Wednesday, May 25, 2011
Tuesday, May 24, 2011
You might know that I started my banking career at Alexandria National Bank. It was there that I met the very best operations person I have ever known, Michael Umlauf. He was not a programmer or an “IT” person; he was just a very good manager. The best advice I ever got from him was to “know what your input would be (i.e., form, raw data, etc.) and know what you want out (i.e., reports).” When we merged three bank operations into one to form First American Bank in 1978, that was his mantra, and it resulted in the smoothest conversion of systems I have ever experienced (and I have gone through a lot of bank mergers!).
Right now, as I am working on several operational projects, trying to design systems and procedures, Umlauf’s advice frequently comes to mind. Often I collaborate with folks who have never considered the basic “input/output” issues of effective organization. My opinion is that processes must have rules. Unlike dealing with nature, where the rules are already defined, managers should step through what the rules should be before processes are designed.
Last summer Dick Davies wrote a blog titled Value Centric Work Analysis. It talks about defining the work process and how that makes work more efficient. This is a good time to review this information and apply it to what you are working on.
As part of your thinking about processes and rules, I think you should first consider what your customers think is important about the system you are defining. How easy is it to use, what kind of instruction and feedback do they need to use it effectively, and how much of their time will it take to complete it?
Next, I think you should consider how efficient your requirements would be for your staff to interface with. Is there a lot of additional data entry required? From the questions you are asking, is customer input going to be clear? How much time is going to be required to “manipulate” the data?
Finally, I think you need to evaluate what you are going to do with the data you receive. What is the purpose of the process? What reports are you going to produce and whom are you going to show these reports to?
A final opinion: don’t go out and engage an IT person to design the technical parts of your system until you have stepped through your work process and know exactly what you want.
This doesn’t sound much like gardening, does it?
Monday, May 23, 2011
Companies see negative signs (read less revenue), and immediately work out a plan to reduce some form of overhead or raise pricing to compensate for the loss. As a sink or swim action, I can’t argue with this, but in many cases a company is perfectly solvent and able to withstand lower profits, just not willing to accept lower profits or flat growth.
In answering to a board, stockholders or parent company, there may be no tolerance for such results, even though they are still not in negative territory.
What often happens then is a series of measures that ultimately reduce the quality, value, or service provided by the company. What then? Not hard to figure out is it? A downward spiral due to loss of reputation, value and performance (see General Motors late 20th century). Now the company actually got what was feared, though it did answer the short term directives or implied demands of the controlling forces. With people who are compensated and evaluated for a company’s value at particular times (or for a snapshot) they are likely to do whatever is necessary to provide the highest compensation for themselves at that time regardless of the long term consequences.
The answer is to have the real confidence to weather the storm and be ready to take advantage of circumstances when they become more favorable without trying to force the issue. Being realistic allows a company to avoid being in a position where reducing customer satisfaction or offering lower quality will hurt their reputation too much to come out of the bad times intact. Then they have to start over and there are numerous examples of companies that could not.
So just as the Greek Tragedies warn, trying too hard to avoid certain fates only brings one closer to what one was trying to avoid. Being realistic in a market, either up or down is a key to continuity.
Sunday, May 22, 2011
I said, “If you have to start by carrying somebody, they just get heavier.”
Robert said, “Can I use that?”
Tuesday, May 17, 2011
Monday, May 16, 2011
- Establish the specific purpose and mission of the institution;
- Make the work productive and the workers effective;
- Manage the social impact and social responsibility.
Monday, May 9, 2011
More recently companies have started to not only care about the value, but want the best of both worlds also, meaning they are asking for the lowest price with the highest array of services at the same time.
This leads to a few things-
One, it takes longer to make a sale because companies are going further in their searches for the best deals.
Two, companies are in danger of falling for a promise that won’t or can’t be kept offered by companies that want their business and say what the customer wants to hear.
Three, it affects salespeople who are squeezed by the companies that they work for in order to maintain profit margins.
Four, in some cases the customer gets a great deal.
Five, in other cases the provider’s margins are too small to stay in business and no one gets the benefits of lower pricing.
So what now? Can companies really afford to keep offering more for less? My thought is that if we keep pushing for this eventually we end up with just one or two companies to choose from. Can you say monopoly? Then the pricing goes back up and there will be no other solution.
For the time being companies had better get in tune with the new reality.
In my mind the best thing they can do is take a realism pill and forget about getting huge increases in business over short periods of time. Even to the point of small temporary contraction for a time, but with the thought of staying profitable or at least not negative. The days of every other company going public and reaping the benefits of their value are over. We still see this thinking and it drives the corporate atmosphere of anxiety.
It isn’t enough to have a good product, and sell it making a profit, because companies are so concerned with their valuation. Whatever became of the thought of true value? In other words companies being worth what they profit not what can be speculated. We have become too concerned with making a killing and not with providing a value.