How
many expensive management fads do we have to try in our business
before we learn that most are either fizzers or produce disappointing
results?
We've all been there ... relationship marketing, total quality
management, self-directed work teams, empowerment, customer
service excellence. The list goes on and on. We adopt them eagerly
as magic bulletts that will solve all our business woes. But
most achieve only a fraction of what is promised.
So what's wrong? The answer is right under our noses. When it
comes to business, we just don't seem to use commonsense we'd
use in our everyday lives.
Suppose you wanted to transform the family wagon into a racing
machine that could win at Philip Island. You wouldn't just change
the engine for a bigger one. Commonsense would make you modify
the chassis, change the wheels, up-grade the suspension, enhance
the braking system, take advanced driver training and improve
practically everything else so that the entire car and driver
is capable of winning the race.
But in business we keep looking for the one simple solution
to the increasingly complex problem of making the whole organisation
perform.
The evidence is mounting that an integrated improvement process
works best. American researchers, Macy and Izumi, looked at
the impact of single discipline initiatives. They conclude that
improvement in financial terms come from:
"... a more integrated and holistic organisational design
strategy rather than a "one-discipline" approach to
organisational change..... An integrated .... organisational
design produces higher performance results.'
THE RETAILCO STORY
One company that's adopted this approach to business improvement
is Retailco (their name has been changed). Retailco is a multi-million
turnover chain of stores selling home appliances, furniture
and floor coverings.
Retailco came face to face with the need for dramatic transformation
when their accountants told them they would be broke if they
didn't improve - and do it fast.
-
They
set up breakthrough teams to cut inventory, improve margins
and boost sales.
- They
conducted surveys, gathered sales closing rates and flow charted
their purchasing, sales and delivery processes.
- A
staff and management team reviewed the data and re-designed every
aspect of the organisation. No sacred cows escaped intact!
- They
turned the organisational chart upside down, creating accountable
profit centres at all levels.
- Product
purchasing was taken out of head office and given to the stores.
The advertising image was rejigged and a bold direct marketing
approach introduced.
- The
commission based reward structure was changed to a team reward
system.
- Regular
customer discussion groups were planned to maintain the new customer
focus.
- Store
layouts and point of sale merchandising were redesigned.
- Retail
sales training was used to lift sales and margins.
- Store
business planning teams were set up to keep the changes process
on track.
The
new strategy worked. Christmas sales were a record. The more
targetted product mix achieved massive sales increases. Outstanding
debtors were cut by $250,000 within weeks. Inventory was cut
by half a million dollars.
Head
Office overhead costs were slashed. Gross margins crept up.
Net profits rose and the bank started smiling at the Managing
Director again.
So
how did Retailco do it and what lessons can be learned?
They
took six rapid steps that created total organisational performance
by:
- Rallying
and motivating the Leadership team.
- Developing
clear Visions or goals that everyone could understand and chase.
- Learning
what worked and what didn't by getting everyone gathering the
facts.
- Developing
a Strategy that covered every aspect of the business.
- Integrating
the implementation of the strategy so that each new activity built
on the others, and
- Building
a renewal process so plans were reviewed and changed monthly.
Let's
face it. We business people can be idiots.
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