Evaluating Business Performance

Let me start with the following disclaimer – I am not an accountant, financial consultant, Chartered Accountant, or CPA. I am business owner who can read the balance sheet, who understands the impact of short-term expenditures on long-term financial performance.

However, I understand how growth needs to be measured financially, especially if your goal is to eventually sell the company or take it big time with investment capital. Everything you do – land new accounts, develop a new product, purchase equipment, hire people, etc. is measured against its impact on:

• Market Value
• Cash Flow
• Revenue and Revenue Growth
• Return on Invested Capital
• Cost of Capital

Market Value:
The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. The market capitalization plus the market value of debt. Sometimes referred to as "total market value.”

Cash Flow:
A revenue or expense stream that changes a cash account over a given period. Cash in-flows usually arise from one of three activities - financing, operations or investing - though they also occur because of donations or gifts in the case of personal finance. Cash out-flows result from expenses or investments. This holds true for both business and personal finance.

Revenue and Revenue Growth:
The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.Revenue is also known as "REVs"

Return on Invested Capital (ROIC)
A calculation used to assess a company's potential to be a quality investment by determining how well (i.e. profitably) a company's management is able to allocate capital into its operations. Comparing a company's ROIC with its cost of capital (WACC) reveals whether invested capital was used effectively.

Cost of Capital
The required return necessary to make a capital budgeting project - such as building a new factory - worthwhile. Cost of capital would include the cost of debt and the cost of equity.

Operationalize Growth Metrics by Managing Your Financials

1. Create attractive gross margins early – target 60% or greater and maintain it through various growth stages – never sacrifice gross margin to buy market share
2. Contain expenses to achieve 20+ EBITDA – total investment equals/never exceeds the difference between gross margin and 20+% of EBITDA (Earnings before Interest, Taxes, and Depreciation)
3. Become cash flow positive early – deliver consistent cash in proportion to revenue growth
4. Utilize incremental gross margins to self-fund incremental investments – provides a unique opportunity to self-fund a higher level of investment in sales and marketing as well as product development

………Profit at All Costs

However, you cannot successfully manage these metrics after the fact. Using financials or trailing indicators to run the business is like driving the car by looking through the rear view mirror or driving your boat by watching its wake.

Only by installing a predictive measurement can you decide what actions are on your short list (the principle of ONE THING) and then measured in the real time so you can drive business measures in the right direction.

Leading in Real-Time

Running a business with real time information - the dream of most executives and managers has become a reality. Whether you call it Business Intelligence, Real-Time Enterprise, Real-Time Operations, etc., the solution is now available if you have the desire.

FORECAST
Applied Knowledge Labs is your powerful and cost effective choice. Our system enables your business to achieve the dream of competing with on-demand information. This capability improves in-the-moment decisions, and makes execution a core competence.

Imagine being just one click away from having today's information on customer service, information from current production teams on reduction in cycle time or how inspired are your front line people this week.

Corporate Dashboards
Collaborating with your executive team, we integrate current measures into dashboards and ensure line of sight to each individual. You can in one location combine the three elements of alignment:

• contribution to business objectives
• participation in improvement projects
• job requirements

Individual Scorecards
Far more challenging is designing a method of capturing data that does not distract from work or makes unreasonable demands. Our philosophy is to make the system match the requirements of common “day-timer” systems. We use this as our standard and depending on the frequency of updates driven by the job, our goal was a functioning system running on an investment of 15-20 minutes a day.

By taking a few minutes to update the system, each person will have a real time report on how well they are doing as self-managers. When this information is rolled up to the executive level, everything you need to run it in the real-time is available. Welcome to on-demand, real-time business information.

We can either build you a simple to operate low-tech paper system for posting visible performance targets, or help you find a software partner to automate that process.

The only question is in your mind is paper or electronic, not yes or no to building visible measures of day to day performance. You cannot manage what is not measured, whether that is management of self or management of the firm.

Predicting the Future

The challenge of any profession is to make the complex simple. Over our half-century of business improvements, we have directly experienced the complexity of running a sustainable business. Our job is to understand all of the underlying forces and nuances we experienced and make it simple. You cannot execute what is not understood or easily performed.

