Blog

The One Year, Thirty Minute Challenge :: Week 11 :: Value Creation :: Experiential Value

If you or I were swinging through a fast food drive through and placed an order for one of their value meals and the voice on the speaker announced they’d be collecting $25 at the window, we’d put a quick halt to that order. Why? Is it because we’re opposed to paying $25 for a meal? Probably not. We’ve most likely paid $25 or even more for a meal at our favorite restaurant. We’re just opposed to paying $25 for “that” meal, because the value proposition doesn’t work for us. $25 should buy us a better dining experience than a burger wrapped in paper, fries in a tiny cardboard box and a soft drink in a paper cup.

Experiential Value is the gap between what the customer pays for our product or service and the worth and enjoyment the customer experiences from the purchase. We want the gap between what the customer pays and pleasure they derive from the purchase to be as far apart as possible. We’ve already visited value creation in the short history of The One Year, Thirty Minute Challenge, but we’re going to touch on it again – this time, exploring steps to maximize the customer’s experiential value.

We’re pretty good at calculating Economic Value because the math is very easy


The math for calculating Experiential Value is a bit more squishy because it involves the sometimes subjective value that the customer assigns to his or her experience with our product or service.

How do we do build the experiential value? I think some of the best advice comes from an extremely practical book by Rich Karlgaard, The Soft Edge. In the chapter he calls “Taste”, he reminds us that we can interact with every purchase on three levels. Unfortunately, we rarely do. Let’s talk about them.

Function – Form – Feeling

Function is the most rudimentary level. I purchase an oil change for my car and I get an oil change – new filter, new oil – very transactional. I got the service and I paid the bill. Even if the product or service is a bit more sophisticated, it can still be only transactional. It could be a new computer, a medical procedure or meal at a sit-down restaurant. As long as there’s an equitable trade, we’re satisfied with the transaction. Clearly if we get less than what we bargained for, we going to feel jilted. We might ask to speak to a manager, leave a one-star online review or most likely, never return. But, if the transaction works, we might come back. Nothing special, but not a disappointment either.

Form is the next level of engagement. Was the item we purchased not only functional, but beautiful? I not only got a good diagnosis and treatment in the medical office, but beyond that, it was a bright, cheerful waiting room, it was easy to check-in and the magazines were from at least this decade. This level of engagement made the transaction easy and even pleasurable. Next time I need this product or service, I’m likely to return because both the product and the delivery were great.

The last level of engagement, Feeling, is hard to find but it cements customers to the company that provides it and it even forges personal bonds between the customer and representative of the company. It imbues the transaction with meaning. The customer connects with the company over shared values and the customer feels validated for choosing this company to provide the product or service. Simon Sinek might call this finding customers that share your “why” or Seth Godin might call it finding your tribe. Whatever it is, it’s a connection that turns customers into brand ambassadors. It’s the company that you tell your friends about. It might be the great meal delivered by a friendly, attentive server. It might be the doctor who delivered bad news, but sat there in the treatment room until your last question was answered and seemed totally unhurried even though you knew other patients were waiting. When customers connect on feeling the bond is strong – loyalty is high and can drive premium pricing – because the relationship has moved beyond transactional to a desire to repeat that feeling. Any employee can deliver feeling with the right amount of coaching and the right support from the organization.

Why have I gone to great length in talking about delivering function, form AND feeling before kicking off this week’s exercise? Because measuring the distance between what the customer pays and the enjoyment they experience is hard to do, but the payoff is big and the payoff is long. Here’s another important thing to know about experiential value – it buys you a mulligan or two. If you fail, you’re most likely going to get a chance to make it right – maybe multiple chances. But, like all business transactions, you ought to work like crazy to earn it every time you get the chance.

So, let’s jump into this week’s exercise.

This is getting mentioned almost every week – gather your most trusted team members and work through these topics. Doing this with your team allows you to mentor and to see the strengths of various team members as they embrace the subject matter. It might also allow you to identify topics for employee development. Keep notes, create action items and assign them to specific people to carry them out. In a couple of weeks, reconvene and check on progress.

Function


How does your product (list the factors) deliver the basic functionality that your customers seek? For example –

  • it’s a fairly-priced, quickly-served, tasty fast food meal
  • it washes dishes using an appropriate amount of water and detergent in an acceptable period
  • we show up on time and the garage door works when we’re done

For the question above, which of these rudimentary tasks could we screw up the easiest, causing us to fail at the most basic level? For example –

  • We frequently schedule jobs too close together causing us to miss appointment times
  • The final price regularly comes in above the estimate
  • We frequently run out of items on the menu

What can we do to hedge against failure in delivering these baseline products or services?

Form


How can we improve the delivery experience?

  • Can we communicate better before, during and after the sale?
  • How can we improve customer onboarding so that expectations are clear and realistic?
  • Can we make the product or packaging more attractive?
  • Can we improve usability making the product easier to access?
  • Can we make the invoicing and payment process easier or faster?

Feeling


Can we make customer feel smarter, better or more noble by purchasing and using the product or service?

  • Can we show that the value proposition is demonstrably better than the value proposition for those who purchased competing products? If your warranty is twice as long as your competitor’s, let the customer know they are insulated from problems twice as long as everyone else who bought a competing product? They made a smart purchase.
  • Can we give them access to a customer service experience that will get them immediate help if they need it?
  • Can we show that they supported a cause (think Tom’s shoes) or a group of people (a locally-owned family business or a group of now fairly-compensated foreign farm workers) with their purchase?
  • Can we identify our connection (a real connection, not a contrived one) with a group of people to whom they already feel connected (veterans, environmental advocates, gun owners, local business owners, artisan food makers)?

 

One quick note about all of this. Customers and potential customers can smell a phony a million miles away. Function, form and feeling have to be delivered by an organization that sincerely embraces a desire for an excellent product or service, delivered in a winsome way by people who sincerely care about and want to connect with their customers. Anything less and none of this works.

For those who do it well, delivering on function, form and feeling will generate increased loyalty and create enthusiastic brand ambassadors for your organization.

The One Year, Thirty Minute Challenge :: Week Ten :: Metrics :: Balanced Scorecard

It happens every time you check in at the doctor’s office. They take your temperature, pulse rate, respiration rate and blood pressure. Why? There are thousands of medical measurements that assess a variety of health factors, so why those four? With decades, even centuries, of experience, medical professionals have deduced that these four measurements are indicative of baseline health. In fact, they’re called “vital signs”. That is, if each of these isn’t within an acceptable range, the patient’s life might be in jeopardy.

In this week’s One Year, Thirty Minute Challenge, we want to talk about the business version of vital signs. They’re a bit more complicated than medical vital signs because they’re most likely different from business to business, but they’re no less important.

