Posted by Troy Blackmon on 10 August 2009 | 0 Comments

This C12 10-Point Check-Up is designed to uncover areas of need or opportunity, thereby helping us to head-off problems and make proactive decisions to stay “ahead of the curve.”  Since so much of our accounting and operational performance data is historical (i.e., based on prior period activity), we can often end up trying to lead our business like someone who steers a car by looking in the rearview mirror!  It’s far better to lead by incorporating forward-looking tools and plans which are merely ‘informed’ by history.

As we touch each of the following points, rate your company on a 1-10 scale, with 10 representing ideal or ‘best-in-class’ performance.

1.   Are key customers happy and loyal? Given the high cost of acquiring new customers (i.e., twice that of keeping existing ones) and the opportunity to grow intelligently with existing customers – in terms of productivity, profitability and expanded offerings – this is a vital area of concern.  Do you spend personal time with them to truly know their current and long-term needs and their level of satisfaction in doing business with you?  Are any of your key customers unhappy?  If customers are your best ambassadors and promoters, give yourself a 10.  If you don’t know what they think, or believe that many are ready to jump ship, take a 1.  [Note: read Fred Reichhold’s The Ultimate Question (HBS Press, 2006) and The Loyalty Effect (HBS Press, 1996) for great ideas on measuring and increasing customer satisfaction and loyalty]. 
Rating ______

2.  Are you adding incremental new business?  Are you gaining or losing in the competition to further penetrate your market by gaining new customers and offering more to existing customers?  With healthy marketing, R&D, and sales efforts, you should be “whipping up” on the average competitor.  Here’s where you’d like the trend to be your friend!  If revenue and market share are trending up, especially over a three-year or longer period, you must be doing a lot of things right.  Conversely, if you’re trending down, trouble is around the corner!  At what rate are you adding new customers and new offerings? In many fast-moving market niches, if you aren’t constantly adding new customers and more completely serving the needs of existing customers, you’ll be watching from the sidelines in a few years.  If this component of your revenue is growing at 15% or more per year, you’re probably a 10.  If you haven’t had to learn a new customer’s name in awhile, you’re probably a 1. 
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3.  Are your communications effective?   In your business, does the right hand know what the left is doing? Are your meetings boring and unproductive?  Do the same mistakes seem to occur over and over again?  Are you paying too much for rework and warranty on items that should’ve been done right the first time? Do you hear “I didn’t know that” too often when you’re trying to discuss something with someone who really should have “known that?” Communications are the life blood of business, especially during tough times. You can’t over-communicate (unless you’re trying to micro-manage and personally orchestrate all activity). When essential information is lacking, people ‘fill the void’ with misinformation and rumors.  Are you confident that your people know all they need to know, to do what they’re tasked to do, while sustaining the level of excellence you’d like to see?  If so, you rate a 10.  If you’re unsure what others need to know, why they need to know it, and what all the fuss is about… you might be a zero, but take a 1.  
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4.  Are your goals clear and do they support your core principles?  Are your vision and mission understood and supported by your team?  Can employees recite your mission statement from memory?  Do they refer to it when making daily decisions? This will only happen if you lead by example!  Obtaining buy-in and alignment to our core principles and goals is a leaders’ responsibility.  Fortunately, a desire to be a part of something bigger than themselves is a deeply felt need among the sort of employees we’d most like to have on our team.  This links back to our previous questions on communication and employee loyalty.  Our core principles, goals and values must be consistently and clearly communicated, beginning with the recruiting process.  They’re not ‘real’ when articulated just once, typed in a memo, or hung on the wall.  They need to be continually modeled, discussed and reinforced.  They’re the fabric of our culture, defining what we believe and desire for our futures together.  Each time we gather, we should do or say something that celebrates or refers to these core principles.  If you were to introduce one of your employees, at random, and ask them to share your firm’s purpose, goals and core values with your best customer, banker, or potential investor, how confident would you be?  If you can’t imagine doing this, for fear of embarrassment, you’re definitely a 1.  If you’d welcome the opportunity to display your firm’s unity and focus, give yourself a 10.
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5.  Does your compensation system support your desired culture?  If you want your team to focus on performance, do you measure and pay for performance?  Is your compensation approach linked to your corporate strategy and objectives?  Or do you, instead, simply pay for time worked?  Is your attitude towards compensation proactive or reactive (i.e., entitlement and the ‘squeaky wheel’)?  Are your employees paid well for performing well in comparison to competitors’ employees in comparable positions? If so, there’d be a significant portion of their pay that’s dependent on their contribution to your profitability, quality and service.  Ideally, they’d be able to personally track and report their own performance.  Do these concepts ‘compute’ for you?  If not, your employees likely won’t have a ‘clue.’  If you suspect that this is the case, take a 1.  If your employees think like owners, take responsibility for personal performance, and are rewarded for win/win teamwork, you earn a 10.  
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6.  Are your direct reports working too many hours?  Are you?  Is it possible that you are and they aren’t due to poor management or insidious ‘upward delegation’? Overworked and overextended employees make mistakes.  This ‘out-of-control’ condition is generally indicative of other problems and leads to future difficulties in sustaining or growing a healthy business.  We need balance in our lives and our team needs it no less!  If you have too many people working too many hours (beyond seasonal peaks and emergencies), you’re bringing long-term trouble to your doorstep.  We can sustain peak performance for only so many hours before quality, productivity and health begin to break down.  To go beyond this point brings burnout, inefficiency and costly turnover.  If you and your team average no more than 45-50 hours, you’re a 10.  If you average 60+, and they average 40, you’re either a masochist, workaholic, or control freak.  Conversely, if you average 40 and they routinely put in 60+, that isn’t sustainable either, even given extraordinary communication skills. Rate yourself.  Are you and your team accomplishing a healthy and balanced work pace?  If not, are you moving in the right direction with sustainable habits?
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7.  Are you introducing new products, innovative technology and features to existing offering as fast or faster than your toughest competitor?  No market is static. Most of today’s products are aging fast, and the lifespan of next generation products will likely be even shorter.  New competition, peddling ‘better mousetraps,’ is surfacing at an alarming rate.  No business product or service can afford to remain static for long.  Unless we stay ahead of the curve, we can slip behind before we know it.  How do you measure up in your market(s)?  How do you know?  What are you doing on an ongoing basis to improve your position? The future of your company and team depends on your ability to attain healthy market share based on value, quality and tangible differentiation in features and performance.  How does your product or service look today as compared to 18 months ago?  Five years ago?  If you answered “same old, same old,” you get a 1. Conversely, if steady innovation and improvement are a part of your firm’s culture, you may be a 10.  
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8.  Are your financial and operati ng reports timely, reliable, and valuable to you in managing the business?  Many businesses struggle due to a lack of vital operating information. Do your team members have, and understand, the timely critical data necessary to track performance against company and personal goals?  Do they know how they impact your numbers?  Do their compensation and performance evaluations reflect this impact? Such accountability is critical for a high performance environment.  Leading a business without such relevant information would be like a baseball manager not knowing the batting averages, fielding or pitching statistics of his players.  He’d be forced to make his decisions purely based on emotion, personalities, or ‘gut instinct.’  Rate your financial and operating data.  If you trust it, routinely use it, and your people do as well, knowing their accountability, you rate a 10.  If no one pays attention to it until quarter-end or year-end, you’re below 5.  
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9.  Are your financial and operati ng reports timely, reliable, and valuable to you in managing the business?  Many businesses struggle due to a lack of vital operati ng information. Do your team members have, and understand, the timely critical data necessary to track performance against company and personal goals?  Do they know how they impact your numbers?  Do their compensation and performance evaluati ons reflect this impact? Such accountability is criti cal for a high performance environment.  Leading a business without such relevant information would be like a baseball manager not knowing the batti  ng averages, fielding or pitching statistics of his players.  He’d be forced to make his decisions purely based on emoti on, personalities, or ‘gut instinct.’  Rate your financial and operating data.  If you trust it, routinely use it, and your people do as well, knowing their accountability, you rate a 10.  If no one pays attention to it until quarter-end or year-end, you’re below 5. 
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10.  Have your recent initiatives been successful?  By initiatives, we mean signifi cant changes of all kinds (e.g., entering new markets, installing equipment or a new IT system, launching new offerings, etc.).  Big and small initiatives need to be continually undertaken by progressive leaders seeking to grow based on serving the changing needs of their customers.  We institute changes to ensure healthy growth and development by improving processes or procedures, reducing waste, improving responsiveness, quality or value, or enhancing our company’s culture.  Determining the scope and pace of change is a leadership function that should involve clear thinking, acceptance of risk, thorough planning, and implementation accountability.  We won’t grow in a purposeful, orderly way if we’re deficient in any of these areas.  ‘Luck’ is too fickle a partner in which to entrust our future.  It’s wrong to be either a ‘stick in the mud’ or to run off ‘half-cocked.’  Building a great business requires objective and forward-looking thought based on sound market intelligence.  It also requires balance between strategy and execution. If your latest efforts to introduce changes have failed, take a hard look at the process that you’re using to conceive and roll-out initiatives.  If two of your last three moves have gone according to ‘plan,’ give yourself a nice score.  If you’ve done nothing but practice your ‘crash and burn’ recovery drill, be grateful for 1!
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Moving Forward toward Excellence

