Transform Your Business

My article is featured in CATS Recruit Section, page C30, of The Straits Times today, 17 June 2009. We have it reproduced here for your reading pleasure.

Businesses will need to manage the process of cost reduction well to ensure that they do not unwittingly compromise their product quality or service standards. Cost-cutting is a short-term strategy. It is far more important that companies take a long-term view to build and strengthen their organisation and its capabilities now, positioning themselves for the eventual economic recovery.

Over the years, businesses have worked hard to win customers to get to where they are today. To lose their customers now would be tragic indeed. Studies have shown that it costs up to six times more money to acquire a new customer than to retain an existing one. In the slow economy, it would probably cost even more to win a new account.

Businesses must have an unrelenting focus on delivering the best customer experience. There must be the line of sight from the top to the bottom of the organisation. Take care of that and you will enjoy customer loyalty – and revenues and profitability will follow. Many companies find that 20 per cent of their customers provide over 80 per cent of their revenue. Thus, high levels of repeat customers will lead to high levels of profit.

To achieve that, companies must remain constantly vigilant about the changing requirements of their customers, understand their business models and the markets they operate in, know what their customers want and deliver these to help their customers succeed.

Achieving excellence

To achieve business excellence, everyone in the organisation needs to focus on delivering customer satisfaction by taking personal responsibility for improving processes and be empowered to make changes.

Departments need to become self-managed teams; cross-functional teams are needed at the company level; and the organisation needs to be flatter and more efficient for faster decision-making and response. When the company finds a problem or an opportunity for improvement outside, they need to collaborate to find the solution.

For that to happen and for that change to be successful and sustainable, a holistically integrated approach to business excellence, which engages all parts and elements of the organisation and its leadership, is required.

Leadership for change

Executives must lead the change process, the thinking about productivity and quality to learning to create a company that consistently delivers high value and customer satisfaction.
They must establish a culture of continuous improvement that seeks to remove bottlenecks, eliminate sources of wastes and customer dissatisfaction, and become more efficient and more effective.

There must be a focus on reducing cycle time, rapidly transferring knowledge and delighting the customer – these help the company to maintain its competitive edge.

Management must also be able to spot changing customer preferences, be aware of the changing competitive landscape, harness advances in technology, seize opportunities and implement new solutions rapidly.

Product and service standards have to stretch from the top to the bottom of the organisation and need to cut across all departmental lines. The organisation’s own learning and development process must be structured, systematic and focused on building on its strength. Critical systems that support hiring, training, recognition, career advancement and information access need to be in place.

Employee engagement

Organisations can reorganise, downsize and streamline their way to efficiency. These approaches are necessary but often not sufficient to catapult organisations into high performance mode because they neglect one essential component of performance – engaging employees in their work.

To mobilise the entire organisation, leaders must ask for employees’ inputs and their involvement, especially in areas that need improvement. Unfortunately, in modern day continuous improvement process this step is often missed which causes communication and ownership problems that hinder success. Employees must be trained and equipped to go from “good to great”.

Total approach needed

For companies to be successful in their business, they need to be responsive to their customers’ needs at every step of the business process involving every function, employee and leader. Anything short of a total approach is unlikely to deliver the desired outcomes.

Organisational transformation is a long-term process requiring a fundamental change in management practices and culture – a paradigm shift.

Finally, the organisational direction that advocates the strategic intent has to be clear about the objectives that needs to be achieved, the type of values and capabilities that are needed and how all this is going to be implemented for successful change to occur.

If you like this article, please subscribe to our blog and get our FREE Report on “10 Secrets to Successful Employee Engagement”.

Written by Robert Chew
Principal Consultant and Corporate Trainer
Website: www.quartonmanagement.com

P.S. Register NOW for his powerful workshop on 29 and 30 June 2009 at ST701 Seminar and Workshop and enjoy early bird discounted fee. Please logon to www.jobs.st701.com. Hurry, limited seats left!

How To Cut Costs The Smart Way

My article is featured in CATS Recruit Section, page C26, of The Straits Times on 11 June 2009. We have it reproduced here for your reading pleasure.

There are costs involved in manufacturing a product or providing a service. In fact, every activity in an organisation costs money. And prudence would have it that money in any business should be well spent or invested.

Cost is, undoubtedly, a key factor to competitiveness. As organisations face the current global economic challenge, the pressure now is even far greater for them to find ways to reduce their operating costs to remain profitable. But it has also become increasingly difficult to compete on price alone.

For businesses to remain profitable and viable over the longer term, companies will have to continue to satisfy the needs of their customers in more efficient ways, demonstrating value for money.