Predicting the future is not about crystal balls, reading entrails, or interpreting Nostradamus's quatrains. It is about understanding the most fundamental question in business: where is value today and where is it headed? Or what are my customers currently paying for and what will that be tomorrow?

Our organizational assessment FORECAST is the start of a process to capture an accurate and complete picture of your business. It allows a company to determine where and how value is being created and for whom, and what core competence is required to make this competitive advantage a reality.

Once we understand the competitive advantage opportunity of your market and position in that niche, we can help you identify the barriers and causes of gaps. FORECAST's analysis capabilities bring the internal barriers and causes, the upset conditions, to the scrutiny of all effected members of the organization.

Our research group designed FORECAST to be a flexible and customizable assessment to fit your unique issues. It is built on 26 micro-assessments such as Process Management and Customer Enthusiasm and can even evaluate your readiness for ISO as an example. Our ability to customize is limited only by the creativity of your questions.

The Four Critical Strategic Elements of Growth:

1. Competitive Advantage: (MARKET INTELLIGENCE) The essence of understanding market leadership, it identifies where the organization can excel and is the matched set for Core Competency. Competitive Advantage exist in both real time and the future, understanding the under or unserved needs with significant financial gain of a targeted niche.


2. Core Competence: (BRAND SUPERIORITY) It starts with brand, and what makes your brand superior in the eyes of the customer. Not just a marketing campaign, it is about perceived customer benefits of your end product and the experience of buying and using, it must be difficult for competitors to imitate, and finally creates uniqueness from anyone else.


3. Discretionary Performance: (TALENT) The amount of performance the organization can capture beyond what is required. Typically, standards are set artificially low. No business is able to sustain itself when people do the minimum. Every successful company has a competitive advantage through people who work harder then required or compensated.


4. Productive Capacity: (OPERATIONS) The essence of your business model, it measures the organization's ability to provide products, services, and customer enthusiasm to specified markets. It is the delivery component for Core Competency.

These form the core of our assessment technology; however, we are about more than gaining understanding. FORECAST's foundation is smaller, discrete assessments that provide the detail necessary to solve problems and create a plan to win.
Our assessment library includes:

1. Clarity of Vision, Mission, Values


2. Competitive Advantage


3. Vertical and Horizontal Alignment


4. Internal Operations and Support Processes


5. High Performance Employment Systems


6. Core Competence


7. Performance Management


8. Knowledge Management


9. Team Effectiveness & Focus


10. Learning & Growth


11. Change Readiness & Management


12. Customer & Market Dynamics


13. Organizational Structure


14. Environmental Dynamics


15. Horizontal Links to Client Development


16. Horizontal Links to Market & Innovation


17. Leadership Effectiveness


18. Sales Effectiveness


19. Employee Inspiration


20. Customer Enthusiasm


21. Customer Intelligence


22. Market Intelligence


23. Competitive Intelligence


24. Baldridge Award


25. Innovation Management


26. Process Management


27. Quality Management


28. Technology Management


29. Project Management


30. Management Efficiency


31. Training System


32. Productive Capacity


33. Canada’s Best Managed Companies

Measuring to Manage

After spending many years working with and competing against the big 5 consulting firms, we decided to build our own comprehensive organizational assessment. The difference would be a focus on sustainable growth and not an excuse to sell consulting services. Most of our competitors (McKinsey, et.al.) used assessments to sell their considerable assortment of products and services. This allowed the client to question the objectivity of the results because the process appeared to be nothing more than another step to sell more stuff.

We on the other hand only sell and service ONE THING – an assessment of the best practices for fast growth companies. That is it, nothing less or nothing more.

We call it FORECAST and the goal is in the name, to provide an accurate picture that identifies gaps between the future and present. It best serves managing growth, business planning, and improvement projects.

When we began the design process 2003, it was apparent a coherent model for measuring business performance as needed to explain the process. Using our background in process improvement and SPC (Statistical Process Control), we built the following model for business metrics: Predictive (Leading Indicators), Descriptive (Real-Time Indicators), and Evaluative (Trailing Indicators).

The ability to Predict: is starting the year or performing a mid-course correction with the knowledge of which actions will achieve the desired results - a short list of actions spells the difference between success and failure. The challenge is to have a model of how the company should function so being off-track is obvious to everyone.

