Tag: visual strategy

Businesses Need To Stay In Shape To Qualify For Loans

Written by Des Kirby on . Posted in Blog, Leadership Development. Leave a Comment

Recently the Bank of Ireland approved €1.2Bn in new credit for SMEs in the first quarter of the year. But businesses need to stay in shape to qualify for loans in terms of structure and strategy, as well as being efficient in their daily operations. Business advisor John Raftery explains why focusing on the bigger picture is crucial for companies seeking funding to grow their companies.

John why is it important for businesses to be in good health all the time to access funds?

Many companies don’t think about getting themselves into the right shape until they want to access funds, or put themselves on the market to sell the business. I would argue that companies need be in the right shape all the time, right throughout their lifespan. By that I mean companies need a very clear set of performance metrics that drive the company’s performance. These KPIs need to be visible and shared with as many of the staff as possible, if not the entire workforce.

In order to get to that point quite a lot of work needs to be done to make sure you are measuring the right things i.e. your KPIs are the correct ones. This goes back to what I’ve learned from working with SMEs throughout Ireland; that information is assumed to be available but often the information is in people’s heads or it’s stored away on laptops or in spreadsheets. Various individuals have certain pieces of the information, but there isn’t one overall document or format containing all the information for everybody to follow.

A lack of focus on the big picture

A lot of companies are very busy with day to day operations delivering their products and services. This ‘busy’ environment results in a lack of focus on the big picture. I think innately companies know they need to address that issue. They are aware they need to be better organised and create more efficiencies and focus more on the bigger picture, and they need access to information more readily. It’s always in the back of their minds to do that but they never get around to doing it because day-to- day activities take over and a lot of firefighting takes place. One of the reasons so many companies end up firefighting problems is because they don’t take the time to stand back and look at the bigger picture, and get themselves organised and more focused.

What are the consequences for companies who don’t share information like KPIs?
The consequences are more and more inefficiencies, a lack of communication between people and tasks getting completed with the same issues and problems arising again and again. A lot of companies are solving the same problem repeatedly without ever taking the time to do some root cause analysis. Information is often misinterpreted; people assume that what they are doing is the right thing.

For example, I was working with a white goods company who had a team of engineers taking care of service repairs. But the information regarding each engineer’s call out performance was not relayed back to management. It turned out that the first-time repair rate of the engineers was very poor, somewhere between 55 – 60{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4}. The company owner never took the time to step back and examine that first time call-out rate because he was too busy firefighting problems within the business. As a result there were a lot of issues around this from customer complaints to rescheduling of visits, wasted time and problems with availability of materials. The company was very busy but unless they share information and step back to analyse and understand that information properly, and understand the issues that are causing the poor performance, they won’t be able to find the right solutions.

So companies can appear to be very busy but they‘re busy doing all the wrong things.

Yes, ‘busy fools’ is a term often used to describe companies in that situation. I always get uncomfortable when I see a company whose staff are doing a lot of firefighting. Now firefighting may be understandable sometimes when a business is going through a particularly busy period, or something dramatic has happened to the business. But firefighting should only be carried out for a short period of time. Then it should be back to normality, back to the organisation’s disciplined behaviours by everybody in the business. Unfortunately some companies are firefighting all the time. Some people even derive satisfaction from firefighting; they say a good firefighter always carries his own box of matches. There are people who think of themselves as heroes – MacGyver types – who like dramatic solutions, rescuing a situation and pulling it out of the fire.

Company Culture

It’s all to do with the culture of the organisation. You can walk into some businesses and everything is very calm because it’s very well organised. People know exactly what they are about and what they are required to do. If you ask them to report on their activities they can articulate exactly what their roles and responsibilities are, and tell you the performance of their department in relation to the overall performance of the business. You go into other companies and they tell you their tale of woe, how busy they are and all the hours they’re working, how they can’t take a holiday, the stress etc. But they are all over the place, there is no central core in the organisation to keep them focused and no disciplined approach that gets them to report back on a regular basis.