Prominent American quality consultants Armand Feigenbaum and James Harrington have pointed out that 25 to 40 per cent of operating costs result in waste. Separate studies undertaken by the American Society for Quality (ASQ) have also shown that waste can go as high as 40 per cent of sales.

Waste is any resource-consuming activity that adds no value for the customer. For most organisations, customers are the users or consumers of their products, services or both. Clearly, the focus is on external customers. But identifying waste can and must also be applied to the support activities that serve internal customers.

High Costs

In the past, there was insufficient information about production and service costs. Hence, there was limited scope for comparisons and benchmarking. Organisations, as a result, were able to pass on their high costs of production and services to their customers and continued to do so for a long time.

Nowadays, customers are more well-informed about processes and the service delivery supply chain. They are now able to analyse and compare the cost structure of their supplier organisations to determine where they might be able to derive highest value for the money they pay to acquire goods and services.

Limitations

In traditional accounting, organisations may know their total revenues and costs to the penny. But they have no idea how much they throw away every day on plain simple ineffectiveness, inefficiency and waste.

These are not visible on financial reports because traditional accounting methods do not provide a means of separating value-added activity from wasteful or low-value activity. As such, they do not show the high costs of ineffectiveness and inefficiency within the organisation.

Reducing Waste

Since traditional accounting methods have their limitations, the management of most organisations attempt to control inefficiency and ineffectiveness the best they can without proper tools and metrics – resulting in much wasteful activity.

If your accounting systems are of little help and your management practices lack the knowledge to be lean and productive, then how do you identify waste and unproductive costs?

There are two approaches. The first is a variation of cost accounting and is called activity-based costing, or ABC. It is an excellent system for identifying low-value activity, but it has drawbacks. It is a formal accounting system that parallels existing systems; it depends on considerable input from large numbers of individuals who already are working at their time capacity limits, and it requires a high level of system support.

The second approach is one with assessment and problem-solving capabilities and is called the cost of quality or COQ.

Improve Processes

The biggest opportunity organisations have to boost the bottom line comes from improving their business processes. The survival of many organisations is dependent on these improvements.

In many companies, management can make more profit by cutting unnecessary costs in half than doubling sales. This can be accomplished without hiring one new person, building a new facility, or finding one new customer.

Organisations must therefore identify unnecessary costs in the business processes and take action to improve the company’s bottom line.

Organisations must help their employees recognize wastefulness, maintain a high visibility of what these are, systematically reduce non-value-added activities and reducing costs the smart way.

An organisation that focuses on profit may have maximum profits in the near future. But an organisation that focuses on its reputation of being the highest value provider will provide the best return to its investors in the long haul.

If you like this article, please subscribe to our blog and get our Free Report on “10 Secrets to Successful Employee Engagement”.

Written by Robert Chew

Principal Consultant & Corporate Trainer

Website: www.quartonmanagement.com

P.S. Register NOW for his powerful workshop on 26 June 2009 at ST701 Seminar and Workshop and enjoy early bird discounted fee. Please logon to jobs.st701.com. Hurry, limited seats left!

You Cannot Change the Past- But You Can Shape the Future

It is true that the past has an impact on who you are today. If you look at yourself today, you will either see someone who has overcome obstacles positively, or someone who has maybe let the obstacles overcome them. In any case, we all have situations in our life that we might have wanted to play out differently. There are some incidents in my life that I am not proud of, but I have to remind myself that what matters now is the future and I can’t change my past.

Even if I could change it, why should I? It has served as a learning experience and, therefore, it is something that contributes to my development.

So how can you take those not so pleasurable experiences and make them into something usable? Allow me to suggest some pointers when you are looking to leave the past behind you.

1. Do not allow your past to creep up into decisions where it dictates your life. If your past has held you back before, it has no bearings in the future.

2. Let it go and embrace the changes you can make today, tomorrow and years to come. Instead of looking back a year ago, look ahead a year. Set goals that will allow you to accomplish something you have wanted to do. Those goals will lead to more goals. Pretty soon, you will look back over your shoulder and see only positive and smile.

3. If you have gone through a traumatic experience in your life, it is unfortunate. You need to make peace with your past and no longer allow it to control you. It has already got you once- why let it keep bringing you down?

4. Think positive: Make sure you cast out negative thoughts. These thoughts can only bring you down and pierce your personal development achievements.

5. Get rid of physical evidence:  Even though something might cause us pain, we still seem to keep reminders around. For instance, a broken relationship might yield gifts given and pictures. Put them out of sight. Seeing past situations that hurt only make the pain worse.

Conclusion

The only way you can move forward is to accept the past, know you cannot change it and let it go. This will allow you to continue with a bright future with the past lifted off your shoulders.

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