The ability to Describe: is to track performance in real time. It makes running a real-time enterprise a reality. The challenge is how to build a scorekeeping system that is bottom up? How do you roll those measures up to create individual, group, and organizational dashboards? This bottom-up approach challenges every individual to “their best performance to date.”

Additionally it breaks the truth-fear paradox. Most business measures are not designed or used as corrective feedback (TRUING) instead it is employed for blame and faultfinding. The result is fear of the truth! How can any of us run a business when truth is avoided like the plague?

The ability to Evaluate: is the ability to review results against plan. It takes advantage of your current financial measures by expanding its ability to review decisions and actions taken during the year.

Most end of year evaluations simply measure results without a clear line of sight to cause and effect. Our critical addition is to back track through the various decisions and actions by using FORECAST to drive next year’s improvements.

A partnership with AKL enables your executives and managers to review and evaluate performance over the year. This ability cannot be overstated, you are now armed with your unique best practices to assess, design, align, and execute to achieve optimum growth.

Competencies

As discussed in yesterday'’s post, best practices are the characteristics of superior performing organizations. Our context for best practices @AKL is growth so our research into best practices focused only on those organizations that were industry leaders for sustainable growth.

Within that context, "what does a best practice look like when practiced by individuals?" is the question we are addressing today. The following items represent common definitions and a random search of goggle news on the topic.

http://en.wikipedia.org/wiki/Four_stages_of_competence
Four stages of competence
In psychology, the four stages of competence relate to the psychological states involved in the process of progressing from incompetence to competence in a skill:
1. Unconscious incompetence: the individual neither understands or knows how to do something, nor recognizes the deficit or has a desire to address it.
2. Conscious incompetence: though the individual does not understand or know how to do something, he or she does recognize the deficit, without yet addressing it.
3. Conscious competence: the individual understands or knows how to do something. However, demonstrating the skill or knowledge requires a great deal of consciousness or concentration.
4. Unconscious competence: the individual has had so much practice with a skill that it becomes "second nature" and can be performed easily (often without concentrating too deeply). He or she can also teach it to others.

http://www.ncrel.org/sdrs/areas/issues/methods/assment/as7scans.htm
Skills and Competencies Needed to Succeed in Today's Workplace
Because the world of work is changing, the U.S. Departments of Labor and Education formed the Secretary's Commission on Achieving Necessary Skills (SCANS) to study the kinds of competencies and skills that workers must have to succeed in today's workplace. The results of the study were published in a document entitled What Work Requires of Schools: A SCANS Report for America 2000. A summary of the findings are provided in the tables below

http://www.cs.state.ny.us/successionplanning/workgroups/competencies/
competencies1intro.html
Definition of a Competency
A competency is a characteristic of an employee that contributes to successful job performance and the achievement of organizational results. These include knowledge, skills, and abilities plus other characteristics such as values, motivation, initiative, and self-control.

Why Competencies?
Competencies are a critical tool in workforce and succession planning. At a minimum, they are a means to:
* Identify capabilities, attitudes, and attributes needed to meet current and future staffing needs as organizational priorities and strategies shift, and
* Focus employee development efforts to eliminate the gap between capabilities needed and those available.

http://www.forbes.com/technology/2006/04/15/derek-bok-university
_cx_db_06slate_0418bok.html
The New 'U'
"…tools are already available that can help campuses assess such important competencies as critical thinking, writing, quantitative reasoning and proficiency in foreign languages...universities have not yet become "learning organizations"--at least not in the sense that the term is used in other well-run institutions...

Although we did not start 25 years ago with the goal of identifying competencies for fast growth, we assessed a wide range of public and private organizations as well as across industries when building competency-based training programs, performance management systems, and compensation packages.

We built many models for the individual contributor (individuals without responsibility for others - just themselves) and the leader. When combining all of these models -– we found three common themes for Leader Model:

• Self-Knowledge: This cluster of competencies looks at the basic values, motives, self-concept, and perceived social role of individuals in an organized environment. At its very core is the conflict between organizationally imposed constraints (job description, performance evaluation, compensation, etc.) and the individual with all their idiosyncrasies.
• Problem Solving: This competency cluster focuses on how a leader searches and processes information, solves problems and makes decisions. Considered the most elusive of the three clusters, it has the strongest relationship to leadership and managerial performance. Although the process is not linear, it can be viewed within a logical sequence.
• Relationships: This competency cluster represents how a leader relates with others in the work environment. Although predominately interpersonal and intragroup, this cluster also takes into account how a leader relates to everyone inside and outside the organization. It is how a leader executes their business strategies through others to build corporate value.
  

