Tuesday, 9 March 2010
What do you do?
One of the comments we picked up on during the CeBIT 2010 fair was this:
At around 80% of the exhibitor booths it is very difficult to figure out what the company does or sells.
Now we might split hairs over the accuracy of the 80% estimate, but we want to focus on the underlying theme in the message. Are you making it clear exactly what you do?
And this is exactly where we run into some major difficulties. There are a multitude of issues and factors to consider in marketing what we sell or do.
However, what we have experienced in the past is that it is mostly a process drive issue. If you sell only one or two products or service lines you focus almost exclusively on the customer or client. Transform the organisation into a multiple portfolio product and services supplier and the situation is vastly different. It has something to do with the organisational life-cycle. Mature organisations are so often tied up in bureaucratic inward focussed processes that they lose sight of the ultimate objective of serving their customer base as effectively as possible with internal processes promoting efficiency.
However, what tends to happen is that the customer gets neglected, the sales message distorted and the internal political processes and empire building takes over. Egos drive the internal bureaucracy, the buck gets passed from silo to silo and the organisational drift away from value creation is well and truly established.
And not focussing on the key sales message of what we offer our customers and the consumers in large is very evident in your display and ‘sales pitch’ at exhibitions and fairs.
Therefore, go back after the event; think about the core purpose of value creation, value management and value measurement the mantra of Value Based Management and combine this with a Risk Based Approach to managing the processes and get everyone in the organisation to understand and apply Value Based principles so that you can serve you true constituency, namely your customers first.
This will please the shareholders as economic value gets created and the other stakeholders will benefit in proportion as long as the focus is in the right place.
Remember that a Value Based Management approach has a key value driver focus and it is both a skill and art in getting the balance right. In future articles we will elaborate on the seven key value drivers which underpin the Value Based Management approach.
We want to conclude the ‘What do you do?’ question with a short note on performance management and bonuses. At a broad level part of the issue underlying performance bonuses is that the focus is mostly on divisional or individual business unit performance, rather than on enterprise performance. Again the epitome of the silo and bunker mentality. Unless the enterprise can thrive and is sustainable, it does not matter how successful the individual business unit or division is. Successful business units can always be divested of if the choice is made by the executive leadership team and then the unpleasant consequences of dancing to new master’s tunes are an inevitable opportunity cost to individuals.
So rather than fall into the trap of financial underperformance, wasted energy and frustration, ensure that we understand Enterprise Value Creation and Enterprise Value Measurement, to ensure longer term sustainable business practices.