Blog Archives

explore the value of a fractional leader

4/27/2015

By Charlie Dietz, CIO of SMB Value Partners.

As you think about how to staff and successfully execute your next important project, consider bringing in a fractional leader as your project leader. Why consider such a resource?

Fractional Leadership is using an experienced, senior, outside resource(s) to supplement your existing leader and employee resources. With today’s lean organizations and the competitive pressure to deliver new and improved products and processes, many organizations find themselves unable to meet the business challenges of larger, cross-functional projects. In some business areas, the department leader is often a technical resource, lacking the breadth and depth of management experience and expertise needed on your project.

Many small to-mid-sized businesses (SMB) and associations / non-profits have found Fractional Leadership to be a viable solution to addressing their business challenges: bringing in an outside leader / expert. The advantages include:
Services of a senior leader with broad industry and cross-discipline experience.
No “on-the-job” learning, as happens in many smaller organizations, with the ability to achieve planned results sooner, rather than later.
The fractional leader’s experience and successes gain respect from the organization’s senior management.
Clarity of focus on the project-at-hand, not entangled in day-to-day issues and silo boundaries.
No organizational bias on what the right answer would be. Able to challenge teams to constructively evaluate alternatives.
On projects where a solution supplier is actively participating, it is important that your project leader not be controlled by that vendor. The fractional leader is an independent voice with primary focus on collaborating with your business and delivering your business success.

There are a lot of “pain-points” that keep organizations from achieving full results from cross-functional projects. Often issues in areas like Information Technology, Marketing, Sales, Operations, Planning, and Finance (to name a few) can hinder or misdirect progress to a successful project. Using the Fractional Leadership solution gives your organization use of a resource that will identify and cut through issues to improve your success. You have the benefit of a senior leader that you may not be able to afford as a full-time employee, as you only have to pay for the expertise and time associated with your top priority: your results-focused business project.

To learn more about Fractional Leadership for your key projects, please visit http://www.smbvaluepartners.com/smb-fractional-leadership.html.

Are You Bowling Alone? Rebuild Your Social Capital with Your Customers

4/13/2015

By Deb Dietz, CEO of SMB Value Partners.

I was having a conversation with a client about the decline in attendance at her association’s annual meeting this year. She was telling me that her organization had thousands of members, but many were passive. She felt they were disengaged from the organization, and she felt many were probably on the cusp of not renewing their membership. When discussing her annual meeting specifically, she stated that she was spending more on marketing and communications campaigns to drive less attendance than in years past. What’s going on?

To try and make sense of this, I did a little digging and came across a book, “Bowling Alone”, by Robert D. Putnam. For those of you that don’t know the book, he speaks about the collapse and revival of the American community, and speaks specifically about the sport of bowling. He has analyzed a lot of data and has come to the conclusion that Americans are becoming increasingly disconnected from family, friends, neighbors, and social structures; whether the PTA, church, or even bowling leagues. His data show that people…individuals…are bowling more than they ever have; they just aren’t bowling in leagues. He notes the impact on revenue (declining) because bowling lane chains are no longer benefiting from the revenue associated with beer and pizza, which is where the money is.

Some additional trends in Putnam’s research speak to Americans spending less time DOING and spending more time WATCHING. Watching their phones, their iPads, their TV – would you disagree? Try having a conversation with someone when they won’t put down their phone or digital device, look you in the face and actually have a conversation! This is the world we live in today. Great to be so connected, but we’re connected digitally, not physically.

With this in mind, I asked my client if she was witnessing the same declining participation with her association’s on-line or digital (e-Learning) programs. She said, no. In fact, they were trending up on the digital events while trending down on the live events. Her members are getting what they need digitally and don’t seem to value the impact of social/professional connections – in person connections.

Of course not everyone has their nose in their phone or iPad, and some members actually value the in-person connection, but you have to know the demographics of your membership and how they want to learn, or receive information. Have it their way. So ask the right questions and develop a portfolio of value; products, programs and services that serve their needs and that they’ll willingly pay for. If you provide the right value to the right audience with the right message via the right channel, you may just end up bowling in the league instead of by yourself.

Beware of what you reward!

