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Strategic Discipline Blog

Four Decisions Three Disciplines

Posted by Douglas Wick on Mon, Oct 14, 2013

In these blogs we emphasize the importance of Four Decisions and Three Disciplines, the later a Positioning Systems foundation principle for  Strategic Discipline.

What will you gain by attending the Mastering the Rockefeller Habits Four Decision Workshop?  Your understanding of the Four Decisions and Three Disciplines will grow, yet most importantly you will get practical working knowledge on how to apply these principles directly to your business.  Within the workshop we will work on your business, helping you to build a 3-5 year plan, annual plan and quarterly plan for 2014.  Best of all you’ll have a coach by your side to help answer questions and focus on your specific business.  We’ll be working hand and hand with you to help you achieve the results you desire for your company.

Let’s look quickly at what the Four Decisions describe the imageand Three Disciplines are to help you understand what to expect.

Decisions equal success – and there are four decisions, in growing your business, that you must get right or risk leaving significant revenues, profits, and time on the table. These four decisions: People, Strategy, Execution, and Cash.

People: No less expert than Jim Collins proclaimed in Good to Great, “First who then what!” People challenges impact your happiness and can be either a source of energy or an emotional drain. People issues can include conflicts with a partner, a customer with too large a piece of your business, a supplier delaying your success, a key employee or two that’s disrupting the rest of the organization’s effectiveness, or challenges at home. Or you might simply lack enough employees to serve your customers, though we caution executives to avoid tossing employees at problems. 

Until you settle these relationship issues, they’ll continue to consume a tremendous amount of emotional energy, making it difficult to focus on the other three main decisions. Focus on getting the right people doing the right things with clear accountabilities and metrics.

Gazelles has a One Page People tool (provided when you attend the workshop) that will help you sort out these accountabilities and metrics..

Strategy: Strategy challenges are indicated by a slowing in top line revenue growth. If revenue is not growing as quickly as you like, then it’s time to re-examine your strategy i.e. what you’re selling to whom. It’s important to have a concise articulation of that strategy so you can get everyone aligned and on the same page without wasting sales or operational energies on activities not useful to the business. 

Jim Collins, author of Good to Great, calls this precisely articulated strategy a company’s “hedgehog.” Alan Rudy, founder of growth company incubator Into Great, calls it the “ping” of the business. Others call it a unique selling proposition (USP), differential advantage, or brand promise.  Whatever you choose to call it, you know you’ve nailed it if revenues are growing as rapidly as you want.  Turbulent economic times tend to expose weak strategies which are why we’re seeing many companies re-examining their business models. 

Gazelles has a One Page Strategic Planning document that help you get everyone on the same page...

Execution: Execution challenges surface when your increasing revenues are not generating increasing profits. I’ve seen many firms triple their revenue, because they have capitalized on a differential advantage, only to see their profitability drop because of the sloppiness of their execution. 

The other indication of poor execution is pure hours spent delivering your products or services. When execution is haphazard, the organization has to rely on the “heroics” of their people putting in incredible hours to just keep the wheels from falling off the organization. By simply tightening up your execution habits, you can dramatically improve gross margins and profitability while reducing the time it takes for everyone to complete their work. 

Gazelles has a One-Page Execution Checklist (The Rockefeller Habits) of ten habits that will reduce by up to 90% the time it takes you to manage the business, freeing up the leadership to spend more time on market-facing activities.

Cash: And the last challenge is Cash. The first law of entrepreneurial gravity is “Growth Sucks Cash.” We encourage companies to calculate their Cash Conversion Cycle (CCC) which measures companywide how long it takes between when you spend a dollar (marketing, design, rent, wages, etc.) until you get that dollar back. 

In the early days of Dell, the CCC was running 63 days and caused Michael to almost run out of cash. By focusing on decreasing this cycle, today they are running close to minus 35 days. This means they generate more cash the faster they grow, which is why they have over $9 billion in the bank, up from $6 billion when they got in trouble. We believe all growth firms can accomplish this or at least dramatically improve their CCC giving them sufficient internal cash to fuel their growth. 

I suggest executives read Neil Churchill’s famous article entitled “How Fast Can Your Company Afford to Grow” which provides the formulas for calculating your cash conversion cycle.  Gazelles has a One Page Cash Tool (provided when you attend the workshop) which outlines the cash cycle and helps you for work through concrete ways to double operating cash flow in the next twelve months.

Our Gazelles coaching methods and in particular Positioning Systems foundational principles find the Three Disciplines Rockefeller preached as fundamental to growing any business.  This is particularly true for small to mid-sized businesses where the business principal can frequently be the greatest obstacle to success.

The three disciplines we teach are:

  1. Priorities:  Knowing what to focus on is critical.  Where and what do you put your energy toward?  What, if you put your full concentration upon it, will impact your business most? Is it one of the Four Decisions; People, Strategy, Execution or Cash?  Once you determine what it is, you need to make it your One Thing.  To the exclusion of all others you must concentrate on this.  In doing so not only will you achieve it, you will drag other important priorities with it toward accomplishment.  Your One Thing is the equivalent of the blitzkrieg military strategy, placing all of your forces at the enemy's weakest point.  Make sure it is the proper priority and that your time and resources are well invested.
  2. Meeting Rhythms: Rockefeller met with his key people every day for lunch.  As Verne points out in Mastering the Rockefeller Habits, Rockefeller knew the meaning of the word company means "to share bread."  While personal and professional relationships were strengthened, far more important is the vital communication, exchange and feedback that occurred on a daily basis.  These ambitious men weren't just hobnobbing or chit chatting, they shared vital market information, customer and employee data that helped them to make better decisions.  Meeting Rhythms, following the guidelines we provide, are truly a cadence of accountability.   Priorities and benchmarks are shared and most importantly ....
  3. Metrics: You can't manage what you don't measure.  Rockefeller's business numbers were a common discussion of the daily lunch.  Making people accountable is impossible without measurement.  Indeed your best and most competitive people will want the numbers to score how well they are doing.  It may be one of the most common instruments to measure whether a candidate is an A player or not.  Simply ask them how they measure success.   If they are not aware of the metrics which drive their accomplishments, then it's probably also true that they are not at the top of the food chain as an A player.   The best leaders are paid most for their ability to predict and delegate.  Without metrics it is impossible to forecast your future.  Metrics updated in company and individual dashboards is Pearson’s Law in action. 

These Three Disciplines are essential to your businesses success.  They are essential to developing a discipline for growth.  Unfortunately most business owners and managers fail to recognize the importance of Strategic Discipline and how it influences the area of accountability.  Accountability is one of the major reasons to engage a coach. 

Want to achieve confidence your 2014 will be successful. Plan to attend the The Mastering the Rockefeller Habits Four Decisions Workshop.   Get to know these principles and implement the necessary discipline required to make your business successful.  Discover what these essential business success principles can do and learn how to embrace these disciplines to ensure your business is successful in 2014! 

Topics: Strategic Discipline, 4-3-2-1 formula for business growth, Mastering the Rockefeller Habits, Four Decisions

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Certified Gazelles Coach

Doug Wick, President

Positioning Systems

 

The Strategic Discipline Blog focuses on small to midsize business owners with a ravenous appetite to improve his or her leadership skills and business results.

Our 3 disciplines include:

- Priorities
- Metrics
- Meeting Rhythms

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