Companies often struggle with taking a project from concept to execution. According to an article written by Booz Allen Hamilton titled “Performance Improvement Initiatives,” a staggering 40% of these projects fail to deliver on their promises. But there is good news for companies interested in boosting their success on project implementation. Making a few changes on how you approach your projects can improve your implementation success rate.
For example, companies can improve their success rate by strategically planning implementation, partnering with front line employees, assembling a team of employees to monitor the plan’s success and responding quickly to challenges.
Struggles with Implementation
Successfully implementing a project is one of the most difficult challenges. This is because once ideas move from the concept phase to implementation; there are many opportunities for challenges. For example, current processes, employee functions and technology capacity can all create issues.
Companies can also experience issues with communication; resulting from disorganized leadership. And if your company operates in silos (where employees aren’t fully aware of their connection to other business units) this can pose an additional set of problems.
The solution to these issues is using a systematic approach to bringing your project from concept to implementation. Booz Allen Hamilton’s article suggests focusing on implementation in a strategic order to drive up project success.
Successful companies use a three pronged approach; focusing on the order of implementation, controlling front-line employee behavior and developing successful project management techniques.
Focusing on Implementation Order
The first step in designing a successful implementation strategy is focusing on which steps need to occur to implement your project. Carefully develop each actionable step, to understand any potential issues with project implementation plans.
Once you’ve created a list of actable steps, carefully evaluate each step to determine which actions should happen first. To make your implementation plan most effective, talk with affected business unit leaders. Discuss any potential challenges that may occur during a given step. And if challenges are present, discuss what solutions are needed before implementation. Then, move the actionable item further down the timeline; allowing the business unit manager to resolve the issue while your are working on other steps.
Your plan also needs to be flexible to change. During the implementation process, changes will occur – threatening to put a halt to your project. Design a plan that is flexible enough to accommodate these changes – allowing you to work around the issue. This will assist in avoiding delays on your project delivery date.
This process allows you to identify possible issues, such as staffing or technology capability challenges, and create a plan for resolving those issues without bogging down the entire implementation process. It also allows communication to flow between those managing the project, and the business units affected by the implementation plan.
Front-Line Employee Behavior
Anticipating your front-line employee behavior will allow you to design rewards for desired behavior. Since front line employees play an integral part in a company’s success, you need them to be on board with the project.
Determine what steps are needed to get these employees up to speed on the project and how to motivate them to achieve the desired result.For some employees, this may involve monetary compensation like a cash bonus tied to performance. While other employees are motivated by winning extra vacation days or having public recognition of their achievements. Exam your group to determine which types of rewards are most appealing.
On the flip side, you’ll also need to consider consequences for undesirable reactions to the project. Anticipate these behaviors and devise plans to deal with these issues if employees decide to be resistant to change – and how to ensure compliance for new procedures or protocols.
Project Management
Busy executives don’t have time to monitor the daily implantation of a project. For this reason, it’s important to designate a project manger or entire team devoted to implementing the project.
The team should have a project manager, capable of driving action and delivering success. Avoid choosing leaders that are easily persuaded or distracted. Instead, select a leader who has excellent negotiation skills and a proven record of driving results.
Also, choose project team members that represent different business units of your organization. This will allow you to gain collective insight into any project challenges. These individuals can also assist in working across business unit borders for successful implementation.
Making a few simple changes to how your company approaches project implementation can allow your business to increase the percentage of successful projects. And once you’ve modified current strategies, you’ll become more efficient in project implementation and enjoy the benefits of increased performance.
Resource:
Eser Becer, Brian Hage, Matt McKenna and Herve Wilczynski. “Performance-Improvement Initiatives.” Booz Allen Hamilton.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Monday, March 23, 2009
Leadership of the Future: Strategies for Success
Talented leaders are the backbone of a company; developing strategic initiatives to grow and preserve the business. However, with competition in the marketplace growing fiercer than ever, companies need to focus on creating management programs that develop leaders with the necessary skills for success. Building in-house programs to train and develop leaders will result in enhanced performance and increased revenue potential.
According to the McKinsey Global Survey Results, six important leadership skills are essential to a company’s future success. These areas include challenging assumptions, encouraging risk taking, inspiring employees, clearly defining expectations, rewarding achievements and participative decision-making. Focusing on these areas can assist with positioning your company for future success.
