Scarce Resources for Sustainable Profitable Growth

Scarce Resources in general is a result of demand exceeding supply. It was quite enlightening to me, as I recently read a book on economics, that this condition is the source of any business activity. Scarcity breeds businesses and drives progress of our civilisation.

What about competing businesses? The ONLY differentiator between competing businesses is the efficiency of the usage of these scarce resources.

1.        Relevant products and services (including the raw materials)

2.        Leadership bandwidth

3.        Right employees

4.        Willing customers/clients

5.        Knowhow both tacit and explicit

6.        Time to implement an idea

7.        Investors for finance

8.        Partnering vendors

9.        Office and production facilities

10.    Cooperative society

I have further explained each of these scarce resources and identified the key question as well as a rhythm to ask this question.

1. Relevant products and services (including the raw materials)

The most important scarce resource for a business is the availability of appropriate and relevant products and services to meet or fulfil a need, both explicitly stated and implicitly prevalent.

Key Question: Value Innovation?

Rhythm: Once in 3Y

2. Leadership bandwidth

The leadership bandwidth is a very common scarce resource for a business, especially due to us human beings commonly not being able to generate time for the important but generally not urgent tasks.

Key Question: Focus Areas – Maximum 5?

Rhythm: Annual

3. Right employees

I’m sure getting the right employees on board is a humongous challenge for any business due to the gap between what the organisation can offer and what the employee expects and inversely what the organisation expects and the employee can offer.

Key Question: Passionate and Enthused?

Rhythm: Quarterly

4. Willing customers/clients

It is quite obvious that willing customers and clients who are ready to use the products and services is always a major scarce resource irrespective of the life-cycle of an organisation, be it a start-up or a fully matured organisation in its milking stage.

Key Question: Value Perception?
Rhythm: Monthly

5. Knowhow both tacit and explicit

Knowhow of products, services, processes and practices is one of the key scarce resources which many a times is not very explicit, especially because of the gap between knowing and doing – we quite regularly believe knowing without doing and thus base our decision or inaccurate knowledge.

Key Question: Repeat Failures?

Rhythm: Monthly

6. Time to implement an idea

Time necessary to implement any new idea or change of course is a very scarce resource, especially to stay ahead of the competition.

Key Question: Waiting Time?

Rhythm: Monthly

7. Investors for finance

As we all know if we pull up all the available finance in our society, finance should not really be a scarce resource at all. However finance becomes a perennial scarce resource, since finding those investors who are interested in the respective business and are prepared to lend at affordable interest rates is quite a challenge.

Key Question: ROI?

Rhythm: Monthly

8. Partnering vendors

One generally feels that buying something what we need either as direct materials, indirect raw materials or knowhow is not very difficult as long as we have the necessary finance. Feeling and reality being different, it is really quite a challenge to find abundance of vendors who are proactively interested in partnering for a long-term win-win relationship.

Key Question: Reliability and Dependability?

Rhythm: Monthly

9. Office and production facilities

Finding an appropriate and affordable space for office and production facility is equally a challenge and therefore is also a scarce resource for business.

Key Question: Utilisation?

Rhythm: Monthly

10. Cooperative society

Finally, when one wants to achieve sustainable profitable growth it is primordial that inclusive growth becomes the DNA of the business and this can only be achieved with the cooperative society that on the one hand can understand the risks associated with the business and can on the other hand equally appreciate the progress that can be achieved through the respective business.

Key Question: Media Noise?

Rhythm: Monthly

In conclusion I realised that our thinking and actions will become totally different the moment we perceive these 10 business requirements as scarce resources and closely monitor the efficiency of their usage, both objectively and subjectively, and gradually improve to achieve Sustainable Profitable Growth and contribute to the progress of our society.

Standards for Sustainable Profitable Growth

I have been going to various companies from various industries like, manufacturing, construction, hospitality, commodities, etc. in the last the one and a half years and I see that one of the common areas of concern, mainly with the bigger companies, is that the freshers are not industry ready. On the other hand for the smaller companies the challenge is to get everyone across the hierarchy to perform as the owner or promoter intents, thus providing consistent quality and on-time delivery products and services to the customers. The challenge in the case of the smaller companies becomes extremely intense, especially when the next generation of the founder needs to take over.

