A lot of business challenges went unsolved as senior leaders wrapped up for the holidays. Returning to work in the new year means renewed impetus, renewed focus and renewed energy. However, the same old challenges persist, typically across people, processes, systems and even partners. Some business challenges are tactical, day-to-day decisions that can be fixed fast. Some business challenges need follow-up and a little management. Others are gnarly, complex and longer term to deliver changes to how you operate or your business model. Typically, the tactical decisions do not deliver significant cashflow growth. So, today we discuss solving business challenges preventing cashflow growth.
Business challenges
In general, business challenges fall into one of the following three types:
- Day-to-day;
- Small projects;
- Transformation.
The scale, complexity, cost and duration increase as you progress to number three.
Furthermore, challenges tend to affect the following four dimensions of a business:
- People;
- Processes;
- Systems;
- Partners.
Day-to-day challenges may only impact 1 or 2 of these dimensions. Transformation is likely to impact them all. This is crucial for senior leaders to acknowledge that the latter requires greater resources, patience and governance. An impatient, task-oriented and directive leader may resist transformation as much of the programme must be handed-off to others to manage, such is the wide-ranging scope.
Solving business challenges
We would be remiss to mention that an ostrich with its head in the sand remains at risk. Similarly, the boulder won’t reach the top of the mountain without a sustained group effort. Many business challenges are complex, affect multiple areas, dimensions and ongoing business operations. What differs is how we plan to tackle them.
Here are four ways of solving business challenges:
- Hire new people/remove poor performers;
- Deploy technology/software/machinery;
- Bring in third-party resource/expertise;
- Implement continuous improvement.
This is not an exhaustive list but is what we typically experience. We will briefly discuss each in turn so as to understand the pros and cons.
1: Hire new people/remove poor performers
The answer to solving business challenges is often to hire new people to lead some form of change. Typically, these are senior managers tasked with leading initiatives and making things happen. The trouble is that it is very expensive. Take a typical senior manager hire on £80,000 basic salary. Assuming that you are fortunate enough to avoid the recruitment fee, the minimum that they will cost you in year 1 is about £94,000. When you add in expected benefits such as a bonus, car allowance, higher pension contribution, taxes, laptop and mobile device, you are nearing £120,000.
That is a sizeable investment to hope to solve a business challenge and make change. It may also take 4-5 months to hire a senior manager, who usually has a 3-month notice period. To counteract the cost, many seek to offload the bottom 10% of staff, typically those with poor performance reviews or on a PIP (performance improvement plan). This is draining on senior management time.
2: Deploy technology/software/machinery
New technology promises business benefits. These may be in the form of cost savings, greater efficiency, automation or reducing defects. Others may promise to unlock growth, such as by automating marketing motions, providing sales insights or allowing you to produce something new. Depending on the nature of the solution, there is a substantial amount of effort involved. New technology typically doesn’t come cheap and integrating into your business might require change. Similarly, new software needs integration with your existing systems, which assumes that they are up-to-scratch with where they need to be. New ERP, CRM, eCommerce/mobile app deployment is a significant digital transformation programme. Finally, new machinery, albeit it may sound easier, could require reorganisation of a factory floor, complex configuration, new processes, testing, training and scheduling.
3: Bring in third-party resource/expertise
A dynamic approach is to bring in a third-party. A complex digital transformation may consume so much organisational resource that it risks failure. New technology implementation may only yield the desired benefits with a tightly governed programme to integrate it. New hires take a while to get up to speed and they don’t want to rock the boat until after probation and they exceed the timing of unfair dismissal (generally 2 years in the UK). Third-parties can have boots on the ground in days compared to new hires taking 4-5 months. Third-parties also bring expertise that you may lack and perspective, which gets harder with longer tenure. Finally, third-parties don’t need the same hiring approval and may not involve capex. Unfortunately, they can be more expensive per day, are not fully integrated in your ways of working and also need time to get up to speed.
4: Implement continuous improvement
Kaizen, or change for the better, is a Japanese philosophy of making many small, incremental changes to lead to a larger, long-term benefit. It may also be described as the sum of incremental gains. Lean and Six Sigma are frameworks linked to the reduction of waste (increased efficiency) and reduction in defects (increased quality). Many organisations turn to Kaizen ‘blitzes’, value stream mapping or the 5 Whys to workshop improvements in internal processes. Ideally, people at all levels of the organisation are involved to unlock maximum benefit. This requires a substantial cultural change and in itself is no longer a source of sustained competitive advantage. In summary, the entire organisation must live and breathe the philosophy for the long-term (not just one leader). Additionally, if your competitors are doing it, you are unlikely to ‘out compete’ them with CI.
Business challenges that prevent cashflow growth
Sadly, a smorgasbord of business challenges prevents cashflow growth. These may include:
- Poor performers;
- Lack of available talent;
- Bad company culture;
- Inefficient processes;
- Manual workarounds;
- Inflexible or out-of-date systems;
- High complexity;
- A narrow view;
- Lack of insights;
- Failure to value research;
- Suppliers focused on profit;
- Intense competitive pressure;
- Regulation/taxes/policies.
Some of these are easier to overcome than others. A few are inter-related and therefore gnarly to overcome. Crucially, most will incur a cost, which represents an investment to increase cashflow. Internally, there is always scope for increased efficiency. Externally, there is always opportunity if you can identify it. Once you have identified what is holding you back, you need to decide how you will solve the business challenge. Ideally, you would prioritise those that are preventing cashflow growth, which can be both internal and external. A third-party is a great place to help you flexibly identify the challenges but only you can decide how to solve it. New hires? New tech? Third-party? Continuous Improvement? Another?
A new year’s resolution – solving the unsolved business challenges
Think Beyond is a third-party that can help you to identify challenges or support your journey in overcoming them. Unlike a senior hire, we are flexible, objective, open and honest about your individual scenario. We can be deployed in days and work around where you need us, not staying within the lines as per a rigid hierarchy. Finally, we provide that much-needed oxygen for internal teams that are already maxed out to make your transformation goals a reality.
If you would like to find out more about our support options, simply reach out to our friendly team. Alternatively, you can message us via our Think Beyond LinkedIn profile. There are a few similarly named businesses out there but only Think Beyond management consultants in Cheshire offer a personal service tailored to your needs for private sector organisations.
Finally, why not read some of the benefits that we can offer and identifying some internal challenges.