Challenging Assumptions
A company can become “stuck” when leaders are not willing to challenge current assumptions. This can hamper the creative process; discouraging the growth of new ideas that are outside of normal assumptions. Encourage leaders to think beyond the constraints of traditional assumptions. Incorporating this management strategy can foster both manager and employee innovation.
Encourage Risk Taking
Future leaders should be trained to incorporate strategies for risk taking. This is because taking the right risks can payoff with increased revenue and market share. Train your executives to get out of the “safe zone,” and consider new opportunities – like considering an acquisitions or a merger to break into a new market; or expanding products and services to reach underserved market segments.
Inspiring Employees
Once a leader has designed innovative strategies, it is important to inspire employees to get behind implementation efforts. In most cases, managers will need to reach out to front-line employees who personally serve customers. These employees are a key component to success because of their ability to impact customers directly.
Employees need to feel empowered by their ability to drive the company’s success – and managers must inspire them to want to put forth the effort. This requires unique strategies designed to forge a partnership between employees and management.
You can also inspire employees by creating a desirable work atmosphere to boost morale and foster a team environment. Also, consider designing a plan to reward valuable employee contributions. This could include a special employee recognition program tied to performance.
Clearly Define Expectations
When designing successful leadership strategies, it is important to clearly define expectations for employees. When employees understand what is expected of them (and have the tools to achieve the desired goals), job satisfaction is greatly improved. Also, provide a clear roadmap to success, and tie rewards to desired results. This will reinforce employee expectations. Even making simple changes, such as scheduling regular annual reviews, and creating individual benchmarks, can impact a company’s success.
Rewarding Achievement
Successful leaders also need to focus on rewarding employee achievements. Successful incentives take into consideration what motivates a group of employees. For example, some employees will be motivated by monetary compensation or gift cards. Moreover, other groups of employees will be most satisfied with extra vacation days or a more flexible working schedule. Some employees will prefer personal recognition in front of their peers, or a special lunch with their manager. Choose a plan best suited for your working group to drive up job satisfaction and motivate employees to want to meet company goals.
Participative Decision Making
Future leaders of successful organizations should focus on cultivating a participative decision making environment. Participative decision-making is an effective strategy because a leader does not always have the foresight to anticipate all challenges when making a decision. Engaging others in the decision making process allows the executive to tap into an individual's unique talents. For example, a direct manager of the affected business unit may have valuable insight the senior manager has not anticipated.
A participative decision maker will consider all input, then make the final decision; accepting full responsibility for any consequences resulting from that decision.
Creating a Corporate Training Plan
According to the McKinsey Survey, companies interested in maximizing their success should consider implementing a corporate management-training plan. This allows executives to teach management principles that are most effective in their environment. Although these principles may deviate from an individual’s management style, those who participated in the McKinsey Survey reported that when implementing these strategies, they became better managers.
Management Style to Avoid
When creating a corporate management program, avoid individualistic decision-making strategies. This type of strategy tends to be less successful and does not foster a team environment. Instead, focus on creating a team environment by encouraging the upward flow of communication.
Developing managers who encompass the leadership qualities of the future will allow your company to gain momentum and rise above the competition. In addition, employees will appreciate consistency among managers, and enjoy a team driven work environment.
Resource:
“Leadership for the Future.” McKinsey Global Survey Results.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
According to the McKinsey Global Survey Results, six important leadership skills are essential to a company’s future success. These areas include challenging assumptions, encouraging risk taking, inspiring employees, clearly defining expectations, rewarding achievements and participative decision-making. Focusing on these areas can assist with positioning your company for future success.
Challenging Assumptions
A company can become “stuck” when leaders are not willing to challenge current assumptions. This can hamper the creative process; discouraging the growth of new ideas that are outside of normal assumptions. Encourage leaders to think beyond the constraints of traditional assumptions. Incorporating this management strategy can foster both manager and employee innovation.
Encourage Risk Taking
Future leaders should be trained to incorporate strategies for risk taking. This is because taking the right risks can payoff with increased revenue and market share. Train your executives to get out of the “safe zone,” and consider new opportunities – like considering an acquisitions or a merger to break into a new market; or expanding products and services to reach underserved market segments.
Inspiring Employees
Once a leader has designed innovative strategies, it is important to inspire employees to get behind implementation efforts. In most cases, managers will need to reach out to front-line employees who personally serve customers. These employees are a key component to success because of their ability to impact customers directly.