My tool of choice for business vital signs is a Balanced Scorecard. A Balanced Scorecard is typically 6 – 12 metrics that span four categories – Financial, Operational, Learning & Growth and Customers. Once the metrics are identified, they’re collected regularly (monthly, weekly, daily or even hourly), compiled and reported to everyone in the organization. Everyone then knows if the organization is “winning” and when it’s not, knows that the efforts of everyone in the organization need to be trained on getting the flagging metrics back in line.

Let’s jump into this week’s exercise.

Sociologist William Bruce Cameron observed that, “not everything that counts can be counted and not everything that can be counted counts.” This catchy little quote sums up the most important task in this week’s exercise – identifying the right metrics. Tracking, measuring and reporting something that isn’t truly indicative of organizational health might do more harm than good because you’ll be constantly correcting something that doesn’t really push your organization closer to executing its mission or reaching its vision.

Gather your most trusted team members and start working through the four categories, one at a time – Financial, Operational, Learning and Growth and Customers – and begin making a list of what you COULD measure. Within reason, make the list as long as you want.

One quick note on identifying metrics that are more squishy. Some hard metrics will jump out at you immediately – top line revenue, ROIC, gross margin, number of defects per thousand widgets produced – but, at this point, you might not be measuring things like employee engagement, employee learning or customer satisfaction. That’s OK. Don’t worry about the how. You just want to identify the things that are truly indicative of organizational health.

Now, with your four category lists in hand, work through each list, one item at a time, asking –

  • If we fail at this, do we go out of business?
  • If we succeed at this, does it build sustained competitive advantage?
  • Is this integral to us executing our mission?
  • Is this integral to us reaching our vision?
  • Does this have an added benefit of making the organization itself stronger?

You can even make a form –

Metric If we fail at this, do we go out of business? If we succeed at this, does it build sustained competitive advantage? Is this integral to executing our mission? Is this integral to us reaching our vision? Does this have the added benefit of making the organization itself stronger?
Metric 1 X X
Metric 2 X X X X X

 

After this initial culling, each category list should be quite a bit shorter. Now, for each list, rank the items from most important to least important. With the ranked list, if the list has more than 3 items, can you remove item 4 or any items below it and not touch any item that was tagged “If we fail at this, do we go out of business”? Incidentally, if you have a “go out of business” item ranked 4 or below, you might want to reassess your list.

At this point, you want to have no more than three items in each category (if you have four on one of your lists, it’s not a terrible problem, but four in each category would get you to 16 – that’s too many).

If you need to do a bit more culling to get the total of all four lists to 6 to 12, have at it. Weigh all list items against the others and remove the ones that don’t make the cut. The shorter the list, the better. If you can reliably measure organizational health with 5 total items, go for it. That’s less to track and less for your team to focus on to see if they are “winning”.

The next couple of steps are mechanical. How will you collect the data and how will you disseminate it? Some of the scoring will most likely come off the P&L or a production report. Earlier in the exercise, I asked you to only identify metrics that you wanted to track and not worry about whether or not you had a methodology for collecting it. That’s because the item might have not made the cut. However, if it’s on the final list, you need to create the methodology for scoring the metric. How will you measure employee engagement – turnover? online survey of all employees? exit interviews? productivity? That’s a quick example. Each metric measurement that doesn’t exist will require its own meaningful methodology.

You can use a variety of methodologies for disseminating the results. You can send company wide emails, use a company-wide communication tool like Slack, put up dashboards on TVs scattered through the office, warehouse or factory, convene a Friday afternoon meeting and present the scores – the options are only bound by your creativity. Early on, there’s a big education responsibility. As the Balanced Scorecard is rolled out, everyone in the organization needs to understand why each item made the cut, why it’s vital to the business, how it’s scored and what activities move the needle.

Finally, we reach the second most important part of this challenge. If selecting the metrics is the most important part, doing something about them is a close second. Most of you are probably familiar with the term “diving for the ball”. In football or basketball, if an offensive player fumbles the ball (football) or loses the ball on a dribble (basketball), everyone on the team “dives for the ball”. At that point, it doesn’t matter how the ball got loose. The only thing that’s important is getting it back. That’s very similar to what should happen with the Balanced Scorecard. There most likely will be more time for analysis than what is available in the middle of a game, but when any of the newly reported results are flagging, it’s time for everyone on the team to step up, even if it’s not strictly their job. If one of your metrics is sales and sales are down, everyone in the organization should ask, “What can I do to increase sales?” Working outside your discipline can often yield incredible ideas that are new to the organization. It kills ego in the organization, because team members in the struggling discipline get help from those who are not “experts” in that field. It increases focus, teamwork and cross-discipline understanding.

When the next set of numbers are posted, team members can celebrate shared victories together or reconvene for additional focus on still-flagging numbers.

An apology is in order. This will clearly take more than 30 minutes, but the results will be worth it.

The One Year, Thirty Minute Challenge :: Week Nine :: Strategic Planning :: Staying Even Getting Ahead

This week, The One Year, Thirty Minute Challenge visits my favorite topic – strategic planning. Unfortunately, many owners and managers forego strategic planning because they believe their business isn’t big enough, they don’t know how or it never bubbles to the top of their to-do list.

I’m afraid strategic planning is bit misunderstood (like the fact that tomatoes are a fruit). It’s not mystical and it’s not just for big, publicly traded corporations. It’s for every organization, public or private, big or small, for-profit or not-for-profit. At its core, strategic planning is –

Truthful evaluation, thoughtful options and deliberate actions to move your organization from the current state to the desired state.

We’ll revisit strategic planning a few times during The One Year, Thirty Minute Challenge, providing exercises that will make you think about where you are, where you’d like to be and how you’re going to get from the former to the latter. In each exercise, we’ll keep the scope very narrow, singling out just a single topic that’s usually part of a more overarching strategic planning process.

Let’s jump in.

Organizations operate in rapidly changing environments. Today’s success doesn’t guarantee tomorrow’s success. An organization with expert capabilities today can come up short tomorrow.

Look at the matrix below.

Let’s walk through the four quadrants, starting with the bottom left. Your organization has a set of current capabilities. With those capabilities, you access a certain set of opportunities. That’s your business as it today.

Let’s move to the bottom right. Since the environment in which we work changes rapidly, in the future, you’ll need to add capabilities to access the very same opportunities. Let me quickly illustrate. It wasn’t that many years ago that all you needed to work on a car was a timing light, a dwell meter and a toolbox full of wrenches and screwdrivers. Now what to do you need to work on a car? You need sophisticated diagnostic equipment that plugs into the car’s onboard computer so the car can tell you what’s wrong with itself. Then you need the toolbox full of wrenches and screwdrivers. So, to deliver the same result – a car that runs correctly – you need new capabilities (and in this case new equipment). Just staying even requires new resources and skills.

