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ACCELERATED PERFORMANCEMay 2008“By any measure we’re not doing too bad”. Behind this oft stated phrase lies several fundamental flaws and fallacies. Sustainable business success in the immediate, intermediate and longer terms cannot and should not be quantified by a single measure or by any one set of measures. The true art of modern and futuristic leadership is not limited to the marshalling of resources, including people, skills, processes, products, service supply chain management and marketing. Rather, it is the determination of what sets of criteria are isolated, chosen, measured, monitored and managed to optimise performances. MULTI MEASURES PERFORMANCEPreference to and pride in achievements of a single measure can be and often is misleading and misplaced. In such cases, little consideration seems to be given to causal factors and trend relationships which provide a more holistic appreciation of a business and its success factors. For example, the goal of increasing revenue can often be achieved in the immediate and intermediate terms by reducing prices, squeezing margins or lowering costs - including advertising, capital investment and people numbers. Sadly the longer term consequences of such for a company, a product, a service or network can be profound and negative. Recent happenings in the stock broking and equities investment sectors are insightful. Several broking firms implemented national and transnational policies to effect the grading of clients into categories A, B, C and D, determined by recent records of transactions. The intent was to improve individual broker productivity and profitability. Those accounts which had been less active in recent times were downgraded, the suite of services offered to such clients were reduced and personal contact to specific consultants with whom relationships, trust and a sense of integrity had developed, were fractured. All in pursuit of greater efficiency. The applied new performance standards proved to involve false economies. Among the unintended and unforeseen consequences were the mass “departures of entire and, in some instances, a majority of broker teams. Competitive broking firms benefited and new practices were started up from disillusioned high performance professionals who valued the longer term measured of success. GET IT RIGHTContinual pursuit of increased sales and market share can be ill-advised. Exponential trend lines in sales revenue often do not reveal the associated trend lines in costs, quality and loyalty. Growth for growth sake can be an important input in the short term for “bragging” rights. CAUSE : EFFECTConcentration on the dimension of relationship, for example, time can affect appreciable improvements in measures of revenue, margin profit quantums, without the need for the allocation of additional resources. To achieve an effective and appropriate saving of time, it is often necessary to eliminate wasteful practices and policies. This tends to free up resources within the existing corporate structure and network. An objective, detached and rational evaluation will often readily isolate scope to remove up to 20% of established business practices, which result, at best, in marginal returns. Persons, systems and networks which are freed-up can be rekindled, re-energised and directed to heightened performance standards. Importantly, it does not involve the allocation or application of additional resources. Students of Economics
101 are typically well versed with the Philips Curve, which
graphically details the relationship between increased economic
activity, interest rates and employment rates. An increase in
interest rates (a cost) are associated with declines in employment.
Reverses in the two axis are also achievable. |
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