Using the same process for Individual Contributors, this model trades Problem Solving (still important but not as critical) for Technical Expertise:

• Self-Knowledge: This cluster of competencies looks at the basic values, motives, self-concept, and perceived social role of individuals in an organized environment. At its very core is the conflict between organizationally imposed constraints (job description, performance evaluation, compensation, etc.) and the individual with all their idiosyncrasies.
• Relationships: This competency represents how the individual relates with customers, team members, other internal personnel, and their managers. Unlike the leader model with the emphasis on Problem Solving, this where the individual performs in broad daylight for everyone to see.
• Technical Expertise: This cluster focuses on the technical side of a job, how well the individual performs the specific functions of a job or role within the organization.

What is the importance of reducing the best practices of your business down to the individual level?

If your objectives are to double sales this year or double margin in the next quarter by reducing costs, there must be a clear picture of what must happen. Just focusing on the best practices becomes a daily management problem, most of those measures take a long time to record. In order to manage growth on a day-to-day basis it must be broken down to the individual performer level. What must this person do today, this week, this month to achieve the goal?

Remember you can only manage what you measure, and day to day is about what people are doing now.

Tomorrow: How do I measure organizational, team, and individual performance.

Best Practices

Over the past 27 years, I have tried to find some universal components of business - some way of comparing companies regardless of size, industry, and nationality. I did not find one but several universal laws of business that allowed us to compare and therefore build a model of the ideal. One such model was "Best Practices" where business operations can provide a competitive advantage over the competition. Before we start, let us define best practices and how does a company develop business operations that make them distinctive from the competitions:

http://en.wikipedia.org/wiki/Best_practices: in business management, a best practice is a generally accepted "best way of doing a thing." A best practice is formulated after the study of specific business or organizational case studies to determine the most broadly effective and efficient means of organizing a system or performing a function. Best practices are disseminated through academic studies, popular business management books and through "comparison of notes" between corporations.

http://en.wikipedia.org/wiki/Benchmarking: benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices

And a quick review of today's news on best practices:

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_
view&newsId=20060413005010&newsLang=en: Growth Strategies for Software Companies - Featuring Best Practices on Software Company Management Strategies. This collection of over 3,600 pages of best practices material is the definitive resource for software executives and an incredible resource that will have a direct financial impact on successfully growing your software business - and all major events you face along the way such as management team compensation, valuations, exit strategies, product development, working with financial partners and more

http://biz.yahoo.com/prnews/060417/clm008.html?.v=39: The Best Practices Toolkit for Improving Quality Assurance in the Pharmaceuticals Industry
CHAPEL HILL, N.C., April 17 /PRNewswire/ -- as the cost and risk associated with Pharma R&D and drug launches rise, companies are faced with conflicting needs to reduce costs and ensure quality. Whether it is in the lab, clinical trials or a manufacturing facility, a lack of Quality Assurance can delay or destroy a successful drug launch. To assist executives in their strategic growth plans, analysts at Best Practices Research and Consulting have recently put together a toolkit for improving R&D Quality Assurance based on several recent studies with 10 of the top 20 Pharma companies. To view this toolkit please visit: http://www3.best-in-class.com/de286.htm

OK, so what does this common definitions and a random sample of news?

1. Most large (and very successful) companies have invested considerable time and energy into establishing an internal set of best practices as part of their operational DNA
2. This process usually entails some benchmarking to ensure their identification and development of best practices are not insular; a series of opinions with no basis in reality

Our approach to the benchmarking/best practices issue is to present you with a generic set as a starting point. One could argue that starting with 75% right is not sufficient, but as most business owners know – making progress on something "‘good enough"’ will always beat waiting for perfection. Moreover, startups and micro businesses need processes to benchmark against. When you are in the early business stages, you do what is necessary right now and worry about the future tomorrow.