Let’s move to the top left. There might be the ability to access new opportunities using your existing capabilities or resources. Many years ago, when I worked for The Kansas City Star newspaper, we capitalized on an existing resource by combing through the thousands of pictures in our archives that had been collected over several decades. With them, we produced and sold beautiful coffee table books highlighting things as diverse as the history of the city and a collection of random, unique doors in the city. You might have a similar ability.

Finally, there’s the upper right box – greenfield opportunities. What new opportunities could you access if you added new capabilities? Think back a few years to Microsoft’s entry into gaming. Up until that time they developed software – operating systems, software development tools and office productivity tools. Adding new capabilities (gaming hardware and gaming software development), they were able to access new opportunities (a new gaming platform – Xbox with a killer complimentary product – Halo).

Let’s walk through the steps of this week’s exercise.

What will it take to stay even – to continue delivering the products or services you deliver now to the same set of customers?

  • What new knowledge or skills will your existing workforce need to add?
  • What new employees with what new skills or abilities will you need to hire?
  • What equipment will you need to upgrade or acquire?
  • What changes to products, services or customer experience will existing customers expect just to feel like the value proposition is the same as it has been historically?
  • Are you at a point where “staying even” means abandoning a current product and adopting a successor product? Think VCR to DVD or video rental to streaming.
  • What services or features have been introduced into your industry that have now become “baseline”? The absence of them seems like failure, but the presence of them earns you no brownie points – think WiFi at a hotel or online services at a bank. These must be present as well.
  • What new distribution channels or communication channels must be added? Think social media interaction and digital ordering and delivery of products and documentation.

 

What else can you do with existing capabilities and resources?

  • Can you expand to previously untapped geographies?
  • Can you access previously untapped markets? For example, producing a consumer version of an existing industrial product.
  • Can you deliver a new service with existing capabilities or a new product with existing resources?
  • If you have excess capacity, can you act as a subcontractor for another company in the same industry? It could even be a competitor.
  • Can you leverage your capabilities to manage a function for another company? If your bandwidth is wide enough and your expertise is deep enough, you could establish a revenue-generating business unit that provides that service. It could be a great way to diversify and provide growth opportunities for talented staff members. And that unit could provide the service back to your parent company.

 

What greenfield opportunities could you access if you added new capabilities?

  • Are there adjacent areas to your existing business? For example, adding commercial roofing to residential roofing. You can capitalize on an existing supplier network and can most likely leverage some of your existing expertise.
  • If your company has its own version of 20% time, can you bankroll the work of an existing employee, spin off their creation and become an active shareholder who provides not only capital but coaching?
  • Can you acquire another company with complimentary product or service offerings? You can merge and leverage already existing administrative resources or leave it as a wholly owned subsidiary.
  • Can you engineer a strategic partnership with a vendor or a trusted partner in an adjacent industry? Together, can you create a product or service that neither one of you could create on your own?

 

Gather some trusted lieutenants and maybe an outsider or two (your CPA or a consultant) and work through these bullet points. Keep a list of the tasks or ideas that bubble up.

Pay the most immediate attention to the “staying even” list. Begin assembling human resources and reworking processes, products and services. Check competitors, listen to customers, use data and marry all of those with what you know about moving the needle in your industry. Sometimes customers don’t know what they want next until they see it.

Engage your team in identifying promising new opportunities that are accessible with existing capabilities. Craft plans to evaluate the opportunities, then narrow the field, select and begin work on the options with the best ROI.

Finally, challenge your team to identify greenfield opportunities. Pursue those with the biggest potential upside.

The One Year, Thirty Minute Challenge :: Week Eight :: Value Creation :: Vendors

Vendors can be a critical path component in your value creation chain or they can be a completely undifferentiated source for something as mundane trash can liners. Regardless of where they fall on that spectrum, they’re going to get some attention in this week’s One Year, Thirty Minute Challenge.

The vendors you use for commodity purchases probably don’t significantly impact your ability to build sustained competitive advantage. However, even these vendors can cause some grief if they’re late with orders, have inexplicable pricing or returns policies or are chronically terrible at resolving screw-ups. With the wide variety of vendors available for these commodity purchases, spend a little time finding one who anticipates well, is conscientious and is easy to do business with. Enough said.

On the other end of the spectrum are those vendors who are deeply ingrained in your value creation chain. These vendors are partners in every sense of the word. We often call this special vendor relationship outsourcing. At the outset, outsourcing was typically something that large businesses did to save money. Call centers were moved halfway around the world to take advantage of a skilled workforce that provided services for a fraction of what a domestic workforce was paid. Factory workers building TVs, shoes and hundreds of other items allowed manufacturers to keep costs low, pass along savings to customers and boost profits. But since the beginning, outsourcing has changed dramatically. Now, businesses, large and small, look to outsource vendors to –

  • obtain specialized services they don’t possess in-house
  • get services that the outsource provider does better than they to do it in-house
  • easily scale up and down to meet fluctuating demand
  • focus their attention on core value creation activities while outsource providers take care of tasks that don’t add value to products or services
  • resell additional products or services that they do not produce in-house
  • provide services more economically than they can in-house

 

So, let’s jump into this week’s One Year, Thirty Minute Challenge.

For what disciplines in your organization might outsourcing make sense?

Early discussions on outsourcing targets focused on core vs context activities –

  • Core being those activities where the company was creating value for customers – the activities that made the company unique.
  • Context being those activities that provided the company no additional brownie points with customers even if they are done perfectly.

The conventional wisdom was to outsource context and keep core in-house. Current thinking is a bit different. Skilled outsource providers now deliver services that empower employees to do better work and enable the company to deliver better products and services to their customers.

Here are some options for outsourced services. Some might be on your radar now and some you might not have explored yet. Read through the list and see if any of these might improve company operations, improve customer experience, mitigate risk or boost the bottom line.

