by Elizabeth Hines | Aug 7, 2013 | Blog
In NBC’s comedy Outsourced,Todd Dempsy (Ben Rappaport) moves to India to manage the company’s newly outsourced call center. When he meets the team he will be managing he discovers that they have little to no understanding of the product-line and how to engage with customers in a culturally appropriate manner. The show is a great illustration of the need to give serious thought to: 1) Should I outsource?; and 2) To/with whom?
While outsourcing is fast becoming the successful business battle cry, it is not the panacea. You need to determine your company’s core competencies and how you can deliver the best value to your customers. Are there services at which your company does not excel, or non-critical services which could be carried out more efficiently/effectively if the service were outsourced? If so, you may want to think about outsourcing.
Look before you leap
However, before making the decision to outsource, consider the hidden and long-term costs which can potentially be expensive. Additionally, it is important to weigh the risks of losing customers or market share.
Acquisition?
If, through evaluation and analysis of your core competencies and value proposition, you believe you have the capability but not the technology, you may want to consider acquisition. Explore the competencies of small and/or niche companies in the technology, logistics, and supply chain industries. There are many such companies that have unique capabilities in terms of technology, talent, and/or customer depth or growth. Would acquisition make more sense than outsourcing? How would this impact your company? Your customers?
If you do decide to outsource, think carefully about what company you want to partner with. I’ve previously written about what to consider when choosing a partner.
by Elizabeth Hines | Jul 31, 2013 | Blog
Earlier this month I wrote a post for EBN about how to manage your company and clients when the classic 80/20 rule applies. That is, when a small number clients generate 80 percent (or more) of your revenue. In the post, I made the recommendation to manage clients who are not a good fit with your model out of your portfolio. Several people responded to the post asking how to go about doing this. Here’s how.
Once you have determined that a client is not a good fit with your model, manage them out. Managing a client out of your portfolio is tough, tricky, and essential for you and for your client. If your client isn’t the right fit with your model, then you will not be able to provide your client with the best service. This is the crux of the issue. You, as a company, need to do the best job possible for your client. If the client doesn’t fit your model, you are not doing a good service by keeping the client in your portfolio.
Saying good-bye
Begin by doing a thorough audit of your relationship with the client. Identify why the client doesn’t fit your company’s model. That is, pin-point the disconnect between your client’s needs and what your company offers. As you do this exercise, look at the relationship with your client over time. Have you grown apart as your businesses have changes/grown? Has the relationship never been a good fit? It is important to drill down and truly assess the relationship. Document everything.
Next, set up a meeting or a call with the client – breaking up over text or email is unacceptable. Begin the conversation with honesty and tell the client that you believe they could receive better service and better value if they worked with a company that better fit their model. If possible, provide the client with names of companies that would be a better fit.
Talk with the client about putting together a transition plan. Let the client know that the relationship isn’t over immediately and that the lines of communication will always be open. Alleviate fears that the transition will be difficult.
It is vital that when you talk with the client, you talk about your client’s needs and focus on these. For example, look at the difference between these two approaches:
#1: You tell your client: “Your business is a niche company not only in terms of product offering but also in terms of location. I have really enjoyed working with you and watching your company grow. Because I value you as a client, I believe you would be better served by a company that is well-positioned in the Atlanta metro area and really knows the model car industry. We just aren’t that company, and I feel we are holding you back.”
#2: You tell your client: “Your business isn’t right for my company. We don’t have the time or people to devote to your needs. Our model and yours doesn’t match, we need to recognize this and move on.”
Approach #1 shows your client you understand their needs and that you value the relationship.
Breaking up is hard to do, but if you do it right you will likely receive a call down the road from the client thanking you for breaking up with them.
by Elizabeth Hines | Jul 27, 2012 | Blog
It’s safe to say that the clients I engage with fall into two categories when it comes to business data; those that are drowning in it and those that ignore it altogether. The ones that are drowning in data know all the relevant facts that keep them out of trouble with their Boards or their senior executives, but struggle to tell you what really drives their business costs or profits. The ones that ignore the data are the savvy veterans that rely on their historical win / loss records in their business, but ask them to change course or innovate, and they are like fish out of water.