We present you with a starting point and as the company grows, the best practices you develop will become unique and part of brand offer.

For more details on our 34 Best Practices, clink on our glossary.

Sustainable Growth

As I began the first of 44 articles on Business Growth, Growth that is Fast and Sustainable, what struck me is how this topic is a major economic concern for countries, but there is almost nothing on the subject as a business issue.

A quick review today’s news:
KARACHI: Minister of state for finance and economic affairs Omar Ayub Khan has said the government is focusing on the development of infrastructure, energy and human resource development to sustain and further improve the GDP growth rate of 8.4 percent achieved in the previous financial year.

Brussels: Competitive and Sustainable Growth is one of the four thematic programmes of the Fifth RTD Framework Programme (1998-2002).
Conceived to help solve problems and to respond to the major socio-economic challenges facing Europe, the Programme, with a budget of Euro 2.705 million for the period 1998-2002, has clear targets: to increase economic growth and create new jobs in Europe, by sustaining the innovation effort of European industry towards improved competitiveness and to support Community policies that enable competitive and sustainable development.

And a quick review of today’s web search:
The sustainable growth rate is a measure of how much a firm can grow without borrowing more money. After the firm has passed this rate, it must borrow funds from another source to facilitate growth

G* = Earnings Retention × Asset Utilization × Profitability × Financial Leverage

Resource-Based Model
The currently dominant view of business strategy – resource-based theory – is based on the concept of economic rent and the view of the company as a collection of capabilities. This view of strategy has a coherence and integrative role that places it well ahead of other mechanisms of strategic decision making.

Organizational Capability Approach
"An organizational capability approach nurtures three of the most critical factors essential to achieve superior, sustainable results:

• strategic focus,
• organizational alignment, and
• operating discipline.

Conversely, taking action to achieve strategic focus, organizational alignment, and operating discipline develops capability thinking."

Robert Tomasko: "When it comes to business growth, bigger is not always better. The key to achieving growth is to change the way we think about it. Geniune growth has more to do with reaching maximum potential than reaching maximum size."

OK, so what does this random sample of news and ideas represent?

1. That growth for your business must be clearly defined. Tomasko’s definition that genuine growth is about potential and not size demands that the entrepreneur decide how big are their dreams. This provides the context to analyze the market and identify potential for growth
   


2. Investopedia’s definition of sustainable as maximum growth without borrowing money is aligned with all of our research on the impact of growth on working capital


3. 1000ventures analysis identified two types of growth: resource and capability further narrows the definition to one that is workable for startups, micro and small businesses – given your access to resources, what is the maximum capability your current infrastructure can deliver.

When we first hatched the idea behind Applied Knowledge Laboratories in 2003, our model for sustainable, fast growth reflected the research literature and the reality of North Americans best performing companies.

We kept our scope narrow to the following definition: given the resources available, how does a business maximize everything to grow faster than the market and their industry without securing more money or destroying working capital. This definition leads us to the following

The Growth Equation

Optimum Sustainable Growth = Market Intelligence + Brand Superiority + Talent + Operations

The Components of Best Practices for Sustainable Fast Growth are:

1. Driven by Market Intelligence to


2. Build a plan for Brand Superiority


3. That maximizes your current Talent and


4. Can be flawlessly Executed NOW

Optimum Sustainable Growth - Double the Sales, Double the Margin
The road to sustainable (and fast) growth is not for the weak of heart. Less than 10% of companies in the North America qualify as a "cheetah." It takes sales twice your industry average with margins meeting the same hurdle.

Market Intelligence - The Driver of Competitive Advantage
In order to design a strategy that achieves growth, the company must excel at understanding and applying market intelligence about customers, competitors, and the economy's impact on their industry

1. Keep Current Growth - identify and target most profitable customers to retain


2. Take Business from Competitors - identify their top customers that match your offer - what will it take for them to shift


3. Anticipate Growth - identify where the market is headed - what will it take to be first


4. Move into Comparable Markets - identify and target new markets for existing products & services


5. Invest in New Offers - identify and target new markets to develop new products & services

Brand Superiority - Create a plan for Market Leadership
All successful growth strategies have some common characteristics:

1. Spread the risk - create a portfolio of complementary initiatives


2. Take Small Bites - set up smaller growth objectives in complementary areas - rule of 1%


3. Balanced Initiatives - blend organic growth (existing clients - existing products & services) with new growth


4. Commit to Superior Value - ensure supremacy in one of three areas - price, quality of products & services, overall experience - avoid being average


5. Expand Growth Opportunities - management is the constraint, not market demand


6. Manage for Growth - managing a growth portfolio as a distinct executive function

Talent - Attracting, Developing, Retaining Talent
The challenge is capturing discretionary performance. Performance that is inspired because it is based upon self-management, each of us striving to exceed previous best performance.