  • Payroll – Managing payroll related documents, collecting hours worked, calculating paychecks, cutting checks, making direct deposits, providing year-end tax documents, providing management reporting and providing an online payroll portal for employee self-service. Beyond these core services many providers deliver extra unique services like 401Ks.
  • Human Resources – Providing training, consulting and resources for hiring, development and termination. Providing templates for important documents like non-compete agreements and non-disclosure agreements. Providing insight on the broad variety of pre- and post-employment assessments available. Ensuring client compliance with ever-changing federal and state employment laws.
  • Bookkeeping – Entry of financial data, accounts payable, accounts receivable, general ledger and invoicing. Providing management reporting and filing.
  • Accounting – Providing management reporting, advice on cash management, use of debt and equity financing, tax preparation and minimization of tax liability, collections, shareholder relations, business growth, business valuation and more.
  • IT Infrastructure – Building and maintaining wired and wireless internal networks, internet access, deployment and maintenance of desktop, portable and mobile hardware, data security, backup and disaster recovery, email, desktop productivity software, collaboration software, integration with third-party software providers (CRM, ERP, SCM)
  • Big Data/Analytics – Using data from transactional systems (CRM, Accounting, ERP, etc) and sometimes supplementing with data from external sources, performing analysis and providing actionable insights on trends, patterns and associations previously undetected.
  • Outbound Logistics – Managing all facets of storage and distribution after goods are produced. The provider often picks up items directly from the end of the assembly process and, with information from the client’s order entry system, either warehouses, forwards to another location for additional processing or ships the item leveraging a larger and often times more sophisticated distribution system.
  • Marketing – Help with branding, identifying target markets, messaging and choice of mediums. Some firms provide advertising design and procurement, website design and development, SEO, paid search, social media management and advertising, print collateral, email marketing and CRM systems.
  • Lead Generation – Identification of prospective clients, initial contact, lead development and appointment setting. Firms employ a range of methodologies including email marketing, telemarketing and LinkedIn prospecting.
  • Consultants – With a broad range of disciplines available, consultants provide short-term, mid-term or long-term engagements in areas like strategic planning, execution, operations, customer experience, process improvement, leadership, management development, technology, marketing or project management. Utilizing a consultant allows an organization to “rent” expertise not present in the company or to extend the reach of expertise already present in the company by adding additional resources.

 

Evaluating Existing Vendors

For vendors already in the fold, use these criteria –

  • Do they communicate regularly, clearly and completely about the status of new initiatives, ongoing projects and problems?
  • Do they provide clear, concise and easy to consume information about their performance?
    Are problems resolved quickly and completely?
  • Do you have easy access to key personnel in the vendor organization so that you can get questions answered and quickly ramp up new initiatives as needed?
  • Does the vendor organization regularly contribute new ideas or suggest new services that will increase revenue, improve customer experience, streamline operations, strengthen technical expertise, improve marketing reach or develop employees in the client organization?
  • Does the vendor provide special product or service knowledge that stops the client organization from deploying their product incorrectly or enables the client organization to use their product in new or different ways to better service the client’s customers?
  • Does the vendor suggest better or alternate products or methodologies that solve a problem more effectively for the client’s customers and feel free to intervene in suggesting the alternate products?
  • Does the vendor willingly forego business (i.e. not sell a product) if it’s in the best interest of the client or the client’s customers?

 

Evaluating New Vendors

Technical Competency – I’d suggest developing a list of questions by vendor type that you submit to every prospective vendor so that you can compare apples to apples when you get the written responses back. There’s not time here to do a list for every type of vendor but let me illustrate with the beginning of a list for an IT services vendor.

  • What levels of services are available and what are the response times for each level?
  • What percentage of time do you meet the required response times?
  • Tell me about the technical qualifications of the staff at each support level – certifications, experience?
  • Do you have preferred vendors for each product type? What type of compensation do you get from that vendor for using their products? How can I be assured that I’m getting in best-in-class solutions if you use only products from vendors who commission you to use their product?

 

Company Fit – Not all of these fit in every circumstance, but these are some of the questions I use when evaluating a new outsource vendor regardless of the service I’m seeking.

  • How long has your company been around?
  • What is the staff size?
  • What is the experience of the staff? (in years, professional background)
  • What is the turnover rate for employees? (I want to know if employees are happy working there)
  • How much time do employees spend in training every year? (I want to know if the company has a learning orientation)
  • Is any part of your operation outsourced? (I want to know what level of control they have over the people who will be servicing my account)
  • What is the financial condition of the company? (I want to know if they’ll be around next year)
  • Where is your company located? (time zones can be a challenge)
  • Who runs your company and what are their credentials and experience?
  • Have you worked in this industry before? (I never let this disqualify someone. It just tells me if there are certain industry-specific things I’ll need to educate them on)
  • How much have you spent on R&D in the last 12 months? (I want to know if the company is growing and innovating)
  • Are you insured?
  • How do you deal with ongoing regulatory compliance issues?
  • Can I get a list of references? (Call them)
  • How soon can we get started?
  • Can I see an onboarding packet or something equivalent?
  • Do you have other clients our size?
  • Who is your toughest competitor?

Run through these lists to identify new outsourcing opportunities, evaluate existing outsource relationships and be better prepared for entering into new relationships.

Vendors and outsource partners can be powerful allies in building value. Choosing and managing them can quickly improve customer experience, operations and profitability.

The One Year, Thirty Minute Challenge :: Week Seven :: Growth :: Reframing

This week’s One Year, Thirty Minute Challenge makes us look at our organization through a different lens.

Many of you have probably seen this. Connect the four dots with two straight lines. The lines must touch but not cross.

If you’re stuck, it’s because you tried to keep the straight lines inside the box. That wasn’t one of the requirements.

When we ponder growing our organization, we typically plan incremental growth that we could handle within the framework we already employ – if we grew x% we could ask the office staff to work some overtime or we could hire another technician. I’m all in favor of incremental growth and that type of growth is always welcome. However, for this week’s One Year, Thirty Minute Challenge, I want you to think differently. I want you to ask the question, “What would it take for us to do 10X the business we are doing now?” The genesis for this week’s exercise (but not the exercise itself) comes from Larry Page at Google who asks his team to look for 10X opportunities.

So, here’s this week’s exercise.

Identify the changes to your lead generation activities that would be required to generate 10X the number of leads you have now – would it require entering new markets? A larger sales staff? Additional advertising platforms?

To get to 10X sales, what would it take to increase your closing rate? If you close 10% of all sales presentations, what would it take to close 20%? What additional information would the customer need? A more meaningful connection to your company’s message – your why? Access to existing client testimonials? A better understanding of your company’s value proposition?

To increase velocity of service delivery after a closed sale, what changes would you need to make to customer onboarding activities? Do you need to replace your paper-based order system with an automated system? Do you need to ramp up your after-sale communication so that customer expectations are clear and they know exactly how and when product or service delivery will begin and how it will look?

To handle 10X the business, how will your production infrastructure need to change? Will the existing process bear the weight of 10X the amount of business or does a new production infrastructure need to be built – one that is built from the ground-up with the ability to scale? Do you have suppliers that can deliver 10X raw materials on time and with the required quality or do you need to add suppliers or seek a new supplier? Do you need to find subcontractors that can supplement in-house production? Can they do it with the same quality and meet your time constraints? Can you invoice and collect from 10X the number of customers or do you need to provide new billing or financing options that will keep your 10X cash flow healthy?