What solutions can you offer companies that are stuck in firefighting mode?

Well LEAP has a product called futureSME which is a business solution developed by researchers at the University of Stratclyde using European Union funding. It takes the best practice methodologies of the most successful large companies from around the world and applies them to small and medium enterprises. The futureSME method is the ideal tool to help businesses achieve clarity about their current performance and their vision for the company.

The methodology is divided into two sections

1. Visual Strategy
The first section looks at visual strategy which is about creating a vision for the company, and understanding what the company mission is in terms of its values and behaviours. It also examines the business model by performing a SWOT analysis to help business owners and senior managers create a clear strategy for the business going forward, and understand what their priorities are.

2. Visual Management
Once that company vision has been clarified you can move to the second step which is about visual management. This is where you set four or five goals for the company and those goals have to be succinct and clearly articulated and, most importantly of all, they must be measureable. Without measurement the staff and management teams won’t be able to gauge if progress is being made or not. You then need to create lines of action which prioritize various activities of the company. You assign owners to those activities and set timelines for completion of activities and outcomes. You also look at what type of results those activities will bring you in terms of efficiencies or cost savings. You will then be able to measure progress against your goals by using those lines of activities. Most importantly you will be able to use KPIs that will tell you if you are on track or not. Visual management will allow you to see where you are successful, but also tell you where you are falling behind and who is responsible.

Management Discipline

Once you have a clear set of KPIs they will drive performance of the company. But what you really need to underpin all of that is management discipline. The management team should meet on a regular basis, weekly or monthly, to review overall performance using the visual management tools. They should review the same things each month like their sales pipeline, their customer service performance, financial performance, operations and staff performance.

You have to have a very disciplined approach to it so that you are continuously monitoring your performance and progress in relation to your goals. If you want to approach a bank to raise cash then the bank can see very clearly how the company is performing. They can see what its direction is, what its goals are, what its strategy is. Rather than deciding that you need money and then creating more work for yourself by developing some business plan on-the-fly to get funding from the bank. That is not the most effective use of people’s time.

Are companies more likely to qualify for loans if they provide evidence of a visual strategy?

Well it’s not the only factor. They also take into account the market the business is in, that also has an influence. But if you require the money for investment because you believe you can improve your business performance, then you will need to be able to articulate what your strategy is, what your current performance is, what your goals are and what you are tracking to measure those goals. So it’s not the only factor but it’s a vital one to get right.

Why should business owners contact LEAP before trying to access funds?

We help businesses get into the right shape so they can access the funds they need to grow. LEAP is the sole licensed provider for delivering the futureSME business model to companies in Ireland. We have an excellent record of transforming businesses particularly in the SME sector. The tools we use were designed specifically for SMEs, and we have a very experienced business team who have worked with a wide variety of companies around the country.

Successful Teams Use Visual Management

Written by Des Kirby on . Posted in Blog, Management Development. Leave a Comment

What is Visual Management?

Successful teams use visual management_John RafteryHow do you go about developing a visual management system within your business? In our continuing series of visual management training articles, John Raftery delves deeper into the process of visual mapping. Here he discusses how management teams can use visual tools to help them display company goals and the actions that underpin them. Visual aids such as Gantt charts and bar graphs keep management teams focused on strategy and accountable for results.

Visual Strategy

‘I work with management teams and generally what we start with is getting the top 3 – 5 goals of the company articulated. Then under each of those goals we would discuss the strategies needed in order to achieve those goals. The strategies then have to be turned into clear lines of action. If you can imagine a large whiteboard or notice board that has lines of action, as in the form of a Gantt Chart. On the left hand side you have the lines of action, in other words the actions that need to be taken in order to achieve the top level goals. The next column will list the owners of those actions, in other words the people responsible for implementing the agreed actions.

Tracking Activities

There may also be a timeline that could be divided up into 52 weeks or 12 months or whatever is appropriate for that particular team. The chart will show when the various actions are going to occur, and you can flag the actions with a colour coded ‘traffic light’ system. Green means that the action is on target, orange indicates that the action is in difficulty or has been delayed or is still in progress, and red flags indicate the action has not been completed within the time frame agreed.

