down to all levels of the business there is no ownership of this process from the employees, no involvement and no belief. The other problem is that this link between strategy and daily work is less likely to be there, the strategy may be appropriate for the top echelon of the business and have a direct link to the work that is done at that level. As it is past down the organisation however it gets less and less relevant.

The answer to this problem is to get each level, team or department to establish their own mini version of the strategic plan. Analyse what they do, how they can measure it and then set targets that are relevant and meaningful to the members of that team (based on their input). This will ensure ownership and a unified team working towards a stretching target that if achieved will help the overall business achieve its vision.

That is why setting up a kpi system or performance measurement system needs to be carefully planned, implemented and communicated. It is like putting lots of puzzle pieces together to make a small picture and when all the small pictures are joined it creates a larger more detailed and rewarding image.

If any of this rings true and you have been struggling with implementing a kpi system or how to measure performance then visit Sacher Associates website. You will find an easy to follow systematic instruction manual to implement these systems that work and deliver stunning results. If you need help doing this Monty Sacher is available at a reasonable cost to help you.

Strategic Management is the key

One of the keys to a successful business is a well planned, thoughtful strategic management plan. This plan must involve:

1. a really clear vision of where you want the business to be in a set time frame
2. a check on how the business is currently tracking towards that vision or goal
3. an objective look at the business and what it does. Why does this business exist?
4. What does this business value?
5. A review of current strengths, opportunities, threats and weaknesses
6. Develop the plan with all this info

It is vital  to consider the often forgotten elements in this process, the staff and the customers. It is easy to say you value them, but do you really? Do you include them in your strategic plan? Your plan should aim for total stakeholder satisfaction. You should involve your staff in the process, get their input, value it, as they are the true experts at their job. They know what happens day to day, what works what doesn't. If you get them involved they will appreciate it, they will engage with the process and be an 'owner' of the process and really work with you in a unified sense of direction.

If you embrace this you will be amazed at the results that can be achieved. I have been privileged enough to have a business mentor (Monty Sacher) who took me through this process in a series of workshops with team members developing their own mini strategic plans for their departments, which all contributed to the overall business goal. The process started with identifying the outputs of the job (or business), that is what the department or business produced, measures (how to measure the output) and targets to stretch the team and business to greater achievement. The enthusiasm and camaraderie at those workshops was some of the most rewarding I have been involved in over my 20 year career in management. The results have been beyond expectation both from a financial point of view but a human growth and satisfaction point of view. This is a transformational process for your business if you implement it properly.

This has been a very brief summary and introduction to this philosophy, to find out more about implementing a strategic management plan that works stay tuned for more from me and visit my mentor's website here: Sacher Associates.

Let me know what you think below. Let's start a business revolution from the ground up!

Bye for now.

Geoff