To follow up with 10X customers, do you need a more robust CRM system that can manage increased customer communication, customize communication and deliver valuable information after the sale? Can the system deliver on-going useful information that will position your organization for more sales in the future?

Clearly this brief exercise can’t touch on every element that you might need to 10X your business, but that’s not the purpose. The purpose is to help you think differently about business growth. Most of the time, we approach business growth like riding a bicycle. To increase velocity, we intensify existing activity. We do the same thing we’ve always been doing – just more of it – i.e., we pedal faster and longer. This will work for a while, but at some point, we max out the load-carrying capacity and speed of the bicycle. To make our business grow, we need to swap the bicycle for a motorcycle or a delivery van – more speed, more capacity. We must change platforms.

The value of this week’s exercise will come when you identify the pieces of your organization that won’t scale. When you find irreparable platform deficiencies where no amount of “pedaling” will fix them and they must be replaced. When you find people-constrained activities that must be replaced with repeatable processes.

All of us would like 10X growth, but doing this exercise will position your organization for 2X, 4X or 5X growth on the way there and you’ll be building an organization that is more platform-driven, process-driven and policy-driven – and that’s good for everyone in the organization.

The One Year, Thirty Minute Challenge :: Week Six :: People :: Cognitive Diversity

Diversity has been in our corporate lexicon for about 35 years.

“In 1987, the Secretary of Labor, William Brock commissioned a study of economic and demographic trends by the Hudson Institute. This study resulted in the text titled, Workforce 2000- Work and Workers in the Twenty First Century. Workforce 2000 highlighted demographic factors that would impact the labor market in the United States. In a nutshell- the book argued that the U.S would only continue to grow increasingly diverse and suggested that diversifying the workforce was an economic imperative if companies wanted to stay competitive and attract talented employees.” – Shakti Diversity and Equity Training

Clearly the authors of the study were on to something – the workforce is now more diverse than it was then and is getting more diverse every year. Social scientists project that there will be no majority ethnicity in the US by 2045 (https://www.brookings.edu/blog/the-avenue/2018/03/14/the-us-will-become-minority-white-in-2045-census-projects/). And, there’s certainly been no shortage of corporate diversity programs in the ensuing years.

So, with this influx of diverse workers and the, most likely, millions of hours of diversity training, are we successfully leveraging the cultural and intellectual horsepower of today’s diverse workforce?

That brings us to this week’s One Year, Thirty Minute Challenge. We’ve done some things right in our diversity initiatives – we’ve clearly recognized the changing face of our workforce, we’ve been proactive in recruiting and we’ve sounded the trumpet for inclusivity, but I’m not convinced that we’ve unleashed the most important superpower of a diverse workforce – cognitive diversity – that is, the value of those who think differently. Silicon Valley has an incredible concentration of engineers and rightly so. But now the companies that employ those engineers are hiring art, music and philosophy majors. https://www.edsurge.com/news/2019-02-25-dear-liberal-arts-major-stem-companies-need-your-skills-to-grow Why? Because they think differently.

In many ways, an education is a framework for solving problems. When you hire an engineer and especially a herd of engineers from the same school, you get people who solve problems the same way – like an engineer. So, no matter how many of them you have, they bring a similar approach to tackling a problem – an engineer’s approach. Aim a musician at the same problem and you’re likely to see a much different approach.

Many times, our diversity initiatives have focused on observable differences – gender, ethnicity, age – but have neglected a big difference that makes our organization better – a different way of thinking. If a company who hired only white, male Harvard MBAs tried to become more diverse by hiring a black female Harvard MBA, an Asian male Harvard MBA and an Indian female Harvard MBA, they’ve shortchanged themselves. I’m not discounting the innate differences in each of us nor the differences that come from different upbringings, different cultures or different life experiences, but if we want a big upgrade to the intellectual horsepower of our organization, we need people who think differently. We cheat the organization when we solve for only half of the equation.

One more observation before the steps for this week’s challenge. Almost without exception, when I work with a business owner – especially a newer owner, the first few hires are clones of the owner. It’s no wonder, we like people who are like us. And, if we’re going to trust our business to them, we want someone we trust implicitly and someone like us seems like a safe choice. I get it, but we’re missing out on the benefit of cognitive diversity in our newly formed business.

So, what do we do to leverage cognitive diversity in our business?

  1. If you’ve never defined a set of core values start here. We absolutely want people who think differently in our organization, but those people must share a common set of core values. Whenever I’m doing this exercise with a client, I never allow them to choose values like honesty, integrity or hard-working – no business is out there looking for employees who are dishonest, lack ethical moorings and are lazy. Honesty, integrity and hard-working are price of admission values. You don’t even get to play in the game without them. Instead, discover those things that are integral to the way you do business. Maybe it’s a love for small business owners. Maybe it’s love for a craft (woodworking, car mechanics, logistics). Maybe it’s an unswerving devotion to customer service. Maybe it’s a commitment to lifelong learning. Find those things to which you would be committed even if your business evaporated into thin air.

 

  1. Identify barriers to cognitive diversity in existing operations
    • Is dissenting opinion welcome in the organization? Is it possible that you once had cognitive diversity, but drove it away by shaming or discounting dissenters?
    • Are you hiring over and over from the same talent pool (education, experience)?
    • Are you hiring only those people who are clones of owners or other employees?
    • Is engaging in acceptable risk encouraged? Are failures OK assuming the project sponsor mitigated foreseeable pitfalls?
    • Are employees encouraged to weigh in on parts of the business that are not strictly in their purview?
    • Does your organization exhibit characteristics of groupthink?
      • Do you ever question your own decision-making process or do you believe your process is bulletproof?
      • Do you ignore facts that don’t fit in your “box”?
      • Is there pressure for unanimity instead of desire for vigorous discussion?

 

  1. Build cognitive diversity through engagement with existing employees and through new hires
    • In problem-solving meetings, after you’ve reached a conclusion. Ask one or two people to argue against the conclusion you just reached.
    • In problem-solving meetings, break the attendees into two groups and ask each group to take 15 minutes and create a solution. Let both groups present their solutions and argue the merits. Adopt one, create a mashup of both or go back to the drawing board.
    • Assign a small group of employees to an existing company initiative and identify why the company is doing it all wrong (to be an assigned devil’s advocate).
    • Allow employees to work on a project of their own choosing (this is how Google got gmail and 3M got Post-It Notes).
    • In recruiting, identify positions where you could hire for alignment with core values, introduce cognitive diversity and train for the specific job – can you teach a willing art major how to analyze shipping data or train new call center reps?
    • Identify cognitive biases that keep you from hiring a perfect candidate for a job because they are not “like you”.

