conference the 24 golden rules to turn a profit from a business 09 03 12

Executive Education

The 24 golden rules to organize a business that works

Executive Education

A one-day seminar for managers

Experienced managers apply a limited number of rules to run a business unit

These favorite business rules have costs and benefits

This workshop will permit participants to select the right rules to apply in their particular situation

Executive Education

What’s a business unit

Making and selling things to a market for

a profit

Applicable to • A public or a private

organization• An internal unit or an

external unit

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The four categories of rules

Strategy rules to thrive on competition

Marketing rules for customer satisfaction, for volumes and quality

Operations rules for costs and productivity management, for delegation to human or technical resources

Control rules for financial profit and brand building

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The rules, step-by-stepProtect the profit from the start• Write the local strategic plan

Place the customer first• Write the local marketing plan

Organize the work for a target quality• Describe the projects and the

processes• Make the personnel aware of

their responsibilities

Increase sales• Write the management

plan

Decrease costs• Simplify the unit• Adapt the unit

Control everything• Create the unit’s

scoreboard• Reorganize the internal

accounts of the unit

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The list of rules

•B-rules, rules of thumb, executive automatic intelligence, quick fixes…

A bunch of names

•Business is not that simple

•If you are a genius, forget them and follow your guts

•It’s a starting point, you will outperform them soon

Don’t forget

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Debate for each rule

What are the benefits ?

What are the costs and limitations ?

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Step 1.

THE STRATEGY RULES

To thrive on competition

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Select a clear strategy

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The business rule

Make a clear choice on what’s your competitive advantage

• Operational excellence, low cost• Marketing and customer

orientation• Innovation, high tech, luxury

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Improve your “Sales From New” performance indicator

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The business rule

Set a clear target for sales revenues from

• New customers• New products• New channels• New technology• New suppliers• New partnership, alliances

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Follow a strict process to collect ideas for innovation

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The business rule

A strict process to ask for ideas to

• Suppliers• Customers• Employees• Competitors

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Always compare to the best

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The business rules

Organize internal and external

benchmarking

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Steal a good idea to a competitor

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The business rule

Steal a good idea to a

competitor

Improve the product

Outperform the

competitor

• By investing more cash

• By more marketing

• By more forces in sales

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Step 2.

THE MARKETING RULES

For customer satisfaction, for volumes and for quality

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Sell first, produce after

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The business rule

Demo first, contract second, code line after

• Ask for bigger down payment, for delivery delay

• Build to order• Just-in-time production• Produce only what’s already sold

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Producing with customers’ money ?

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Producing with the money of the customer

Books Building

Transportation: bigger or smaller plane depending

on booking

Events: cancellation for

low booking

Furniture, computers: build

to order

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Frontalize the company, subcontract operations

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The business rule

Turn a technicians business into a marketing business

•Delegate, subcontract operations

•All employees should sell

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Measure constantly the Customer Satisfaction Index

Executive Education

The business rule

Measure the Customer Satisfaction Index on an on-going basis, per customer segment, on selected product specifications

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Organize internal customership

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Step 3.

THE OPERATIONS RULES

For costs and productivityFor delegation to human or technical

resources

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Give more to the best and less to the worst

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The business rule

Regularly: quarterly

Give more: budget,

responsibilities,..

To the best: employees,

activities

And less: budget,

responsibilities,…

To the worst: employees,

activities

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Each year abandon 5 % of your less profitable suppliers, customers,

employees or activities

Executive Education

The business rules

Businesses are build case per case and their complexity increases with years. Simplify it

regularly

Analyze the return per customer, employee,..

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Allow no activities outside a project or a process

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The business rule

Projects and processes are customer-oriented

Projects and processes are easy to delegate and control with the

project and the process master document

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Constantly reduce costs per automation, per delocalization and

per subcontracting

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The business rule

For cost leadership on competitors

•Automate•Sub-contract•Delocalize

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Different methods

Abandon the less profitable activities

Decrease suppliers bills by

centralization, negotiation,…

Collecting the employees

suggestions to reduce the costs

Subcontract activities

Turn activities into procedures

Sign partnerships for economy of

scale

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Measure the sales activities

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The business rule

Measure and pay people on sales

activities

Increase the Time Facing Customer

performance indicator

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Variabilize and flexibilize all costs and assets

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The business rule

Match your flexibility with the market

flexibility

• People flexibility• Machine flexibility• Contracts flexibility• Suppliers flexibility

Increase the versatility of your

pricing policy

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Optimize your Resources Occupation Rates

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The business rule

Calculate the capacities

• Maximal• Minimal• Optimal

Of all your resources

• Employees• Machines• Floors

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Organize a flat structure, downsize middle management

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The business rule

Delayer the business to be more reactive

Middle managers are less useful• First line manager are self

managing by clear accountability

• Reporting is automated

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Improve your indicator “Gains From Processing”

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The business rule

Start an activity as a project to check the feasibility to reach a

quality objective

Turn the project into a process to reduce the costs and delays at stable quality level

Streamline the process regularly

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Organize the leadership

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The business rule

People need directions, vision,

… select only a few KPIs

Place your scoreboard in their

sight

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Measure the Employee Satisfaction Index

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The business rule

Satisfied employees are more productive

Measure regularly a critical satisfaction

factors with a selected category of employees.

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Step 4.

THE CONTROL RULES

For financial profit and brand building

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Measure everything

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The business rule

No crime to knowAim for a fully

transparent unit, project…

Modern ERPs provide

information at no additional costs

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Finance all investments with the gains from abandoned activities

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The business rule

Finance all new activities with the gains from

abandoned old activities, for at least

50 %

Avoid stretching your cash. Its easier to engage

a new activity than to stop an old activity

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Improve your indicator Return on Critical Resources

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The business rule

What’s your most critical resource, asset

• Equipment ?• People ?• Brand ?• Technology ?

What’s its

• Return ? • Occupation rate? • Productivity ?

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The business rule

Calculate the return

• Per project• Per process• Per customer segment• Per distribution channel

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Protect your profit from the start, buy low

Executive Education

The business rule

Make your profit when you buy, when you are strong, not when you

sell, when you are weak

Constantly try to reduce all suppliers bills and COGS : work hours,

energy…

Supply with the cheapest way : rent or

make or buy

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Stop allocating budgets, ask managers for their business plans

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The business rule

Start with zero budgeting

Roll your budgets quarterly

Ask managers if they need more and what return they promise if they get that

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Create smaller responsibility centers

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The business rule

Each team should produce a valuable, merchandisable, tangible product or service, internally or externally

Turn cost centers into profit centers with the internal customership method

Reduce the size of the profit centers

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Conclusions

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Take home point

You can do better with a simple

discipline, applying some rules

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Do not forget

All those rules are common sense and

business proved, but business is not so

simple

Be selective, some rules do not apply to your current situation

Executive Education

Thanks for your patience with me

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