Its January, which means that the NFL post-season is upon us. NFL teams have been working since August to win a spot in the post-season. NFL teams are all about winning.
This is the second in a series of blogs using the metaphor of a winning football team to describe how you can set your organization up to win in 2010. We are walking through five steps for creating your organization’s success this year.
2. The Goal Line
Every winning organization’s vision must include some specific, measurable, achievable goals. The benefits case associated with any ERP implementation is really a statement of goals. This benefits case articulates the specific gains that are expected from a successful ERP software implementation. The benefits case answers the questions beyond “Why?” It captures the “When, where, how, how much, and who?”
The people who are accountable to deliver those benefits create the very best benefits cases. Their “fingerprints” should be all over the benefits case. The power of the benefits case comes from the people who own it and own the processes that the new tools will improve.
The worst business cases, in contrast, are either inaccurate or forgotten or both. The inaccurate benefits cases include huge amounts of naïve algebra and nonsense. They are wildly optimistic or ridiculously conservative. In either case, they fail to deliver a compelling goal-setting message. The forgotten benefits case might actually be fine, but it is neglected and its power as a goal statement and accountability tool are lost.
If your company doesn’t yet have a functional benefits case, complete one. If you don’t measure performance against your benefits case, start now. Make it a matter of accountability within the company to be delivering the benefits. A benefits case is the most fundamental financial planning tool. Learning to develop a solid benefits case is an essential project management skill, but it is not common.
Benefits cases done well are simple and accurate. Your knowledge of the drivers of your business will allow you to design a simple benefits case that is streamlined around them. It focuses your attention on the things that truly matter to the success of your company. No one should waste a lot of time creating tools that support R&D if you are a sales driven company. Knowing where you are requires sales to be reported correctly each month.
Accuracy will vary from benefit number to number. What matters is for you to know which numbers you can accurately budget, and which ones you cannot. The numbers that can vary, like raw material costs, become more important, because of the havoc that they can cause within your company.
3. Know the Score
Winning occurs on the field, but a team’s play is driven by the score and the clock. In the same way, you need to know what the score is in this month, quarter or year. First, reviewing the monthly financial statements provides the basic check against the budget and/or plan. If it takes your company two weeks to close a month and create accurate monthly financial statements, then one of your goals this year should be to be timely in this reporting. The blackout period, the time between the end of a month and the availability of the results, should be as short as possible. This is especially true in companies where performance is highly seasonal or variable. You are less able to respond quickly and correctly without this performance information.
Key Performance Indicators (KPIs) can be an excellent surrogate for “real-time” financial results. They allow you to assess your situation and respond more rapidly. However, you must have experience with the KPIs in your company. What are the patterns, levels of accuracy and trajectories in these KPIs for your company? Knowing your company’s highest, lowest and budgeted levels for these KPIs is what makes them valuable. For example, reporting sales calls, proposals in process, proposals outstanding, new orders, order backlog and completed orders may give a much quicker and more complete picture of how your company is doing in the market than monthly revenues. And these sales KPIs could be simply and accurately reported every week.
4. Be Ready for Anything
Every year is characterized by uncertainty, so you have to be ready for whatever it will throw at you. Think through the major forces that impact your business; come up with a short list. The level of effort each force deserves is a function of its impact, then its volatility. For example, a sales driven company that produces on a made-to-order basis should have an early warning system in place to respond to the order backlog.
If sales explode, the company is ready to deliver with quality, accuracy and on-time delivery. The amount of raw material required in a company like this would also vary with the sales, but that might not matter much if the sources are plentiful and the prices are stable. On the other hand, if the company’s workforce is skilled and stable, responding to the big change in production requirements would be what matters.
5. Love Every Minute
Finally, it is important to remember that the challenges that your business may bring are the things that will make the “game” memorable. We spend a huge amount of our time and our energy at our work. It should be a positive, enriching, motivating experience. There will be hard and easy times. But the personal investment is too great not to strive to win, and do our best. These simple principles are obvious, but they are not easy, otherwise everyone would work by them.
Sophie Tucker, the famous entertainer said, “I’ve been rich and I’ve been poor. Rich is better.” To paraphrase her for businesses, “We’ve had great years, and we’ve had lousy years. Great is better.” Here’s wishing you every success.