 

Clearly, this can be a bit more squishy than some of the other exercises in The One Year, Thirty Minute Challenge and, I apologize because this will take longer than 30 minutes, but it can generate some very powerful problem-solving horsepower in your organization.

The One Year, Thirty Minute Challenge :: Week Five :: Marketing :: Claiming Listings

In 2010, one of my new consulting clients was agonizing over some negative online reviews. He wanted to know how to delete them. I explained that deleting them was precisely the wrong thing to do. I went on to add that the best thing we could do is respond to them in the same online forum and explain, in public – in front of that customer and everybody else, how we were going to address that customer’s grievance. To say that the client wasn’t on board with my recommendation would be a gross understatement. My engagement was terminated shortly after that conversation.

It’s too bad, because the client missed out on the benefit of the Service Recovery Paradox (SRP). The SRP states that customers can often be more loyal to an organization after they have experienced a service failure followed by a positive resolution than if the failure had never occurred in the first place. The research is mixed on SRP, but in a world where almost every shopping experience starts online, the ability to demonstrate authenticity – “Yes, our company is staffed by humans who make mistakes, but when we do, we make every effort to make it right” – is a powerful way to start the conversation with potential new customers.

A 2018 study from Salesforce and Publicis.Sapient found that 87% of B2C shoppers begin product searches on digital channels, up from 71% the previous year. In two different studies, Blue Corona found that 71% of B2B researchers begin their research with a generic Google search and Google found that 89% of B2B researchers use the internet during the B2B research process.

That bit of truth brings us to the topic of this week’s One Year, Thirty Minute Challenge – Claiming Online Listings. There’s a good chance that your business has a listing on Google, Bing and Facebook even if you never created one. If I google my business (ClearVision Consulting), here’s what the search results look like. Notice my website and LinkedIn page are on the left, in the search results list and the Google Business listing is on the right.

This week’s challenge is to encourage all of you to claim all your online listings (if you haven’t already) so you’re in complete control of what people find when they begin to interact with you online.

The mechanics might be slightly different from platform to platform, but I’ll be illustrating with a Google Business listing.

This is my business listing. You can tell it has been claimed by me because I have the option “Edit your business information”. Google knows that I’m logged in to the Google account that manages the listing.

For an example, I’ve pulled the listing of a local business that has been claimed by the owner. My option at the bottom is to “Suggest an edit” to the page owner.

The last example is from an out of state business that has not been claimed by the owner. Notice the two options at the bottom – “Suggest an edit” and “Own this business?”. “Own this business?” indicates that the Google Business is unclaimed. Any information on the page has been gleaned from other sources or from customers or others who have provided it.

To claim this listing, a responsible party (owner or manager) must click on the “Own this business?” link and complete a series of steps to verify that they are authorized to administer the listing. After those steps are complete, they can then build out the listing with the firm name, contact information, address, website, services provided, hours, pictures and more. Most importantly, they can then respond to those who have left reviews.

I’ve provided links below to sites where you are likely to have a listing or might want to create a one. You’ll have to survey the landscape and decide if your organization should be there. Some are industry agnostic. Three or four sites in the list are used frequently by people in trades (plumbing, electrical, HVAC, etc). Others are popular for food and services (restaurants, bars, salons, spas). Click on the links, search for your business, claim your listing (if it already exists) or create a listing. Make your listings consistent across all platforms – standardize name, address, contact info, website, hours, services, logos, pictures.

Google My Business

https://www.google.com/business/

Facebook Business

https://www.facebook.com/help/257661877677443/

Yelp

https://biz.yelp.com/business_name_and_location

Yellow Pages

https://accounts.yellowpages.com/register

Yahoo

https://smallbusiness.yahoo.com/local

Bing

https://www.bingplaces.com/

Foursquare

https://foursquare.com/venue/claim

Home Advisor

https://www.homeadvisor.com/spa/zip

Angie’s List

https://office.angieslist.com/app/join

Thumbtack

https://www.thumbtack.com/pro

Other than listing Facebook, we’ve not discussed social networking. That’s another topic for another day. This challenge is all about being accurately represented in search. The more relevant and accurate listings there are for your organization, the more likely you are to be found. When those listings accurately represent who you are, the more likely people who want your product or service are likely to engage with you.

For those of you who are now super-intrigued by this exercise, here’s a list from HubSpot of the 50 best local business directories.

https://blog.hubspot.com/blog/tabid/6307/bid/10322/the-ultimate-list-50-local-business-directories.aspx

Happy claiming.

The One Year, Thirty Minute Challenge :: Week Four :: Culture :: Mentor Mindset

Management guru Peter Drucker reminded us that, “Culture eats strategy for breakfast.” Even the best strategies and tactics, when unleashed into a company with a toxic culture, are headed for certain death. All of you that have worked in a place with a toxic culture just offered up a hearty “Amen”. We’ll visit the topic of culture multiple times during The One Year, Thirty Minute Challenge and this is one of those times. During the course of a consulting engagement, I’m occasionally asked if I have a list of cultural imperatives, that is, attitudes, approaches to work and actions that should absolutely be baked into the DNA of the organization. I do and one of those imperatives is a Mentor Mindset.

Without question, every leader in the organization should have the Mentor Mindset. But I’d advocate for screening for the Mentor Mindset when hiring even the most junior associate. The Mentor Mindset is that baked-in concern an employee has for making the people around him/her better. It’s the opposite of the person who hoards what they know so they can leverage it for more power.

So, here’s this week’s exercise. We’re going to focus on two things – helping you practice the Mentor Mindset and prepping your staff to develop and practice the Mentor Mindset.

Helping you Practice the Mentor Mindset

Below, write one “why” you’d like everyone in the organization to understand. It might be why you forego cheaper raw materials for your product and insist on a specific high-quality input, why you insist that every customer be greeted in a specific way or why you only promote from within.

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

For the “why” listed above, identify how understanding that “why” will change the way your team approaches their work. Will they be better able to explain to current and potential customers why your widget is better than your competitor’s? Will they have a new-found appreciation of every customer that comes in the door? Will they better understand your goals for the organization? Will they gain insight into an existing process and now be able to make suggestions as to how to improve it since they understand the endgame?

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Design a way to “mentor” by disseminating this information to your team. Is the best medium a company-wide meeting? An email to everyone in the organization? A series of departmental meetings? A series of one-to-one meetings? A video posted on the company intranet? Whatever it is, make it happen by the end of this week. After you share the information, gather feedback. Was this new information? Did this correct an errant perception that they had? How will this change their approach to their everyday work? Will this operationally change their work?

If this returned positive results, look for other “whys” you can share.

