The dream of any company

Today, after almost 6 months, I am resuming my weekly blogging. I want to start this series by introducing a reliable proven path to sustainable profitable growth – the dream of any company.

The core purpose of any business is consistently (or perpetually) delivering and creating value to all the stakeholders. Shareholders or owners of a business would be the 1st stakeholder who took the step to start the business. People covering both managers (also employees) and reportees (also employees) would be the 2nd and the most important stakeholder in a business, whose primary role is fulfilling the expectations of all the stakeholders (including that of People). Customers or market would be the 3rd stakeholder who got interested in the value proposition offered by the business and decided to buy the products/services. Government or regulator would be the 4th stakeholder for having granted approvals to start the business for a prospering economy. Suppliers or business partners would be the 5th stakeholder who deliver products and/or services to the business for further value addition. Creditors or financers who provide funds against either interest or equity would be the 6th stakeholder, who provide cash, the oxygen in any business. Community or society would be the 7th stakeholder of any business, for enhancing their quality of life from the prosperous thriving of the business.

People or employees (both managers and reportees) in any business continuously satisfy and delight all the stakeholders, including themselves, with consistent value creation. Establishing a common understanding of the expectations, the current reality, and the strategies to meet the expectations is the most important step in fulfilling the purpose of any company. Unfortunately, in many struggling companies this critical step is taken for granted and only a couple of people, at times agreeing to disagree, assume to have collectively and inclusively developed the strategies based on their understanding of the stakeholder expectations and the current reality, while hoping all the other people to agree and just follow the instructions with all their mind, heart, body and soul.

Once the strategies are thought through, the most important step is to prepare a rolling plan for the top level key business metrics for, Year, Quarter, Month, Week or Day, Year or Quarter being the most common one for the these metrics. These then can be broken to Months, Weeks or Days. Covering 5 time zones is the most optimum one for balancing constancy needed for efficiency in operations and the agility needed for effectiveness in meeting the natural market fluctuations. The 5 time zones are Actual (-1), Estimate (0), Plan (+1), Forecast (+2) and Target (+3), with the guideline to freeze the Estimate, Plan and Forecast while accommodating the fluctuations in the Target.

Based on the rolling plan, developing a KPI tree for identifying the driver metrics, enables focussing on the right levers for target fulfilment. The process or the sequence of activities needed to execute the strategy by the people in diverse roles within an organization structure for each of the activities and the effectiveness and efficiency metrics or indicators for the process would be the next foundation for fulfilling the stakeholder expectations. Defining one-time project targets and recurring operation targets for the metrics identified in the process, followed by target fulfilment planning by the respective organisational roles for defining initiatives with tasks and timelines and practices with routines and timings is a common practice in a world class company.

People then get on to the execution phase and start working on both the tasks and routines, giving their best and doing their best, without really knowing the actual status of how much the others have progressed, in struggling organisations. Whereas in world class organisations, people regularly report their success with the routines and the expected completion date of their tasks for the benefit of the other people, apart from working passionately. Based on their reports almost in real time they are able to identify the gap between the current forecast and the target, so that they can learn from their successes and failures for bridging the gap and fulfilling the targets consistently. Since this reporting practice is normally missing in the struggling organisations, even though the people are equally competent, they hardly have enough time to bridge the gap and fulfil their targets.

Once a gap between the current forecast and the target is identified, the people in the world class companies start thinking on the causes contributing to the gap, prepare a cause and effect diagram, use the pareto analysis to identify the top contributing causes and define one-time project targets and recurring operation targets for these causes to make them predictable, after having identified them and making them verifiable, measurable, reportable, governable and capable, so that the trend towards target improves, and the gap between the current forecast and the target vanishes, for consistently fulfilling the targets and delighting the stakeholders. People in better world class organisations are thinking more often than the others to discover new causes and make them predictable, further improving their success and further pushing themselves with even more challenging targets for not only just fulfilling the stakeholder expectations but also delighting them with their performance.

In the next weeks, I will be blogging on how the struggling companies can SURGE with doHow®, a performance excellence platform, I developed for enabling the struggling companies become world class.

Happy Reading!

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