In this regard I had some thoughts. I see across all companies that neither valid up-to-date standards pertaining to every role, product and service nor appropriate self-learning materials are available. Additionally the handful of “Experts” in every company are always very busy with no quality time to empower others to perform equally well. Therefore the only possibility of self-learning is generally through trial and error, which is a costly one – high rejects, low productivity, increased throughput!

I would now like to go to a totally different aspect regarding the freshers. Even when I graduated almost three decades back, the biggest ability that one would have acquired through formal “spoon fed Guides/Notes” education would be to reproduce the learning with precision, of course with some analysis and judgement, since the popular way of testing is largely during the examinations lasting a couple of hours. This ability surprisingly matches the need to reproduce consistently in almost all the roles in any industry.

Now putting these two together on the one hand most of the roles in a company need just consistent reproduction for developing, planning and delivering on-time quality products and services and to do this the freshers have the right qualification and mindset but on the other hand the companies don’t have valid and up-to-date “Guides/Notes for spoon feeding” and expect the freshers to learn by observing, questioning and practicing – “Trial/Error”. Will just creating Guides/Notes for spoon feeding every role, product/service specialties, etc. solve the dilemma???

I believe making the education system more industry specific first of all may not really be necessary and secondly may NOT BE POSSIBLE since every industry has its own specialties and every company have their core competencies, which cannot be and will not be imparted to public at large. This is what made me take a different approach to a win-win solution for this dilemma.

In my leadership roles in various countries, I have noted that the employees from countries with well-structured and disciplined societies are generally very good in performing few tasks with almost perfection and feel quite insecure to do others they believe they are not good at. In India and to some extent in Brazil, it is different though. The employees from these not so well-structured and disciplined societies are intrinsically self-confident in performing any kind of role after overcoming many obstacles in life, provided the racial discrimination deterrent to free expression is absent. Not only are they self-confident but can improvise a lot to succeed which results in lesser persistence and superficial expertise.

Therefore in societies not so well-structured and disciplined the need for Guides/Notes for spoon feeding every role, product/service specialties, etc. is extremely important for the employees not to learn based only on the Trial/Error strategy, which one would be intrinsically motivated to do! Additionally, since they are self-confident they will be more open to self-learning through Guides/Notes and then to experiment – possibly the most desirable condition in a learning organisation.

I want to thus conclude by encouraging every company to solve this huge competency gap by proactively creating valid standards and appropriate self-learning Audio-Visual Guides/Notes for performing every role and creating every product/service. This approach not only will resolve the dilemma that I had mentioned earlier, but also ensure sustainable, profitable growth through continuous learning.

Result Orientation

Long time ago a few friends used to play football just for fun. One fine day a star football player saw them and recommended them to the national team. Instead of being happy they were very worried, since all this while they played to just have fun without the worry of winning or losing. Losing now would let their country down.

On their way to joining the national team they met a Stranger. Looking at their great physique but worried faces he asked "What is bothering you so much?" They all said in unision "We play football and never used to think of the results. Now that we are part of the national team we cannot stop thinking, especially of not winning".

The Stranger said "Oh I see! How come you never focused on the results while playing?". There was a lull of silence. Then one said hesitantly "We enjoyed just playing so much and maybe always felt and thought there is always  a tomorrow for winning". Another chipped in "We just wanted do our bit the best and leave the rest". Some more comments came in.

Once everyone had spoken out their heart, the Stranger asked "While you waited for tomorrow you must have thought how to do better?”. Everyone nodded. He continued "What if you just thought that there is always another minute to win when you play". They said "Sure it can be done. We will not only be enjoying the game but also continuously thinking of winning!"

Now each one had a kind of a liberated feeling and became very enthusiastic - they had just got a Powerful Insight.

Now the Stranger asked them to think of something that would remind them of enjoying the game but at the same time continuously learning by seeing their results. Each one thought for himself calmly as the Stranger bid goodbye and moved on.