Here’s a second exercise for you to try. When the next problem lands on your desk that only you can solve, identify someone else on your team that could solve it if they had more training, more experience, more perspective, more information and go find them. Let them know that you don’t want to be the only person in the organization that can solve this kind of problem and you want them to carry this responsibility with you. Then start at the beginning and walk them through the process of solving this problem. Show them how you gather information, explain your thought process in deducing the best course of action, show them the resources you use, show them how you communicate the solution and anything else involved. I realize this will take a lot longer than solving the problem yourself. The next time the same problem surfaces, pass it off to your team member and sit by them as they solve it. Over the course of several instances, let them take the lead. Soon, they will be proficient, and you’ve multiplied the problem-solving horsepower in your organization. And, who knows, they might even find a better way to solve the problem. I’ve written about this approach more thoroughly here.

Helping your Team Practice the Mentor Mindset

When you model this behavior, it’s a strong motivator for your staff do likewise, but here a couple of deliberate ways you can encourage your staff to practice the Mentor Mindset.

  • When you send a team member to a class or conference, ask them to prepare a written recap or short presentation of what they learned. Disseminate their recap or let them make their presentation to the rest of the team.
  • Ask each of your direct reports to share a specific operational task (how they prepare for their staff meeting, how they order raw materials, how they prepare for a sales call, etc) with one of their team members and have them ask that team member if they see any way to improve their work on that task.
  • Ask each person on your team to document one of the tasks they do regularly. Collect all the documents and redistribute them to other team members. Have the team members critique the documents, looking for steps that are unclear or lack a “why”. Send them back to the original author to be updated.

Doing every one of these exercises requires humility. Someone might find holes in your processes. Someone might identify a better way. But, humility is a good thing and, in fact, ought to be one of the attitudes and approaches baked into our culture. This exercise is a good accelerator.

The One Year, Thirty Minute Challenge :: Week Three :: Finance :: Fixed Costs vs Variable Costs

I hesitated to do this one and especially hesitated to do it early in The One Year, Thirty Minute Challenge because it surfaces most frequently with solopreneurs (or those with just a handful of employees). Larger and older companies have already figured it out or else they wouldn’t still be around. However, when I’ve seen it with past clients and corrected it, the results were so dramatic (it’s been the difference between staying in business and going out of business), I felt like I had to share it early on.

It’s really just a math problem. Instead of explaining, let me illustrate and then give the steps for this week’s exercise.

ABC Company charges $60/hour for their widget repairing service. ABC Company is very busy, doing all the widget repair they can handle. They are always booked a couple of weeks in advance. It might be because they are at the lower end of the widget repairing market. Their competitors charge $75 – $80/hour for the same service. The owner of the company pays his widget repairing employees $35/hour (the market rate), leaving him what he calculates as a $25/hour margin. However, at the end of every month, he just has a few dollars in the bank – not even enough to cut himself a check that would equate to 40 hours at minimum wage. So, what’s the problem? It could very well be that the owner is failing to take into account fixed costs.

Fixed costs are those incurred by the business just by being open. They wouldn’t change, even if the business serviced no customers or sold no products.

To illustrate with our fictitious organization, the owner of ABC Company pays each month –

Rent on the Shop $1000
Payments on Two Trucks $600
Tools $200
Truck Insurance $300
Liability Insurance $400
Utilities $400
Cell Phones $400
Accounting Service $150
Internet Service $100
Health Insurance $2500
Advertising $500
Total $6550

That’s $6550 to keep the doors open and the lights on (so to speak). If the two widget repairers get 40 billable hours per week every week, they log 344 hours per month (40 hours per week * 4.3 weeks in a month * two repairers). To cover these fixed costs shaves $19.04 off each hour that ABC company bills ($6550 / 344 hours = $19.04).

When the owner pays the widget repairers, variable costs kick in. Variable costs are those that are driven by volume of work or product produced – for instance, hourly wages, the cost of materials to build a product, shipping costs for a product, etc. In our example, the owner incurs variable costs of $35/hour in wages and an additional $2.67/hour to pay the employer share of Social Security and Medicare.

Here’s what’s left of the $60 the owner collects from customers –

$60.00   Customer rate
– $19.04   To cover overhead (fixed)
-$35.00   To the widget repairer (variable)
-$2.67   To cover employer share of Social Security and Medicare (variable)
3.29   Remaining margin

So, the $25.00 per hour margin the owner thought he was creating with his pricing and salary policy is really $3.29. Now it’s apparent why his competitors are in the $75-$80/hour range for the same service. It’s also apparent why he has no money left to pay himself at the end of the month.

You might be wondering if I’m exaggerating for purposes of this exercise. Unfortunately, the answer is no. I’ve worked with one client where the margin number was 0 and another where the number was in the single digits.

Let’s move on to this week’s exercise.

1.  For the last three months, go through your checkbook or copy of Quickbooks (or whatever your bookkeeping methodology is) and list each fixed expense.

Here’s a starter list (it’s by no means exhaustive). Go through your records and be thorough in finding every fixed expense.

Rent or loan repayment for your place of business

Vehicle payments or leases

Vehicle insurance

Business insurance (property, liability, E&O, etc)

Health insurance

Professional services (accounting, legal, consulting)

Technical services (website, internet, email, desktop support)

Communication (landline, cell phone)

Office supplies

Advertising

Administrative employees (those who would be paid even if no services or product were delivered)

Property Taxes

Total the numbers and calculate a monthly average for fixed expenses

2.  Calculate the opportunity to cover those fixed expenses – 

For service businesses –

For the last three months, calculate the number of hours for which you can collect money from customers (i.e. hourly charges that you can use to cover fixed costs) and calculate a monthly average.

For businesses that sell products (this calculation is trickier if you sell multiple products with different price points) –

For the last three months, calculate the number of units across which you can spread the fixed costs and calculate an average.

For retail businesses –

For the last three months, calculate the number of hours you are open, across which you can spread fixed costs and calculate a monthly average.

3.  Calculate the fixed cost to be covered each hour or by each unit –

Service – monthly fixed costs / monthly billable hours = fixed cost to be covered each hour

Products – monthly fixed costs / monthly units = fixed cost to be covered by each unit

Retail – monthly fixed costs / monthly hours open = fixed costs to be covered each hour

4.  Incorporate the fixed cost per hour/per unit into your pricing model.

For service businesses

variable cost per hour

+ fixed cost to be covered each hour

+ desired margin

= Customer price per hour of service

For businesses that sell products

Cost of good sold (labor + materials or purchase price)

+ fixed cost to be covered by each unit

+ desired margin

= Customer price per unit

 For retail businesses, the use of the number is a bit different

 Aggregate price of all goods sold in an hour

 – aggregate cost of goods sold in an hour

 = aggregate gross margin

Aggregate gross margin must be greater than fixed cost to be covered in an hour

Calculate this over the course time to determine which hours the retail establishment should be open.