Part of the equation is understanding our role in the show; part is having a well-designed job that maximizes our effort, and finally user-friendly methods of tracking performance.

1. Individual Scorecards


2. Corporate, Department, Team Dashboards

Operations - Flawless Execution
The challenge for most companies is to strike a balance between defining process, steps, and roles with the need to provide the flexibility for creativity and innovation. Successful processes are designed to create extraordinary results form normal, consistent performance. Imagine what is possible when the talent is extraordinary!
The 6 Critical Processes of Sustained Growth

1. Delivery of Products & Services


2. Design of New Products & Services


3. New Client Acquisition


4. Organic Growth of Current Accounts


5. Selection & Development of People


6. Performance Self Management

FORECAST - 34 Best Practices of Fast Growth

Market Intelligence (Competitive Advantage)

The essence of understanding market leadership, it identifies where the organization can excel and is the matched set for Core Competency. Competitive Advantage exist in both real time and the future, understanding the under or unserved needs with significant financial gain of a targeted niche.
Competitive Landscape	Creating an accurate and complete picture of the entire marketplace, used to identify current and future customer value
Targeted Industries	Based upon Competitive Landscape, the selection of specific industries with un or underserved needs and high economic return
Product to Knowledge	Understanding how the customer uses your products and services to drive continuous improvement of your existing offer and development of new products and services

Brand (Core Competence)

It starts with brand, and what makes your brand superior in the eyes of the customer. Not just a marketing campaign, it is about perceived customer benefits of your end product and the experience of buying and using, it must be difficult for competitors to imitate, and finally creates uniqueness from anyone else.
Stakeholder Contribution	Creating a clear and compelling picture of the companyÂ’s future that enables everyone: employees, suppliers, and shareholders to contribute
Resource Alignment	Given your companyÂ’s strategy and processes, the most efficient method of organizing to ensure coordination without bureaucracy
Cultural Adaptability	Based upon your companyÂ’s history and traditions, the ease or difficulty for using all of its resources to conduct on-going change
Goal Integration	The blending of diverse goals (business objectives, job demands, professional development) to align people with strategy, processes with customers
Resource Deployment	Given the restrictions on available resources (money, time, people, focus), a process that maximizes results from current budget
Intellectual Leadership	Your companyÂ’s ability to establish thought leadership in its industry by being first to take advantage of new opportunities
Migration Management	Based upon trends identified in your companyÂ’s Targeted Industries, the ability to move into new markets while the opportunity exists
Change Readiness	The ability of your organization (strategy, processes, resources, people) to tackle change as part of how business is done
Strategic Response	The creation and execution of business strategy that creates a competitive advantage by making your brand superior in its niche
Targeted Accounts	Based upon your Targeted Industries, selecting customers that match the companyÂ’s core competence

Talent (Discretionary Performance)

The amount of performance the organization can capture beyond what is required. Typically, standards are set artificially low. No business is able to sustain itself when people do the minimum. Every successful company has a competitive advantage through people who work harder then required or compensated.
Knowledge Development	A future focus on the skills required to meet the performance demands as the company moves into new business opportunities
Motivating Work	A work environment where the barriers are removed and the factors that multiply performance enhanced
Employer of Choice	The processes for attracting, developing, and keeping the right talent to become the Employer of Choice in your niche
Work Organization	The informal and social relationships between members of a group and between other groups that support or hinder overall performance
Group Performance	The creation of synergy from teamwork where to results are greater than the sum of the parts
Performance Feedback	Formal and informal communications on organizational, departmental, group and individual performance
Behavioral Boundaries	The establishment of operating limits that define acceptable behaviors and enable independent decision-making.
Objective Setting	A clear and concise picture for individual and group performance that serves as the basis for performance management, succession planning, and compensation
Role Clarity	Specific and documented requirements of a job or task, linked to a process, and with real-time measurements.
Skills Training	A present focus; bringing the skill levels up to meet current role demands.