Employees need to feel empowered by their ability to drive the company’s success – and managers must inspire them to want to put forth the effort. This requires unique strategies designed to forge a partnership between employees and management.
You can also inspire employees by creating a desirable work atmosphere to boost morale and foster a team environment. Also, consider designing a plan to reward valuable employee contributions. This could include a special employee recognition program tied to performance.
Clearly Define Expectations
When designing successful leadership strategies, it is important to clearly define expectations for employees. When employees understand what is expected of them (and have the tools to achieve the desired goals), job satisfaction is greatly improved. Also, provide a clear roadmap to success, and tie rewards to desired results. This will reinforce employee expectations. Even making simple changes, such as scheduling regular annual reviews, and creating individual benchmarks, can impact a company’s success.
Rewarding Achievement
Successful leaders also need to focus on rewarding employee achievements. Successful incentives take into consideration what motivates a group of employees. For example, some employees will be motivated by monetary compensation or gift cards. Moreover, other groups of employees will be most satisfied with extra vacation days or a more flexible working schedule. Some employees will prefer personal recognition in front of their peers, or a special lunch with their manager. Choose a plan best suited for your working group to drive up job satisfaction and motivate employees to want to meet company goals.
Participative Decision Making
Future leaders of successful organizations should focus on cultivating a participative decision making environment. Participative decision-making is an effective strategy because a leader does not always have the foresight to anticipate all challenges when making a decision. Engaging others in the decision making process allows the executive to tap into an individual's unique talents. For example, a direct manager of the affected business unit may have valuable insight the senior manager has not anticipated.
A participative decision maker will consider all input, then make the final decision; accepting full responsibility for any consequences resulting from that decision.
Creating a Corporate Training Plan
According to the McKinsey Survey, companies interested in maximizing their success should consider implementing a corporate management-training plan. This allows executives to teach management principles that are most effective in their environment. Although these principles may deviate from an individual’s management style, those who participated in the McKinsey Survey reported that when implementing these strategies, they became better managers.
Management Style to Avoid
When creating a corporate management program, avoid individualistic decision-making strategies. This type of strategy tends to be less successful and does not foster a team environment. Instead, focus on creating a team environment by encouraging the upward flow of communication.
Developing managers who encompass the leadership qualities of the future will allow your company to gain momentum and rise above the competition. In addition, employees will appreciate consistency among managers, and enjoy a team driven work environment.
Resource:
“Leadership for the Future.” McKinsey Global Survey Results.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Tuesday, February 17, 2009
New Book Teaches Business Owners to Drive Business Value despite the Economy
The recession is spawning concern from business owners regarding business value. Driving Business Value in an Uncertain Economy, a book by Mark Jordan, offers business owners the key factors that drive business value in any economy.
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Feb 16, 2009 – The recession is spawning concern from new entrepreneurs, executives and seasoned business owners regarding their business value. Driving Business Value in an Uncertain Economy ($11.95, ISBN-13: 978-0-9816572-4-0) offers business owners the key factors that drive business value in any economy.
“The common misconception among business owners is that economic and market trends are the only factors for determining business value,” states author, Mark Jordan. He adds, “When they encounter a scenario like this, fear paralyzes them. They ignore things they can do everyday to boost business value regardless of the economic circumstance.”
Jordan reveals that business value is, in fact, a combination of internal and external drivers. Chief among them is maintaining and improving sales, gross margin and earning trends. The author and Managing Principal of the middle market investment bank, VERCOR, also stresses the importance of leveraging a business’s best assets. The business advisor states a strong management team is an intangible and internal value driver. Finding new ways to capitalize on existing intellectual property is another way to boost business value. “Your management team and intellectual property are what makes your business unique. Any business can turn a profit. Your talent pool, and what they create, will set your business apart in the market,” Jordan shares.
Jordan complements the study of value drivers with frank advice based on his own experience aiding clients in their quest to boost business value prior to a business sale. Case studies and easy to follow action items serve as homework for readers ready to take the first step in growing their companies. Jordan states, “Business owners do not have to wait until the economy turns around to improve their business value, or get it ready for sale. They can do it right now.”
Driving Business Value in an Uncertain Economy (Decere Publishing, 2009) is available for purchase at major booksellers, or online at http://www.amazon.com/ or http://www.vercoradvisor.com/. Lightning Source, a subsidiary of Ingram Industries, Inc., is distributing the book.