5.  Check these calculations frequently. As volume (more hours or more units) goes up, fixed costs per hour or per unit go down, until you increase volume enough that you have to add fixed costs (hire another admin person, buy another truck, lease a bigger building). At that point the math changes again.

6.  I realize this week’s exercise can get complicated very quickly. If the simple examples in this exercise aren’t sophisticated enough for your business, consult your accounting or bookkeeping professional.

This exercise is incredibly important and could be the difference between staying around to serve customers for many years or being gone in just a few months.

If you have questions on this week’s challenge, contact me at 816-509-9838 or mchirveno@clearvision.consulting

Use the comments section below to benefit other business owners and managers by sharing insights you gained by working on this week’s challenge.

The One Year, Thirty Minute Challenge :: Week Two :: Business Continuity :: Data

Business Continuity is the discipline that enables your organization to keep operating or quickly return to operations after an unexpected event – be it a natural disaster, man-made incident or even a catastrophic event caused by the actions of an employee or contractor.

The One Year, Thirty Minute Challenge will return to the topic of Business Continuity later this year when we focus on operational items, but this week we’re going to focus on one of the most valuable and irreplaceable assets in your organization – data.

You can buy more buildings, equipment, vehicles and hire more people, but you can’t buy more data. Data represents not just the historical performance of your company, but more importantly, the historical performance of your customers. And nothing is a better predictor of future behavior than past behavior. This data is a rich resource as you use it to increase efficiency and effectiveness internally. Externally, you can use it to segment customers and prospects and communicate with those distinct groups more clearly – even down to the individual level.

In the course of this exercise, I’ll be mentioning companies and products to illustrate specific types of offerings and capabilities. Some of these I use and some I don’t. However, for all of these, I don’t get any type of kickback or referral fee, they are for illustration only.

If you work in a larger organization with dedicated tech resources, you might be saying, “We’ve got this covered. We have a robust business continuity plan and we have people dedicated to taking care of this.” Good enough, but skip to the bottom for some bonus content on the topic of stored data.

Let’s get started.

Identify all of the data collected or stored by your organization. Here’s a starter list –

  • Financial data in your accounting system
  • Sales data in your order entry system
  • Customer and prospective customer data in your CRM system
  • Operational data in your ERP system
  • Inspection data in your manufacturing system
  • Marketing performance
    • Website analytics
    • Response rates from advertising campaigns
    • Response rates from email campaigns
    • Social media posting with responses
  • Shipping data in your logistics system
  • Supply order history and vendor performance in your procurement system
  • Employee data (including tax and benefit selection) in your HR system
  • PLC programming for your manufacturing equipment
  • Computer code for any software developed in-house
  • Policy and operations documentation
  • Promotional materials (templates, logos, sales collateral)
  • Legal documents (incorporation papers, employment contracts, client contracts)
  • Usernames and passwords for company accounts (website code, website hosting, accounting system, CRM system, social media accounts, online banking, eftps.gov, state DOR, state unemployment)

 

Enlist the help of others on your team to identify other data created or collected in your organization. Also include the location of all important documents that only exist in a physical format (signed contracts, incorporation papers).

With your complete list in hand, identify where all of that data resides. For example –

Data Location Backup
Quickbooks Accounting System Bob’s PC
Customers and Prospective Customers salesforce.com
Website Mary’s PC
Sales collateral, logo Tom’s PC
Incorporation papers File cabinet in Amanda’s office

Some users might use have an application installed locally (Quickbooks, for example) but save the data file on the company’s local server. Make note of both. In case of a failure, you’ll need a copy of the application and a copy of the data.

Now circle back and note (in the third column) where that data is backed up (i.e. a complete, up-to-date, readily accessible copy). If you use cloud-based applications (Software as a Service or SAAS), for example – Quickbooks Online, salesforce.com, zoho.com, your data and applications are already automatically available in case of a localized emergency. However, for all other data that resides on a local personal computer or local server inside your organization, note where the data is backed up. This is essential in case the piece of equipment that houses the data has a catastrophic failure or the entire location is destroyed or becomes inaccessible.

Consult with your in-house or contract technology expert to craft a data backup plan for each piece of data. For all locally hosted data, select a backup solution that, at least daily if not more often, makes a copy of all data and stores it on devices that are not in the same physical location as your organization. Here are a few options to consider –

  • For mission-critical data residing on a local computer or server, you might consider an always-on cloud based backup like carbonite.com. Any time the device connects to the internet, the carbonite.com software will push an updated copy of the files you select to their cloud storage site – all happening without any intervention from the user.
  • There are cloud-based storage solutions available from many excellent providers including Amazon (AWS) and Microsoft (Azure). These services can certainly be used for backups, but many companies have opted to store their live applications on these cloud-based services instead of on local servers. They are fast and reliable.
  • Many companies have crafted hybrid private/public cloud solutions where data is stored both locally in a company-owned hosting facility and in a public cloud facility – sometimes simultaneously.
  • For all paper-only documents, consider scanning them and keeping an electronic copy.

 

Remember, the goal here is business continuity. You want as little disruption as possible to your operation in the case of a natural or man-made disaster.

Once your backup plan is in place, check backups regularly and make sure you can restore production systems from the backed up data.

If your organization uses specialized hardware to create, capture or utilize data (barcode scanners, RFID scanners), you’ll want to have spare hardware on site to restore operations immediately.

For some organizations, being closed for even several hours can represent the loss of thousands of dollars in revenue. Having a strong business continuity plan, especially as it relates to data, can ensure that you can continue to provide services, create goods, bill customers and pay employees without disruption.

Finally on a semi-related note, create, if you don’t have one, a document destruction policy. Data is incredibly valuable but it also creates liability for your organization. A well-crafted, strictly-enforced document destruction policy can mitigate that liability. After consulting with tax and legal professionals, let’s say that you decide you need to keep 7 years of financial records and, for marketing reasons, you need to keep 10 years of customer order data. At that point, securely destroy all other data. If you have other data, outside the scope of your document destruction policy, it can be subpoenaed during a legal proceeding – going back decades if you still have it available. However, if you can demonstrate that you have a document destruction policy and you follow it by destroying all data outside the boundaries of the policy, you can eliminate that potential exposure. In addition, you don’t have to pay to store it and don’t have to pay to retrieve it should be requested.

If you have questions on this week’s challenge, contact me at 816-509-9838 or mchirveno@clearvision.consulting

Use the comments section below to benefit other business owners and managers by sharing insights you gained by working on this week’s challenge.