Strategic Discipline Blog

Your business relies on new customers for growth.  It's experiencing an increasing number of no shows for new customer appointments.  You’ve tried a number of changes, and techniques to get your new patients to honor the first visit they’ve scheduled however nothing seems to be working.  The loss of 1 or more appointments per day is a major reduction in efficiency for you and your staff to say nothing of the revenue loss.

Do your meetings lack conflict?  If so, isn’t that good?

A question that frequently comes up is what should I have Key Performance Indicators for in my business? Certainly there are lot of options.  Revenue and profit margin are Key Performance Indicators that everyone should monitor, however these are lagging indicators.   What Key Performance Indicators do you have in place that predict your revenue and profit margin?  Do you monitor your sales effort and have indicators that report on your sales pipeline?  How reliable are these?  Do you monitor your variable costs and fixed expenses?  Contribution margin is a good forecaster of profit margin as well as gross profit margin.  Yet do these give you enough information far ahead of your performance to be true leading indicators?  With time and practice whatever number you choose to watch you can discover which key metrics help predict the crucial outcomes in your business.

As we approach 2011 and put 2010 in the review mirror it’s important to understand that there are two types of key performance indicators in your business: leading and lagging. 

In my monthly newsletter this week, Without A Plan: Expect 40% Less I offered insight into how one of my client’s developed his business.  Through the practice of Strategic Discipline he put himself in position to sell his company at the end of November. 

Last blog Bad Performance is Your Responsibility we discussed how ultimately the results you are getting from your people is your accountability.  The bottom line here is that in order to get the 40% discretionary effort from your people which leads to higher performance you need to identify the behaviors that are producing poor outcomes and arrange consequences that will stop them.  Next identify the behaviors that will produce desirable outcomes and arrange consequences that will positively reinforce them. 

If your business and specifically your people are producing the wrong outcomes it’s very important that you understand this.  Every company is getting the performance it should be because it’s reinforcing that performance with what it is currently doing.  If you’re not happy with what you’re getting you need to put consequences in place that stop these outcomes and then put new consequences in place to positively reinforce the new outcome you want.  The bad news is you’re reinforcing the wrong things or you wouldn’t be getting that performance.  The good news is you can change it with some diligence.

“Atta boy!”  “Nice job!”  “Great Sale”  “Appreciate your staying late to get that done!”

On a scale of 0 to 10 with ten being extremely lucky, how lucky are you?

A group of 12 young men, high school age have just completed a strenuous basketball practice.  The coach has asked them to join him in his class room to discuss the upcoming season.  He’s a new coach this year, although he has many years of experience.  He asks the team what place they expect to finish in the conference noting that this is a team sport and it’s important the team has a goal to shoot for.  He asks everyone to write down their expected finish, and then collects the results.  The votes are counted.  Ten voted for first place, 2 for second.  

What place do you think the team finished?

If you said second you’re right.  The account is from my senior season of high school basketball.  What does that tell you about the importance of having the right people on the bus?  Our team had steadily improved the previous two seasons.  When I was a sophomore the varsity basketball team hadn’t won in 36 games.  Our team largely composed of sophomores won two games that season and finished 2 – 17.  The next season we improved to 12-7.  We were a confident team going into our senior year.  As a junior I recall playing in the final game of the regular season against a team who was battling us for 3^rd place in our conference. In addition to this battle, I was in a close contest with one of their players for the scoring title in the conference.  I recall two of our players telling me before that game not to worry, they would make sure this player didn’t score so not only would we win the game they’d make sure I’d win the conference scoring title.  That’s the kind of players you want on your team, people willing to sacrifice for the good of others and the team.