About Mark Jordan
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of Selling Your Business the Hard Easy Way (Decere Publishing, 2008), Enhancing Your Business Value…The Climb to the Top (Decere Publishing, 2002) and co-author of The Business Sale…A Business Owner’s Most Perilous Expedition (Decere Publishing, 2001). He is also the author of numerous articles on mergers and acquisitions. For more information about Mark’s books, visit www.vercoradvisor.com.
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Feb 16, 2009 – The recession is spawning concern from new entrepreneurs, executives and seasoned business owners regarding their business value. Driving Business Value in an Uncertain Economy ($11.95, ISBN-13: 978-0-9816572-4-0) offers business owners the key factors that drive business value in any economy.
“The common misconception among business owners is that economic and market trends are the only factors for determining business value,” states author, Mark Jordan. He adds, “When they encounter a scenario like this, fear paralyzes them. They ignore things they can do everyday to boost business value regardless of the economic circumstance.”
Jordan reveals that business value is, in fact, a combination of internal and external drivers. Chief among them is maintaining and improving sales, gross margin and earning trends. The author and Managing Principal of the middle market investment bank, VERCOR, also stresses the importance of leveraging a business’s best assets. The business advisor states a strong management team is an intangible and internal value driver. Finding new ways to capitalize on existing intellectual property is another way to boost business value. “Your management team and intellectual property are what makes your business unique. Any business can turn a profit. Your talent pool, and what they create, will set your business apart in the market,” Jordan shares.
Jordan complements the study of value drivers with frank advice based on his own experience aiding clients in their quest to boost business value prior to a business sale. Case studies and easy to follow action items serve as homework for readers ready to take the first step in growing their companies. Jordan states, “Business owners do not have to wait until the economy turns around to improve their business value, or get it ready for sale. They can do it right now.”
Driving Business Value in an Uncertain Economy (Decere Publishing, 2009) is available for purchase at major booksellers, or online at http://www.amazon.com/ or http://www.vercoradvisor.com/. Lightning Source, a subsidiary of Ingram Industries, Inc., is distributing the book.
About Mark Jordan
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of Selling Your Business the Hard Easy Way (Decere Publishing, 2008), Enhancing Your Business Value…The Climb to the Top (Decere Publishing, 2002) and co-author of The Business Sale…A Business Owner’s Most Perilous Expedition (Decere Publishing, 2001). He is also the author of numerous articles on mergers and acquisitions. For more information about Mark’s books, visit www.vercoradvisor.com.
Monday, February 16, 2009
Secrets to Executing a Successful Strategy
When examining cost-cutting strategies, companies often focus on reducing staff and flattening organizational charts. But this action often ignores underlying issues, and doesn’t result in long-term success. After several years most companies add back layers to their organizational chart, and end up in the same position as before – with increased costs.
Successful companies look past shrinking their workforce, and focus on strategies that address underlying costs. Focusing on areas with potential for greater efficiency, such as decision making accountability, will produce lasting results.
Focus on Execution Strategies
The key to creating effective execution strategies is ensuring every manager understands their decision making responsibilities. This prevents confusion about who is responsible for which decisions and allows managers to understand the scope of their authority. As a result, companies experience a boost in efficiency, and mangers spend less time justifying decisions to upper management.
Streamline Decision Making
Many companies have a single person, such as the Chief Executive Officer, making all of the decisions. This can severely bog down the decision making process and waste the CEOs valuable time. Instead, reserve the most important decisions for the CEO, and delegate the majority of decision making to several mangers, each with their own responsibilities and accountability. This will allow customers to be served better with quicker decisions and easier communication flow.
Make an Accountability Visual
Once management understands the scope of their decision making authority, compile the information into a grid. The visual should clearly demonstrate who is responsible for what decisions. This solidifies the process, and can be used as a communication tool for business units to understand who is responsible for what. Plus, having an official document will hold individuals accountable.
Clarify the Approval Process
Once decision making responsibilities are finalized, employees need to understand the approval process. Processes should be designed to promote the seamless flow of communication, resulting in fast decisions. Employees should receive a copy of the accountability visual, accompanied by protocols for requesting approval.
Avoid Second Guessing Decisions
Decision makers need to feel empowered and supported in their decisions. For this reason, second guessing activities should be avoided. Preventing these activities will prevent productively and communication issues.