Operations (Productive Capacity)

The essence of your business model, it measures the organization's ability to provide products, services, and customer enthusiasm to specified markets. It is the delivery component for Core Competency.
Information Acquisition	The availability of multiple methods of storing information (quantitative and qualitative) from business operations for future use.
Development & Research	Reversal of traditional R&D, new ideas are developed in collaboration with suppliers and customers; bringing products and services to the market faster and at lower cost.
Process Design	An established process for designing and building product, service, sales, and support processes that ensures right first time delivery.
Knowledge Dissemination	The availability of multiple methods for retrieving information (quantitative and qualitative) used in problem solving and decision-making.
Production Equipment	Reliable and robust applications (machinery, computers, pagers, phones, etc.) that are user friendly and dependable.
Inventory Management	An established and ongoing process for managing inventory using JIT (just in time) methods to reduce costs and ensure quality.
Preventive Maintenance	An established and ongoing process for ensuring equipment is managed through its lifecycle, not run to destruction.
Process Reengineering	An established and ongoing process that ensures every component of the business is continuously improved using the tools of quality.
Project Management	A core competency of change, the ability to manage the process of change is determined by the ability to manage large and complex projects.
Beta Testing	Based on research & development initiatives, a methodology that tests processes, products, and services with end users prior to launch.
Operations to Knowledge	The lessons learned from internal operations to R&D and continuous improvement initiatives.

Consulting - The Rules of Engagement

This is not an exhaustive essay on the history or components of consultative selling. My goal is to address the challenges of this sales model in the virtual medium; it is hard enough to make it work face to face, building consultative relationships online is even more challenging.

Building a Professional Relationship with your ‘Pilot’

Consulting is very similar to being a harbour pilot who guides ships through the narrow, shallow and dangerous coastal waters between a harbour and the open sea.

A highly coveted and potentially dangerous position, a pilot is a master mariner with many years of experience in the harbor that (s)he is licensed to operate in.

Pilots specifically use the pilotage techniques relying on nearby visual reference points and local knowledge of tides, swells, currents, depths and shoals that might not be readily identifiable on the nautical charts without first hand experience in the harbor in question.

I thought this analogy would help in describing how we do business. Our team at Applied Knowledge Labs offer than same expertise. Smaller companies suffer the same set of obstacles to growth - the owner operator. Those things that made you successful up to now are the obstacles to further growth; it is called the 'Founder Trap'. It can be overcome, but the challenge is you are the business and the business is you - so any criticism or improvement suggestions are personal. Given our years of experience dealing with this dynamic, let me offer you some insights on how we can work through it by working together.

The assumptions we operate under:
1. I am hired to be fired!? In other words, my job is not to tell you what you want to hear, my job is to tell you what you need to hear. When selling expertise I must be brave enough to risk losing the sale. You have people on salary to reinforce your opinion.

2. Usually, I am presented with both the problem and a solution. If I accept this as the truth, then it becomes a relationship sale. Clients typically do not have a handle on the real situation because of issues beyond this commentary. They need the expertise we bring plus a new and unbiased set of eyes to move upstream until the real source of the pain is identified.

3. The essence of consultative selling is collaboratively assessing and diagnosing the situation. The sale is really made when you and I become convinced that the true problem has been identified. Solutions now become simple.

4. Argue against my own interest!? First, my analysis must be independent of recommendations otherwise it is tainted. You (the client) must believe the results represent the truth without agenda. If my work can achieve this end, sufficient credibility exists to compete for the next stage in the sale. Also, if I am not the best provider – I must pass it up and/or help you find someone else. Delivering where I am incompetent is a recipe for death (margins and reputation).

Now for the online challenge, without an ongoing relationship where clients know you, questioning their decisions will lead to the end of the opportunity. I must create the perception of credibility and integrity; I mean you no harm and I am your number one advocate.

Next Step – Building a Relationship that allows for truth.