Gantt Chart_successful teams use visual management

Creating Accountability

This is a very simple but clear mechanism that allows the team to see clearly what activities are taking place within the company, who’s doing what and what progress is being made. The information is displayed on one large whiteboard, and alongside this you can display key performance indicators (KPI) in the form of bar graphs which will indicate how well your lines of action are affecting the performance of the business. Tracking these KPIs is crucial for identifying which lines of action are working and which ones need adjusting.’

 

How does futureSME come alive in a business?

Written by Des Kirby on . Posted in Blog, Leadership Development. Leave a Comment

LEAP’s Tricia Cunningham explains the advantages for small and mediumTricia Cunningham
enterprises (SME) participating in development programmes using the futureSME methodology. This business framework was the result of an €8 million EU research project that was successfully carried out by the University of Strathclyde and tried and tested on SMEs across Europe.

Tricia, how does futureSME come alive in a business?

One of the critical tools that we explore in the programme workshops is ‘thinking as one brain.’ We try to get the leaders and managers to understand what they need to put in place to ensure the team are in sync, and implement this in the workplace. So the teams work through how they can develop the team to think as one brain, and understand what the guidelines are for managing team meetings effectively.  That way they can work through information quickly, succinctly and cohesively.

Meetings become productive and employees walk away from the meetings with a clear understanding of what has been discussed, what has been decided, and they are clear about any actions that need to be taken.

We also explore any issues of dissent; when you are trying to implement the visual strategy there are times when the team will encounter road blocks i.e. challenges that have to be overcome. We explore what you can do to ensure that those obstacles can be overcome.

Implementation is Critical

Many times in the SME sector you are working with small teams because there aren’t that many layers in the organisation. You have the business owner and key employees as opposed to a team of managers. But it’s still vitally important that these key people make it happen.

So the leader and the key people have to decide how they are going to work effectively together, to ensure the visual strategy comes alive and achieves the desired results. Having the visual strategy alone will not ensure success. Having the visual strategy, and working together as one brain, will ensure that you make progress in achieving your business goals.

How many workshops are on the programme?

There are 6 workshops on the programme; the first 4 are focused on developing the visual strategy, and also examining the leader’s role to ensure he/she is functioning properly as a leader in their business. Then we look at the roles of the rest of the team in terms of implementation. So the first half of the programme develops the visual strategy; the second half looks at getting the team on board and moving them along that strategy.

Is there any support system on the programme for participating companies?

Mentoring is an important element on the programme, so at the start of the programme we do a capability diagnostic to assess where the business is today, and that’s completed with the mentor. There are 6 mentoring sessions in total.

On the Business Leadership Programme  they are 6 mentoring sessions for each business owner, and on the Management Team Development Programme there are team mentoring sessions.  So you might have three people from one business and they will have one mentoring session after each workshop.

Why would you recommend this programme over others Tricia?

It’s based on intensive research on large successful corporations by the EU Framework 7 project . These programmes have been proven to work, they’ve been validated. They have been used by large organisations to succeed, and they have been translated in a way that is workable and practical in an SME environment.

It’s also different from other programmes because it comes with qualified mentors. They fully understand the futureSME process, they understand small and medium businesses, and they know what it’s like for a leader trying to transform their business.

They work closely with the participating companies. So you have that individual element in the workshops where people can exchange ideas, share their understanding, and then the individual can apply what they learn to their own company. That’s what makes the difference, and that’s what makes it so successful.

 

 

What is the futureSME Visual Strategy

Written by Des Kirby on . Posted in Blog, Leadership Development. Leave a Comment

“The best way to predict the future is to create it,” said Peter Drucker, a man who knew a thing or two about management theory and practice. We are currently hearing some commentators speak of the  green shoots of economic recovery, which beckons some crucial questions for small to medium enterprises (SME). Are they in the right position to avail of the economic recovery? Are the managing directors and senior managers busy creating their company’s future, or are they stuck in fire-fighting mode? LEAP’s Mike Gaffney explains why a lack of clarity regarding business goals could be the biggest threat to recovery for many SMEs, and how the futureSME visual strategy methodology can solve this problem. But what is the futureSME visual strategy?