Chances are you’ll fall somewhere close to those two camps, and for some time, I did as well. It was then that I realized that tracking data for the sake of “tracking” was a waste of time for me and for my teams. However, there is data that should be relentlessly tracked and used in all of your decision processes. I call this data, “Decision-Quality”. This is the data you track that drives your business strategy and execution.
Decision Quality data goes beyond the traditional Profit / Loss packages that are churned out every quarter and disseminated to your business chieftains. Decision Quality Data sets are the building blocks and the levers of your business. Examples of Decision Quality Data are areas of your business that can be affected by the execution of your employees. Put simply, your sales employees may not be able to directly affect your finance treasury function, but working together with your finance team, they CAN effect cash flow by selling credit-worthy customers, cutting better financial deals, and when necessary, helping in the collection process. The same can be said of your purchasing professionals teaming with distribution leaders and finance team. This team can coordinate at the front line to cut costs and reduce inventory spend by developing inventory and financial metrics that matter to them and the company overall. By working in concert, they have the ability to solve the problems that arise and avoid pitfalls in real time instead of reacting when the quarterly metrics come out.
Quite frankly, if you are collecting and looking at data, but not taking action as the result of it, STOP. You won’t miss a thing and your team will thank you for saving them time to spend on more productive activities. Don’t fall into the data-cycle-trap dictated by data that is tracked on a calendar basis for the sake of tracking. Ask your teams what data they need to be effective, and simplify the way for them to get it in near real time. Once this type of data is in the hands of a cross functional team of front line managers, task them with the needed improvement and watch them make dramatic impacts in your overall business performance and customer experience, and in turn, your profits. The results will be better and more sustained than if you drove them with a mandate from the top because these managers live and breathe in the environment that created the data in the first place. Their cross functional nature and familiarity with the issues are a winning combination. Give them the data and the direction and watch your teams win.
by Elizabeth Hines | Feb 10, 2012 | Blog
Being in the strategic advisory space, I get a lot of exposure to various business strategies, strategic plans, and sales plans, both internally to organizations and from outsiders looking to raise money or gain influence.
What I have found is that most of these “plans” spend far too much time on what I like to call “creative accounting”. That is, the artful creation of financials that match and make numerical sense, but have very little credibility in the real world because the important business details are left out.
Businesses spend far too much time creating numbers and spreadsheets and devote too little attention to information that really matters. As a result, any plan that cannot be substantiated outside of a spreadsheet is doomed to be discounted…and so are the presenters.
Don’t get me wrong, you need to have a financial base and rock solid financial modeling in your planning efforts or all bets is off. But alongside of that, spend some time on building credibility in those numbers by focusing on what interested parties need to know outside of the spreadsheets in order to make an informed decision…one that’s in your favor.
Specifically, I encourage clients to focus on these items in order to build credibility in their financial plans:
1) What is the opportunity? What the business will sell, who is buying, why are they buying, how much are they buying now, and how much and how fast will their buying increase (or decrease) and why?
2) Who are the people involved? The internal team, the external team, any outside resources or partners providing key services or important resources, contingencies for the partnerships and the switching costs involved if needed.
3) The financial context. How will interest rates, buying trends, competition, demand, and for that matter, supply shape the financials of the plan.
4) The up-side and the down-side risk. What can go right or wrong, to what extent (up or down) and how will the team or company adjust to the increased revenue opportunity as well as the opposite…the decrease in the need for the product or service. Do these risks and rewards make sense in real world scenarios?
Gone are the days where financial engineers can develop models without operational integrity. Models that make sense financially and operationally are now in vogue…thank goodness.