Clarity of Thought

I recently had a short conversation with a start-up entrepreneur stuck on what areas to focus on. He answered my question "What do you like doing the most?" very passionately and I listened to him very attentively. Once I understood his passion, I elaborated the ecosystem of his passion with both his vendors and customers. While doing so it became obvious that just wanting to stick to his passion would intrinsically restrict growth due to forward and backward integration need both his vendors and customers. This is when he got an insight, a powerful one, with total clarity of thought. The next steps then became very easy and we ended this 1h conversation with huge energy pumped in to both of us. This is a very typical coaching conversation. You may want to try this powerful method to get clarity in your thoughts and fulfill your dreams.

Manufacturing Competetiveness

Last week on Friday, 7th November 2013, during the national quality summit organized by the CII, lot of discussions were held about the manufacturing competitiveness in India.

I thought of writing this blog to record my thoughts of the enormous HIDDEN potential we have in our country that can be harnessed to reach great heights.

I would like to start by stating our JUGAD ability as a huge strength to improvise, that we learn from a very early age due to a huge uncertainty in the daily routine. This surely is not the case with the countries dominated by manufacturing industry. Are we using this huge JUGAD potential???

Let me share my views about the competence and qualification. We all know that we need to have exceptional merit or connections, good resources,.... to get qualified. On the other hand, ones landing in Industrial Training Institutes not necessarily are incapable. Thus it is really not uncommon, especially to have the fresh graduates as front line managers with significantly less competence that the workmen. Thus the FRONT LINE MANAGERS normally have a role of leading senior and more intelligent subordinates. Even with a good lot of leadership experience this kind of a team to lead is quite challenging. Just imagining their condition and their effectiveness. It is quite interestingly different in the advanced manufacturing economies, where education in based on merit and generally the less capable ones end up as workers, making the life of Front Line Managers easier. Do our workmen need FRONT LINE MANAGERS???

In all the advanced manufacturing countries the basic livelihood is not endangered, since arbitrary firing is not easy and even if a worker were to be fired, the social security system supports in some way. Whereas in India, unfortunately, many companies, the big ones, pride themselves in flexible manpower - outsourced CONTRACT workmen who can be "Hired and Fired" at will. Some companies come up with similar models but with different terminology of "On Job Trainees", Temporaries, etc. Just imagine what would be going through a worker who is either a temporary or a contract workmen for years - sometimes > 10 Y. Will these CONTRACT workmen be engaged with the company???

Imagine how it would be when we get the workmen fully engaged by first ensuring PEOPLE QUALITY and DIGNITY before product/service quality.
Imagine how it would be if we get our workmen to take on some coordinating roles on rotation to become a SELF MANAGING TEAM without the front line manager.
Imagine a system of remuneration based on CONTINUOUS LEARNING and TEACHING using the Jugad abilities.

The enormous hidden potential can in my opinion only be released provided we relook at some conventional wisdom, like our payment systems, hierarchical structure, accountability for down stream performance, etc. You may want to check out the functional value stream, BITS and Timeout in the following L2L system presentation.

 

Cascaded Reviews

Imagine how it would have been if our bodies needed our conscious attention for the basic delivery process and now think how much of your conscious attention is being given to the basic delivery process in your organisation. Cascaded reviews when implemented properly can lead to the same situation as in our bodies. However wrongly done leads to Micromanagement this is what that goes on with our bodies in the ICU’s!

In my earlier blog I had explained how the closed loop control can be introduced in the organisations. A key success factor is the intelligence that goes in through the review process. I very briefly want to reiterate what would be reviewed: Target, Accurate and traceable Actual Situation, Current Forecast, Measures for all KPIs/KRAs are what that needs to be reviewed at a frequency appropriate to the clock speed.

In life all of us want to succeed. Success not only meets the targets but also breeds further success. How can success be made systematic in nature? This is when the cascaded review comes into play. When I mean cascaded review, I mean that the lower hierarchy level must have reviewed at least twice before the respective hierarchy level reviews. Again the review is very simply done always for the Target, Accurate and traceable Actual Situation, Current Forecast, Measures for all KPIs/KRAs at an appropriate frequency with all the involved functions, so that upward value added reporting is done and not the upward delegation. Thus I believe this is the starting point to give the higher hierarchy level the confidence and thus refrain from Micromanagement. However I must caution that a certain amount of transformation, especially concerning the true capabilities in people, must take place in the entire organisation before such a cascaded review with reducing frequency can take place. Otherwise the cascaded reviews can become another wording for Micromanagement.