Add up all 10 ratings to compute your total score.  If you scored 80 or higher, your check-up is worthy of celebration! You’re company is essentially fit and healthy. If you scored below 60, you might need to be referred to a specialist for further examination and perhaps a few special scans and prescriptions! This check-up is like the quick physical an MD might provide… sort of a fast ‘once over’ to search for areas of immediate concern.  Simply passing such a physical doesn’t guarantee good health. And, as conditions change, your fitness level won’t last without a solid maintenance program.  Still, such objective assessments are a good practice that when used regularly, can minimize the likelihood of unwelcome surprises.

As we so often recommend, why not share this C12 10-Point Check-Up with your key staff. Discussing their input will be a valuable exercise in uncovering ‘the brutal facts’ and developing unity around the key areas that need to be addressed.  It will also confirm or challenge the validity of your own observations and plans. Further, be ready to do this every 6-12 months to keep things in focus, together, as today’s answers and perspectives will certainly change in a dynamic market and economy.

If you scored lower than you’d like in any area, or overall, don’t be discouraged.  Recognition is the first step toward resolution. Be proactive and take responsibility for initiating efforts to correct deficiencies. Whatever you pay attention to always gets better, so focus on the areas that need shoring up.  On the other hand, if your scores were high and things seem great, don’t be complacent.  The second law of thermodynamics, suggesting that systems proceed from order to disorder, has not been repealed!  It’s at work in our businesses and markets.  Stay ‘in the saddle’ and lead your business.  Last decade’s approach won’t be sufficient to address your company’s opportunities and obstacles this decade.  Don’t back up, press on.  Make a good platform even better!