Streamline Communication
Another important component to successful execution, is educating employees about how their actions impact the company’s bottom line. Strategies and measurement tools should be implemented to remind employees consistently of their ability to impact business. Plus, procedures should be put in place to promote the upward flow of communication from the front line to upper management. This will give management the ability to quickly solve problems such as pricing and service issues.
Keep Decision Making Close to Activities
When too many decisions are made at the corporate office, the reality of what’s going on with customers can be lost. This is because information moving from front line employees upward can get fine tuned and refined before reaching upper management. This results in decisions based on disseminated information, which produces unsuccessful strategies. The solution to this issue is keeping as many decisions as possible close to where the activities are occurring. This allows individuals with first-hand experience to resolve issues.
Increase Lateral Management Opportunities
Many companies discourage lateral management moves because they think it isn’t productive. However, allowing these moves can be a smart strategic decision. When laterally moving managers, other business units can benefit from cross-unit cooperation. The company may also experience less turnover, because middle-level managers won’t get bored and feel like opportunity is limited.
Foster Cross-Unit Collaboration
Execution strategies can be improved by examining communication flow between business units. This will result in more accurate forecasts on costs and lead times. Potential demand and production challenges will also be identified earlier, allowing quicker reaction and increased customer satisfaction.
Increase Rewards for Positive Contributors
If your company doesn’t already have an incentive plan, adopting one is a good decision. This action will assist in supporting your company’s strategies and goals. Assign measurable goals to employees, and hold individuals accountable for their performance. Positive motivation can be established with monetary compensation, gift cards, or other rewards. This allows individuals to be rewarded for their positive contributions.
Encourage Staff to Move Across Business Units
Like managers, having staff move into lateral positions makes a more well-rounded business model. Your business units will enjoy enhanced productivity and employees will be more stimulated and feel more valued.
Reshaping the way your company thinks about executive strategies will assist in identifying and cutting underlying costs. As a result, your company will enjoy success that won’t disappear in several years. And your company will benefit without cutting jobs and flattening your organizational chart.
Resource:
Gary L. Neilson, Karla L. Martin and Elizabeth Powers.” The Secrets to Successful Strategy Execution.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Successful companies look past shrinking their workforce, and focus on strategies that address underlying costs. Focusing on areas with potential for greater efficiency, such as decision making accountability, will produce lasting results.
Focus on Execution Strategies
The key to creating effective execution strategies is ensuring every manager understands their decision making responsibilities. This prevents confusion about who is responsible for which decisions and allows managers to understand the scope of their authority. As a result, companies experience a boost in efficiency, and mangers spend less time justifying decisions to upper management.
Streamline Decision Making
Many companies have a single person, such as the Chief Executive Officer, making all of the decisions. This can severely bog down the decision making process and waste the CEOs valuable time. Instead, reserve the most important decisions for the CEO, and delegate the majority of decision making to several mangers, each with their own responsibilities and accountability. This will allow customers to be served better with quicker decisions and easier communication flow.
Make an Accountability Visual
Once management understands the scope of their decision making authority, compile the information into a grid. The visual should clearly demonstrate who is responsible for what decisions. This solidifies the process, and can be used as a communication tool for business units to understand who is responsible for what. Plus, having an official document will hold individuals accountable.
Clarify the Approval Process
Once decision making responsibilities are finalized, employees need to understand the approval process. Processes should be designed to promote the seamless flow of communication, resulting in fast decisions. Employees should receive a copy of the accountability visual, accompanied by protocols for requesting approval.
Avoid Second Guessing Decisions
Decision makers need to feel empowered and supported in their decisions. For this reason, second guessing activities should be avoided. Preventing these activities will prevent productively and communication issues.
Streamline Communication
Another important component to successful execution, is educating employees about how their actions impact the company’s bottom line. Strategies and measurement tools should be implemented to remind employees consistently of their ability to impact business. Plus, procedures should be put in place to promote the upward flow of communication from the front line to upper management. This will give management the ability to quickly solve problems such as pricing and service issues.
Keep Decision Making Close to Activities
When too many decisions are made at the corporate office, the reality of what’s going on with customers can be lost. This is because information moving from front line employees upward can get fine tuned and refined before reaching upper management. This results in decisions based on disseminated information, which produces unsuccessful strategies. The solution to this issue is keeping as many decisions as possible close to where the activities are occurring. This allows individuals with first-hand experience to resolve issues.
