5.15.80: COST FIRST OR DIE - THE 80% - WILLIAM EASTMAN

PROFIT RADIO - "A Network of Entrepreneurs for Entrepreneurs"

Introduction
​We introduced the 5.15.80 Model at the beginning of the Season. It was a combination of research into small business performance and our practical experience from the last 2 decades. You could go to any area around the global with a market based economy and randomly select 1,000 companies, here is the distribution you would find: 5% or 50 companies that own their markets, 15% or 150 companies that are making money, and 80% or 800 companies that are barely surviving.

This series is about how to move from one level up and our concern in this series is the 80%, the focus now is how to make the business perform and viable.

LISTEN > ENGAGE > APPLY

Show Objectives
Today we start 3 of the 9 Disciplines of Fast Growth. These are the beginning disciplines that will move a successful business to a market dominator.

Disciple 4 is the first in the sequence and starts with ways to improve market and sales performance. 

Discipline(s) 7, 8, and 9.

• D9 Achieve Operational Efficiency
• D8 Distinctify the Offer

• D7 Professionalize Leadership & Management

Key Issues - Owner Perspective:

1. What should I do make this business viable?

What Do I Need To Know
The Job App
The purpose of this job app is to provide a step-by-step guide for improving an existing process. The organization has the advantage of experience over time to understand what works and what needs improving. Benchmarking an existing process against the industry, the company has an opportunity to start from a better position and collapse the learning curve.

Who: Managers, Subject Matter Experts (SME), Front Line Employees.
The challenge is building on the past to create the future. The managers or immediate supervisors need to be involved to provide resources and ensure this process fits into the larger organization. SME's bring specific technical expertise to incorporate the latest improvements into the process. Front Line Employees provide a pragmatic filter and a set of hands to get it done. Additionally it builds commitment to the new process.

Resources: Manuals (equipment, software, etc.), Collaboration Software, Competitor Product & Service research, internal defect data, external defect data.

Resource materials are used to identify all of the “musts” of the new process. If the process is complicated and/or being built virtually – flow charting and/or relationship  software (Visio, Mind Mapping, etc.) is essential. Product & Service research, if the selected process impacts either, is necessary to understand what is average and what is exceptional. Defect data, internal and external, is used to look for patterns and identify root causes of problems.

Time: 3-5 weeks
Market Research is the most expensive – hard costs. QFSD is the most technical – requires accurate information (research) and SME's familiar with the process. The major time issue is active participation from the front line to ensure buy in.

Key Terms

• “Should Be” - what the organization believes – what policy requires & best practices built on a clean slate
• “As Is”  - what it actually is – what people are doing
• “To Be” - what is possible – how much of the gap can close between Should Be ans As Is
• SME – Subject Matter Expert, either internal or external
• QSFD – Quality/Service Function Deployment – technical method of integrating end user demands with technical requirements, used for designing processes, products, and services.

What You Need to Do

1. Select the Target Process: Project Manager selects a target process.
2. ​Assemble Process Teams: Simple Projects – Project Manager creates an Action Team to handle the design, building, testing, and finalizing of the new process. Complex Projects – Executive creates a Design Team for research, design, and project management; and an Action Team for building and testing the new process.
3. Create “As Is” Process: Project Manager or Design Team works with employees in the targeted process to determine what they “actually do” and why those steps/methods were chosen.
4. Conduct Market Research: Based upon the output produced from the targeted process  Project Manager conducts research to establish a Benchmark (Should Be) as a starting point.
5. Compare “As Is” to “Should Be” Process: Project Manager or Design Team compares what should be done against what actually occurs to determine the reasons for the difference. This information is critical for designing the “To Be” process.
6. Complete a QSFD: A structured process for creating design specifications based upon user needs and technological requirements. Should include project manager, functional management, subject matter experts, and front line employees.
7. Create “To Be” Process Map: Starting from the As Is, Design and/or Action Team build a process that establishes the company as the LCP (Lowest Cost Producer) or as close as possible.
8. Test “To Be” Process: Action Team tests the new process under real conditions to identify cycle time, costs, and defect constraints in achieving LCP.
9. Upgrade “To Be” Process: Action Team incorporates improvements to reduce costs and cycle time, and eliminate defects until performance standards are achieved.
10. Finalize “To Be” Process: Project Manager or Design Team reviews results from the Testing and Upgrade Steps and “freezes” the final design as a new “As Is”. 
11. Integrate Policy & Procedures: Project Manager or Design Team updates Corporate Policies and Procedures to formalize the new process – creates the new standard – the “As Is” process.
12. Update Position Descriptions: Ensure new and/or revised tasks are incorporated in Position Descriptions for hiring, management, and compensation.
13. Scheduled Review: Each significant process should undergo periodic review to ensure the organization maintains LCP in their market.

How to build or improve your business with IBGR

1. Follow the 5.15.80 Series all season.​
2. Get your business growth news everyday from IBGR.Network
3. JOIN the IBGR Community
4. DOWNLOAD the IBGR Growth App
5. RESEARCH anything related to Starting, growing, or Exiting a business on the IBGR Network

We are your single, one stop source for business success, period, end of story.

Make sure you leave some thoughts in the comment section below. I am interested in continuing the conversation.