Three Keys to Maximum Business Performance
While people have been impacted by globalization, technology, and other circumstances, achieving business success has not changed. Over time, you will need to discuss changing conditions and have a robust operating system maneuvering these issues. But I have concluded that while most entrepreneurs pride themselves on their speed in getting things done, I see them running in circles. More creative entrepreneurs may make lots of rapid right turns instead of circles. Still, they find themselves in the same place and with the same problems as the people running in circles, never achieving acceleration.
The Difference Between Speed, Velocity, and Acceleration!
Acceleration in performance should be the goal of all leaders. Most people use the words speed, velocity, and acceleration interchangeably. However, these are three different outcomes. Speed defines how much distance has been covered in a particular timeframe. Velocity is the rate of change of distance in a particular direction concerning time. And acceleration is the rate of increase in velocity. Great companies achieve far greater velocity than “good” companies.
Every Business Has the Same Fifteen Leaks
As I wrote in my first best-selling book, Your Business is A Leaky Bucket, there are fifteen ways every business is leaking growth and profits. The bigger the business, the bigger the leaks. No business is immune. The odd part is that you likely already know you have the leaks. And, all fifteen leaks had a centering cause…leadership. They result from poor leadership. These leaks individually and collectively slow velocity, and large leaks can cause demise in your business. My book helps you identify and quantify the leaks. More importantly, I prescribed how to address each leak. Average companies achieve speed, good companies achieve velocity, and great companies achieve acceleration. The latter spend specific leadership time narrowing the fifteen leaks.
Leaders I work with are stunned when they realize how easily they can improve a business. But are often surprised by the dollar value in the improvements. However, easy does not equal simple. It takes discipline to work on the business rather than in it. It takes perseverance to stick to your plans and focus on a limited number of objectives while saying “no” to others. It takes rigor to drive excellence.
The Three Primary Reason Business Leaks Occur
There are three primary reasons why those leaks continue to recur throughout the life of your business:
1. Mediocrity—You know your organization and people are capable of more, but you allow average to become the standard for your business. Sometimes, this happens because you attempted but failed to raise the bar in the past. There is also a tendency to compare your business to industry norms and become comfortable if it’s doing better than the industry average—even if that industry average is a massive bottleneck in your business. Accepting the lower standard may be common in your industry, so you accept it, too. For example, high turnover has become the accepted norm in certain positions in some industries. But excessive turnover is a significant drag on a company’s ability to grow and scale. Ask yourself, how often have you taken too long to replace someone you know is not capable of doing his or her job? These are examples of accepting mediocrity!
2. Mastery—It takes discipline and perseverance to continually improve and address the issues that cause slower growth, lower profitability, and cause leaders to be tied to their work. Let’s be honest; when you started your career, were you thinking, “I am going to be a master craftsman at culture, team cohesiveness, strategy, people, execution, and cash systems?” Each of those areas requires skills and knowledge, continuous learning, and continuously increasing your level of mastery. However, as your business grows, so do the challenges in these areas. The typical leader would prefer to focus on industry knowledge, serving customers, and making better products and services rather than think about, discuss, and address those other, less tangible issues. In reality, culture, team cohesiveness, strategy, people, execution, and cash are the business operating systems that you use to run your business.
3. Invisibility—Financial statements do not capture the substantial costs of the weaknesses in your business operating system. Generally accepted accounting principles are only designed to capture actual transactions, assets, and liabilities. There is not a place in accounting principles to capture the cost of mediocrity and lack of mastery. Like most leaders, you do not go out of your way to quantify these costs. Here are some examples of mediocrity that should be monitored and will not be found in your financial statements:
– The cost of keeping underperformers
– The cost of lost sales because of mistakes in the sales process
– The cost of customers who left because of their disappointment with your quality and bad processes
– The cost of a bad strategy leading to higher customer turnover or slower customer growth
There are no financial statement line items for these costs, yet they exist in every business. Such losses are much more significant than you want to face, so you don’t! You are complacent with being good enough, especially if you are growing rapidly and profitably.
To succeed in business, leaders must have a business operating system and toolkit that help them work on the business in a way that allows their team members to make clear decisions and act regardless of the noise. Success is the result of your commitment to that system and how well you use the tools that support it. For the past 100 years and into the next 100, you will find that business challenges are the consequence of how effectively leaders handle these six operating systems:
(2) Team Cohesiveness