Increase Lateral Management Opportunities
Many companies discourage lateral management moves because they think it isn’t productive. However, allowing these moves can be a smart strategic decision. When laterally moving managers, other business units can benefit from cross-unit cooperation. The company may also experience less turnover, because middle-level managers won’t get bored and feel like opportunity is limited.
Foster Cross-Unit Collaboration
Execution strategies can be improved by examining communication flow between business units. This will result in more accurate forecasts on costs and lead times. Potential demand and production challenges will also be identified earlier, allowing quicker reaction and increased customer satisfaction.
Increase Rewards for Positive Contributors
If your company doesn’t already have an incentive plan, adopting one is a good decision. This action will assist in supporting your company’s strategies and goals. Assign measurable goals to employees, and hold individuals accountable for their performance. Positive motivation can be established with monetary compensation, gift cards, or other rewards. This allows individuals to be rewarded for their positive contributions.
Encourage Staff to Move Across Business Units
Like managers, having staff move into lateral positions makes a more well-rounded business model. Your business units will enjoy enhanced productivity and employees will be more stimulated and feel more valued.
Reshaping the way your company thinks about executive strategies will assist in identifying and cutting underlying costs. As a result, your company will enjoy success that won’t disappear in several years. And your company will benefit without cutting jobs and flattening your organizational chart.
Resource:
Gary L. Neilson, Karla L. Martin and Elizabeth Powers.” The Secrets to Successful Strategy Execution.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Building Better Strategies: Dealing With an Uncertain Environment
Entering a market full of uncertain variables can make forecasting a difficult task. And making the mistake of using precise forecasting methods can cost your company time, energy and money. That’s because forecasting outcomes with so many variables is tricky – and precise models aren’t flexible to change. And even worse, some executives rely solely on instinct, which is also a dangerous mistake.
But if precise models and instinct don’t work, then what does? Breaking away from static models and building more flexible scenarios that react better to change will give your company the ability to perform better in an uncertain environment.
Functioning with Limited Information
Having limited information about market conditions can make planning challenging. For this situation, consider developing a single model strategy. The model will be based on available market research, competitor information, and any other available resources. But this model will differ from traditional versions, with the ability to quickly and easily adapt to change.
Planning for Unstable Conditions
If market conditions are unstable, consider choosing a few flexible scenarios. Build each scenario with several elements, and strategize reactions to changes in market conditions. Also, carefully work out the risk and return on investment for each situation. Examples of companies that may benefit from this strategy are those affected by government laws or regulations, like the pharmaceutical and medical devise industries.
Focus on Trigger Events
For companies launching products or services in emerging industries or an entirely new market, consider developing 4-5 different scenarios that focus on trigger events. When embarking on this process, make sure that each scenario is distinctly different. This will save resources on developing strategies that are too similar. Management should discuss the risks of each scenario, and the appropriate reactions. The ability to expand distribution potential should also be discussed in detail to plan for future growth. Also keep in mind that merger and acquisition activities may be viable options for accommodating growth.
Dealing with Scenarios that Seem Impossible to Predict
Breaking into new markets and countries is difficult because there isn’t any existing experience to pull from when predicting factors like demand. When building scenarios, isolate variables that may indicate how your product will act in the new market. You can also study related markets to forecast product success.
Secure Your Market Position
Once you’ve entered a new market, it’s important to secure and maintain your market position. To establish a leader market position, seek the best information available on pricing, and establish strategies to grow and maintain customer relationships.
The Value of Market Research
If you have an emerging product or service, purchase enough market research to get a snapshot of similar markets and their success. However, don’t spend too much, because this information doesn’t always accurately predict your success. Instead, use the information you have to build flexible models, with the ability to accommodate expansion and growth activities.
Evaluate your Models Regularly
Models quickly become outdated, especially in emerging markets where information is changing constantly. Ensure your models stay current by evaluating them every 3-6 months and making the necessary changes.
Invest in Pilot Trials
When developing your models and plans, consider launching a pilot program for new products and services. While this activity can be expensive, it’s valuable for companies with little or no market research. The results provide a glimpse into consumers’ reactions to your product, and allow you to quickly make adjustments before bringing a product or service to market. This is a good strategy for those interested in launching new products in emerging markets or new counties.
Invest for Growth
Launching a new product or service is a large financial investment. And when a product becomes successful, it’s important to have strategies in place for growth. If your business grows quickly, strategies should be swiftly implemented to preserve customer service, expand production, while maximizing profit. One solution to consider is participating in merger and acquisition activities, which may be more cost effective than expanding operations.