4/9/2015

by Charlie Dietz, CIO at SMB Value Partners, Inc.

I had a very wise boss once, and I remember his point many years later: “Beware of what you reward, as you will get a lot more of it”. Sounds trivial doesn’t it, but this is an important business concept. It’s a corollary to the “you get what you measure”.

Consider these examples:

The Sales team’s compensation is often significantly based on gross sales hurdles. The old saying still often repeated, “We’ll sell it at cost, but make it up on volume”. And every year when the new Sales Comp Plan is issued, the first thing the Sales team members do is figure out how to maximize their bonus.

What really counts is the bottom line. Compensation for all of those with a “seat-at-the-table” needs significant focus on PROFIT. And, more of the Sales team effort needs this same focus.

The issue is often around a company’s ability to fully evaluate every new deal, ongoing contracts, services, etc. based on the profit generated. Get a couple of smart accounting / finance / IT people together, and with properly configured ERP and reporting applications, you can have a dashboard or reports that give you a reasonably accurate “P & L” view of every customer. I know those of you selling lots of SKUs to retail have a complex environment with the pay-for-space, promotional deals, etc., but it CAN be done, and is a very worthwhile investment.
Many Manufacturing companies have a financial process of “overhead absorption”, which GAAP requires for external reporting. In a nutshell, all of the non-direct costs, or overhead associated with manufacturing a given item is broken down and assigned by cost accountants to the total standard cost of each product. So, some products have a higher absorption rate than others.

Often, the Manufacturing leaders have part of their incentive pay tied to producing products with a total absorption that covers the expected non-direct costs for the period. As can happen with the proper focus on production to the forecast / sales consumption, manufacturing may get near the end of a period with absorption-to-date below their goal. If the immediate needs of customers are covered, often the production is shifted to produce items that absorb proportionally more overhead to meet the hurdle. That can create a few problems:
o The high-absorption items produced may already be well above their desired inventory levels.
o And / or these same products may consume scarce raw materials, labor or other resources that would be better applied to other products, and / or create additional costs.

Net results are often an increase in overall company cost / lower profit.

Proceed cautiously when setting measures to monitor your business. But, “beware of what you reward, as you will get a lot more of it”.

Click HERE to see the next post in this series.

Developing your 2016 Strategic Plan – You’re Already Late!

4/8/2015

Developing your 2016 Strategic Plan – You’re Already Late!

by Deb Dietz, CEO at SMB Value Partners, Inc.

It’s April already and time is flying. For many not-for-profits and associations their annual meetings have come and gone or they are diligently working to make it an exceptional member experience and financial success. But what happens after all the hard work in planning and executing your meeting is over? Many staff members will go off on a well deserved vacation after burning the midnight oil for months. And, when they come back, the coma sets in. The lull after the storm. Undoubtedly, association leadership and staff members learned a great deal at their meetings with their constituents, committee members, volunteer leadership, service providers, strategic partners, and their board of directors. Many accolades from all for a job well done, right? But, what about all those ‘opportunities for improvement’ that surfaced during these discussions? Now is the time to develop actionable plans and face those issues head-on. Break free from the coma and get started! Consider Victor Hugo who said, “He who every morning plans the transaction of the day and follows out that plan, carries a thread that will guide him through the maze of the most busy life. But where no plan is laid, where the disposal of time is surrendered merely to the chance of incidence, chaos will soon reign”.

If you believe your existing, and perhaps chaotic, strategic planning process could use some re-engineering, consider putting these building blocks in place:

Strategy – Mission and Vision statements. I know what you’re thinking, and I’ve been there too. How many hours have we all sat around a conference table debating the difference between mission and vision? Let’s keep it simple and think of it this way: Mission (why we exist), Values (our guiding principles), Vision (picture of our future), Strategy (differentiating activities and initiatives).

Need - Revamping your performance measurement systems. If your company is experiencing issues including: a) debating the meaning of your measures, b) no one is paying attention to their measures, c) you haven’t changed your measures in a long time, or d) you’ve recently changed your strategy but your measures don’t link up to your new strategy, then you should consider implementing a new performance measurement system.

