Why are some companies so effective at achieving market domination—even if just a segment of the market—while other companies remain only “also-ran’s” or even fail to achieve any significant level of success at all?
What are some of the critical differences between market leaders and the other companies—or supply chains—against which they compete?
Our experience in working with a variety of small to mid-sized business enterprises and their supply chain participants has led us to the conclusion that the difference may be found in two different areas:
- The effectiveness of the organization’s decision-making process and its faithfulness in executing on decisions
- How integrated and involved the whole organization is in achieving its goals
- While these areas are distinct, they are not wholly independent of one another, as we will try to show.
Effectiveness in decision-making
Executives and managers make decisions all the time in all kinds of organizations. Unfortunately, for most businesses, the effectiveness of management’s decision-making is about the same as a good major league batter. They might get a real “hit” about one out of three times at the decision-making “plate.”
If they’re lucky, the management team is batting about 300 (300 hits for a thousand at-bats). The other two “at-bats” produced no positive results. Hopefully, the other “at-bats” didn’t result in any negatives—like hitting into a double-play.
We don’t believe that leading companies just have “better luck.”
More effective decision-making comes from understanding better the cause-and-effect in your customer-to-cash streams.
Like a river flowing over and around many rocks and boulders, the stream flows. But even more water could flow with less turbulence if you just knew where the rocks were and how to get them out of the stream.
Interestingly, we have discovered that, in a great many cases, the firm’s employees know where the turbulence-creating rocks and boulders are in the customer-to-cash stream. And, in fact, they frequently have a pretty good idea about how these flow-disrupting boulders can be removed from the stream.
Unfortunately, managers and executives are all too often unwilling to hear what the first-line workers have to say—or listen to what they have to say with a jaundiced ear, thinking that the workers’ only interest is to make their own tasks easier or less stressful.
Managers and executives often do not take time to consider whether the net result of the workers’ suggestions may also mean increased Throughput in the customer-to-cash stream.
We help increase the effectiveness of our clients’ decision-making process by bringing them tools to help unlock what their employees already know about what how their customer-to-cash stream (and, supply chain) actually works—or fails to work.
Where managers and executives used to “bat” 300, or so, decision-making effectiveness can be increased with little or no effort to 90 percent or higher.
Virtually every decision can become effective when the true cause-and-effect is more fully understood.
Effectiveness in execution
As a side-effect of a decision-making process that stems from clarity of objectives and keen insight into the actual causes and effects at work in the organization and the industry in which it operates, the effectiveness of execution on the decisions also increases dramatically.
Part of the increase in effectiveness in execution is the natural outflow of the whole team having “invented the solution” to their problem from scratch. They are confident that the action they are about to take will be effective in achieving its desired end because they were involved from end-to-end in the diagnosis of the cause-and-effect and the creation of the present improvement remedy.
No one sabotages or undermines their own invention. No one hates or fears change when they are convinced by their own reasoning that the change is beneficial for them.
Management didn’t hand down the latest edict on how things will change, or pass along the latest fad as “the next thing we’re going to try.” Instead, the whole organization was involved in uncovering the reality of their present situation (see: Current Reality Tree) and in planning the best remedies for their situation.
This approach has an immediate effect on the enthusiasm and faithfulness with which proposed changes are undertaken. The result: effectiveness in execution.
Involvement and integration
As you have probably already detected, we have not even gotten to the topic of “involvement and integration” and, yet, it is already covered.
If the amazing success of the Toyota Production System has taught us nothing else, it should be abundantly clear that everyone must be involved in creating success. Everyone from the production floor “down to” (as Toyota’s executives would put it) the CEO should be fully involved and integrated into the process of ongoing improvement (POOGI).
We are finding more and more as we work with our clients that it is now supply chains that compete with other supply chains. It is no longer company against company at the core of competition and gaining of market share.
Therefore, we encourage our clients to extend involvement and integration well beyond the four walls of their own firms. Trading partners—both customers and suppliers—should be integrated and involved in creating solutions. This is part of what we call the New ERP—Extended Readiness for Profit.
In summary, our work with hundreds of small to mid-sized business enterprise (SMBs/SMEs) has show us that market dominance comes from effective decision-making and effective execution on those decisions. And, that effective decision-making, in turn, stems from clarity derived from understanding the reality of cause-and-effect relationships in your custom-to-cash streams.
Once this clarity is gained (and maintained):
- Decisions can be made on well-defined (measurable) objectives
- Decisions can be proactive, rather than reactive
- Decisions can drive clearly-defined actions, because there is a clear understanding of the connection between tactical (or strategic) goals and operational actions
Furthermore, we have concluded that involvement and integration of the whole organization viewed as a single operating “system” is essential for market-dominating success. This includes extending involvement and integration across the supply chain—not just keeping it within the four walls of your company. This is the New ERP!
We would very much like to hear your views on this topic. Please leave your comments here (below) or contact us directly, if you prefer.