Mike why is it so hard to apply proven business theory to business practice?
A good friend of mine who has been in business for many years, said to me ‘Mike the theory is fantastic but how do I work around my lack of discipline?’ In essence the challenge he is faced with is that he has certain ways of doing things, some effective some ineffective. He has certain habits and his management team work around his habits, to the detriment of bedding down best business practices and disciplines in the organisation. So the challenge is to build the disciplines and practices independent of the managing director of the company.

What exactly are best practices?
There are literally hundreds of business methodologies, tools and techniques that can be applied to business. Recently LEAP commenced collaboration with futureSME, a European-wide research project, whose purpose was to right-size proven business methodologies that have worked in larger organizations, and make them applicable to the SME sector. The futureSME methodologies are a very effective way to enable organisations to apply disciplines, and develop new habits through application of those disciplines, that bypass the nuances of the senior people in the organisation, particularly the owner.

In terms of best practice what are business owners doing wrong?
The biggest challenge they have is keeping a strategic focus and how to develop the business on an on-going basis to make sure the business is progressing.  The owner is in fire-fighting mode, the senior team are in the same place. There is no head space to ask are we doing the right things, and can we do things better?  There is plenty of energy and commitment by the team, but there is a lack clarity and a corresponding lack of application of best business practices.

So how can the MDs and management teams help themselves to change their behaviours? They have to develop new habits, and the best way to do that is to apply methodologies that fit easily within the business. Over time these methodologies will engender new disciplines, and new ways of conducting their business which will lead to a positive cycle of improvement.

Is futureSME a one-size-fits-all model for SMEs?
Through futureSME a foundation programme has been developed with the specific intent of pulling business owners, and senior managers, away from day-to-day operations. It uses visual strategy mapping as a key component in getting them to see their business in a new light. To develop disciplines regarding strategy in a visual manner that helps to create momentum in a more productive manner than the current ad-hoc, fire-fighting approach.

Is visual strategy mapping something new?
It’s not new but what futureSME has done very well is bundle a number of different methodologies into one strategy map, with a supporting implementation plan as well. This bundling of existing methodologies is right-sized for application to the SME, so after just 6 half-day workshops there is a clear on-the-wall visual strategy for their business. Clear goals are identified with specific actions attached to each goal; again it’s on the wall, its visually alive, which ensures that the MD and the management team can’t dodge the bullet of implementing the strategy that has been defined.

How will futureSME benefit company owners and senior managers out there?
The number one thing the leader has to provide is clarity. The visual strategy map provides that clarity. Where we go with the business, how are we going to get there and who does what. It’s not just a compelling vision, we also go through the business model canvass which addresses every business dimension from customer segments and types, to channels to key resources, activities and partners.

But we do a very rigorous appraisal of where the business is as well. We clarify where the business wants to get to, we get the decision makers to commit to clear values and a mission statement that is real and not just aspirational. Then back up that top level with specific goals that will progress the company to achieve this vision and support those goals. What are the actions, who will do them and by when?  It’s a very powerful mechanism to keep the wheels of the business turning towards an agreed vision for where the business needs to get to within a stated time-frame.

So it’s about helping businesses thrive in the long term?
Absolutely, if all you have been doing for the last five years is fighting to survive, there comes a point where that’s all you understand. All the habits and disciplines are built around how to survive. How to thrive can get lost, because the training regime and best practice habits are not geared for growth.

We forget and underestimate that the human brain is a self-patterning system. It will see its perception as reality. If it perceives things are a certain way and has to stay in survival mode, it will never look for a broader perspective in terms of opportunities to grow. Companies that have gotten this far are now in a good position to avail of the growth opportunities that are making a faint appearance on the horizon.