Sponsorship - Executive leadership must be aligned to the goals and objectives of the strategy and they must be held jointly accountable for results. Alignment fosters collaboration, breaking down business silos and gets leaders, and staff, aligned to common objectives. On a side-note, I recently participated in a roundtable discussion with CIOs and CFOs as part of a technology leadership networking group, and when I mentioned this point about shared accountability and alignment, I had the CFO of one company tell me, “Deb, you’re talking about nirvana; this type of alignment just doesn’t exist today”. I gave him some examples of how it can, and does, work – and then when I made the point about driving performance objectives across the executive leadership team, so that all the executives shared performance goals, and their compensation was aligned to those results, his eyes got even bigger. Nirvana, yes – but that’s not a bad thing to shoot for.

Support – While it’s critical for executive leadership to sponsor an organization-wide strategic planning process, the success of such an endeavor hinges on managers and staff resources working towards common objectives and being jointly accountable. If the strategic plan ‘cascades down’ from the leadership to the staff resources, the alignment and focus derived across the organization can lead to real breakthroughs in performance.

Organizational Scope – I’ve built strategic plans for employers and clients that have included different functional areas having their own ‘mini’ strategic plans, ensuring business and service unit related objectives ‘roll up’ to the organizational objectives and measures. This ensures alignment across the organization.

Resources - The strategic planning process should, ideally, include key staff resources as part of the Strategic Planning Steering Committee. Strongly consider who will best represent your department, division, or team and allow them to participate. I’ve seen very senior level executives and more junior level staff resources participate. This is a great way to get buy-in of your plan throughout your organization. Consider having a representative from each department participate. This is also a great professional development opportunity for junior staff members….even if they don’t have a ‘seat at the table’ they can be in the back row observing, and learning. As future leaders, this is a great way to give them insight into the challenges and opportunities the organization faces. Allow them to participate and don’t exclude or discount their contribution.

Data – Make sure you have the ability to measure performance, meaning you need to define the data to analyze and determine what your performance measures should be. You need to know current state, desired state and have access to the appropriate financials, and quantify the value of the improvements.

If you consider these steps when developing your strategic plan, I believe you’ll find the process to be invaluable. And, it’s not a once-and-done process, but gains more value as a repeating, evergreen, process. But, these steps take time, and like I said – it’s April. You’re already late.

Are You Stuck In The Status Quo?

4/1/2015

Are You Stuck In The Status Quo? Apr 1, 2015

by Deb Dietz, CEO at SMB Value Partners, Inc.

Recently I had a CEO of an association / not-for-profit organization tell me that they had not conducted member needs research in over 7 years because they already knew what their members needed. He seemed reluctant to discuss the white elephant in the room – the fact that the revenue from membership dues, product and program sales were decreasing. The organization was unclear of the profitability associated with their products and programs, and had decided to reduce investment in the creation of new value for their membership.

The status quo seemed acceptable. Yet how long can any organization go without investing in the creation of value, new products, new programs, and new services that customers/members need, and will pay for? And, don’t you need to know those answers so that you can move forward and grow top line revenue for your company?

Any growth strategy requires an understanding of your market, your customers/members, or those you serve. You need to understand the financials, what’s working and what’s not for your company, and then make the difficult decisions about eliminating products or programs that are no longer relevant to your customer-base. Yes, even the ‘sacred cows’ that you’ve sold forever. Maybe it’s time for them to be put out to pasture. You also need to understand market demand and size so that you can realistically forecast revenue, aligning human and financial resources to those initiatives that will provide the best future return on investment to your organization.

Sometimes the status quo isn’t a good thing. Ask the hard questions. Truly understand the status quo and jump start the new value creation process for your company. Fear of the unknown is not acceptable in today’s environment where competitive threats are everywhere. So, if you are noticing sales and profitability trends in your company eroding, arm yourself with insights from research and from the hard work associated with actionable financial data and trend analysis. Truly understand what you need to sell to your customers, and why, and as important, understand what you need to stop marketing and selling. You can realize cost savings by stopping investing in products and programs that aren’t profitable, and you can shift that investment to those products or services that will drive growth for your company.

Get un-stuck.
Challenge the status quo.
Become a champion of value creation and increase your relevancy to your customers / members.
Do it now, before they find another organization that will.

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