When correctly executed cascaded reviews frees enormous amount of management bandwidth to think and implement strategies for profitable growth, which is the most essential oxygen for any business. This can be achieved, since through the cascaded reviews the entire organisation performs delivery of products and services on its own – as if this were sub-consciously done. This is nothing different from nature where everything is cyclic and rhythmic. The other hidden benefit of cascaded review is the continuous learning in an organisation as well as empowerment with information.

I welcome you to reflect by comparing your organisation to the human body analogically and checking if all the routine tasks are being performed without conscious effort. Should this be the case the entire organisation is truly world class and would certainly boast of sustainable profitable growth over the last few years. Should this not be the case, then working on freeing the bandwidth of the top management for concentrating on strategies to achieve profitable inclusive growth can be the first step. I personally used to get very enthused whenever I reflected thus.

The last success factor is to communicate, communicate and communicate. Communicating the right ant the relevant topics is of course extremely important and should the cascaded reviews take place, the contents of the communication automatically become the most important and relevant. Apart from this just the review itself serves as a good communication medium, especially for the various functions to see the big picture and align their actions to what is important and relevant.

Happy Reflecting!!!

Targets and Metrics

Closed loop control is what that creates magical precision be it video recording of the trajectory of the ball in cricket, football, volleyball, etc., striking a target with a Tomahawk missile, grinding components in mass production to sub-micron tolerances, blood pressure in our bodies or position of the sunflowers against the sun.

Target fulfilment is the best with a closed loop control and this is precisely what we can do in organisations with people for achieving the targets consistently. However the process is far more complex that a video recording of a ball and at the same time is far simpler than the control of blood pressure. In the case of the video recording software can identify the ball and the track it by automatically moving the video camera.

On the other hand in the case of the human blood pressure control, there are multiple decentralised closed loop control happening in all our blood vessels and with the nerves giving this feedback constantly to the brain for any additional emergency measure that may be necessary. Of course the heart muscles are the most important to regulate based on the body’s need. The closed loop control is so good here that we come to know of any problems through symptoms like pain, gasping for breath, etc. at times too late. We therefore have a system to check the condition through the annual health check-up, for example.

In organisations with people and quite a volatile environment the challenge for a closed loop control is not as simple as the video recording. However is easily doable.

Firstly the targets have to be clearly defined. When I mean target, it not necessarily need be an increase, like sales, profit, etc. or a reduction, like scrap, write-offs, etc. It can also be just to sustain the achieved levels of delivery, quality and cost. Having defined the targets there must be a system to measure these continuously appropriate to the clock speed. Clock speed is the speed at which the situation changes on its own without any intervention.

Now that we have the target and the actual situation, we can then with our experience and wisdom forecast actuals against the targets should we not change anything but proceed the way we are doing till now. Forecasted Actuals or Current Forecast will identify the gap to the target. Now comes out experience and wisdom once again to define and execute measures to bridge this gap. All these must be happening appropriate to the clock speed. As an example in the case of mass manufacturing all these must happen at least twice a shift of 8h. Whereas in a project industry with the duration is more than a year, all these must happen at least once a week.

Now comes the hierarchy as in the case of our bodies. Target, Accurate and traceable Actual Situation, Current Forecast, Measures for all KPIs/KRAs being checked at a frequency appropriate to the clock speed must then be reported to the higher hierarchy level in a cascaded manner with the frequency getting reduced as the hierarchy increases. I will explain this in my next blog. Similar to our annual health check-up, even in organisations, it is necessary to check and confirm that the closed loop control is happening at a frequency appropriate to the clock speed. In this case though, the confirmation must also be based on the clock speed.

Organisations with close loop control therefore perform with the same magical precision as the others depicted earlier do. All it takes is to understand the cause and effect and JUST DO IT.