Minimizing Your Risk
Some companies can’t afford to take all of the risk alone. Minimize your risk by entering a joint-venture business arrangement. This allows businesses to share costs and risks when entering uncertain environments, such as a new market or country. Although profits are shared between the companies, it can be a beneficial arrangement, allowing high-profit potential for companies that wouldn’t have entered the market alone.
Building better strategies and planning methods will allow your company to experience greater success. Because more flexible planning allows businesses to react smarter, which positively affects the bottom line. And when outcomes are uncertain, management will be able to react quicker, contributing towards revenue growth, and enhanced productivity.
Resource:
Scott Cade, Robert-Jan Hagens, Caroline Moss and Muir Sanderson. “Moving Beyond Cost-Cutting.” Booz Allen and Hamilton.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
But if precise models and instinct don’t work, then what does? Breaking away from static models and building more flexible scenarios that react better to change will give your company the ability to perform better in an uncertain environment.
Functioning with Limited Information
Having limited information about market conditions can make planning challenging. For this situation, consider developing a single model strategy. The model will be based on available market research, competitor information, and any other available resources. But this model will differ from traditional versions, with the ability to quickly and easily adapt to change.
Planning for Unstable Conditions
If market conditions are unstable, consider choosing a few flexible scenarios. Build each scenario with several elements, and strategize reactions to changes in market conditions. Also, carefully work out the risk and return on investment for each situation. Examples of companies that may benefit from this strategy are those affected by government laws or regulations, like the pharmaceutical and medical devise industries.
Focus on Trigger Events
For companies launching products or services in emerging industries or an entirely new market, consider developing 4-5 different scenarios that focus on trigger events. When embarking on this process, make sure that each scenario is distinctly different. This will save resources on developing strategies that are too similar. Management should discuss the risks of each scenario, and the appropriate reactions. The ability to expand distribution potential should also be discussed in detail to plan for future growth. Also keep in mind that merger and acquisition activities may be viable options for accommodating growth.
Dealing with Scenarios that Seem Impossible to Predict
Breaking into new markets and countries is difficult because there isn’t any existing experience to pull from when predicting factors like demand. When building scenarios, isolate variables that may indicate how your product will act in the new market. You can also study related markets to forecast product success.
Secure Your Market Position
Once you’ve entered a new market, it’s important to secure and maintain your market position. To establish a leader market position, seek the best information available on pricing, and establish strategies to grow and maintain customer relationships.
The Value of Market Research
If you have an emerging product or service, purchase enough market research to get a snapshot of similar markets and their success. However, don’t spend too much, because this information doesn’t always accurately predict your success. Instead, use the information you have to build flexible models, with the ability to accommodate expansion and growth activities.
Evaluate your Models Regularly
Models quickly become outdated, especially in emerging markets where information is changing constantly. Ensure your models stay current by evaluating them every 3-6 months and making the necessary changes.
Invest in Pilot Trials
When developing your models and plans, consider launching a pilot program for new products and services. While this activity can be expensive, it’s valuable for companies with little or no market research. The results provide a glimpse into consumers’ reactions to your product, and allow you to quickly make adjustments before bringing a product or service to market. This is a good strategy for those interested in launching new products in emerging markets or new counties.
Invest for Growth
Launching a new product or service is a large financial investment. And when a product becomes successful, it’s important to have strategies in place for growth. If your business grows quickly, strategies should be swiftly implemented to preserve customer service, expand production, while maximizing profit. One solution to consider is participating in merger and acquisition activities, which may be more cost effective than expanding operations.
Minimizing Your Risk
Some companies can’t afford to take all of the risk alone. Minimize your risk by entering a joint-venture business arrangement. This allows businesses to share costs and risks when entering uncertain environments, such as a new market or country. Although profits are shared between the companies, it can be a beneficial arrangement, allowing high-profit potential for companies that wouldn’t have entered the market alone.
Building better strategies and planning methods will allow your company to experience greater success. Because more flexible planning allows businesses to react smarter, which positively affects the bottom line. And when outcomes are uncertain, management will be able to react quicker, contributing towards revenue growth, and enhanced productivity.
Resource:
Scott Cade, Robert-Jan Hagens, Caroline Moss and Muir Sanderson. “Moving Beyond Cost-Cutting.” Booz Allen and Hamilton.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
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