Whilst there are some fundamental steps to follow in enabling business growth, the ‘Optimise’ phase this the third in our basic structure.
With your optimisation objective(s) well known, course firmly set, resources understanding their role to achieve it, all underpinned by strong financial and strategic guidance, it is now time to smooth out the cycles and accelerate your business.
In the words of Sun Tzu:
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
To gain increased traction it is necessary to roll down the key strategies to the pillars of resource into clear Targets and Tactics. At the same time, drive up the information provided throughout each division from monthly forecasts to daily or weekly dashboards of highly correlated measures and metrics as is depicted in the diagram below.
Objectives and Strategies to Forecasts and Budgets, there should be a very small number of very significant strategies. Continuing our example of a strategy to increase geographic reach, what are the targets and metrics for sales and marketing to increase geographic reach? What tactics must be achieved by when to ensure the agreed number of sales from expansion occurs as necessary, how much is this expected to cost and have these costs been factored into the forecasts. Equally at the other end of the process, what does finance need to do to ensure budgets and forecasts break out geographic regions to enable measurement of sales in the new region and so on.
With an increased amount of activity across each pillar of resource’s core responsibilities and strategic items, measuring how they are progressing with increased frequency is of the greatest importance. If a team focus on the strategic elements rather than the core work, you will drift away from hitting your financial forecasts. If they focus on core work only, you will never reach your business objective.
The dashboard related to the entire company should be transparent to everyone including the board, ideally, it should fit on a single page, be largely graphical with key numbers and cover off the core elements of the pillar in no more than three graphs and strategic items in no more than two graphs. The graphs should be designed in a way so that as the company improves, the curve points up. In this way it is easy to look at the dashboard, determine what is not improving or pointing up and at a glimpse look at the area that requires attention.
For our geographic reach example, the core and strategic information across the Sell pillar providing the team, management and the Board instant understanding of the business could include:
Awareness (Web or social media hits / likes)
Sales Pipeline:
Value - next 60 days
Wins - last 30 days
Sales Pipeline
Value - next 60 days (New Geographic Territory)
Wins last 30 days (New Geographic Territory)
Importantly if you measure the wrong activity it will elicit the wrong behaviour.
With the appropriate items in place it is now necessary to ensure they are updated in a timely manner. Daily may be possible in some instances, but generating the information is not meant to be an end in itself. Most business systems should be able to provide feeds or send scheduled reports to automate the information. Subject to the size of the company, weekly or bi-weekly is typically sufficient.
Keep in mind that the aim is not to catch-out the staff who are not hitting their targets but to enable staff and managers to see in near real time where effort is needed and promote proactive conversations so when it comes to the end of the month and you review your actuals against forecast, the team weeks ago identified deficiencies and mitigated them to ensure the forecast was reached.
Once you have completed these three steps, you will have structured your business so that the teams have a clear understanding of their role and where they fit in the grand scheme of your business. You have provided them clear and focussed objectives and strategies to guide them and forecasts and budgets to measure their success. You have then made those strategies tangible and transparent across the business with a small number of targets and milestones with highly visible measures and metrics across the business. You are now ready for your business to take off and the potential to double the value of your business in three years.
CFO Evolve provides exceptional part-time CFOs, passionately building great businesses through financial and strategic insights.
Contact us if you think that we can assist with your business growth.
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