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In This Issue
Mastering Profit Margins

Accelerating Sustainable Change

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Volume 56, June 2014
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Andrew Miller

The monthly electronic newsletter presented by Andrew Miller.

My newsletter focuses on providing ways to generate dramatic ideas and quickly optimize the speed, and improve the performance and profitability of your organization.

Mastering Profit Margins

There are only three ways an organization can improve profit margins:
  • Increase revenue and maintain costs.
  • Maintain revenue and decrease costs.
  • Increase revenue and decrease costs.
In order for organizations to be able to master the art of maximizing profit margins, they need to know which levers to pull in order to maximize those margins. Pulling these levers means having the right strategy to take advantage of the opportunities. These levers become even more important when you are in industries like retail where margins are very tight to begin with. Mastering margins is not just about cutting costs to increase profit, it's about knowing which levers to pull, what strategies to implement, and when to pull the lever.
 
Mastering profit margins is like operating a crane. If you pull the right lever at the right time, you are able to lift a huge piece of equipment or material with ease. You use leverage. Mastering margins is the same. You use a small amount of effort effectively and you are able to raise margins dramatically.
 
Here are the key levers that organizations can pull to master their margins:
  • Pricing and payment terms
  • Procurement and managing suppliers
  • Cost of goods sold
  • Supply chain optimization
  • Customer growth and retention
  • Employee engagement and empowerment
  • Brand recognition
  • Operational excellence
  • Innovating and collaborating
To be a successful and profitable company, you need to know which levers to pull and when. And often you may be pulling multiple levers at the same time.
 
For more details on this, read my latest article for IndustryWeek.
 
Which levers can you pull to maximize your profit margins?

Accelerating Sustainable Change

The reason that more than 70% of change initiatives fail is because the implementation is not done in a sustainable way. Organizations often use methodologies as a crutch that stops them from using good judgment and critical thinking. Methodologies stop us from making the tough decisions we need to make in order to be successful.
 
If you want to have a successful change initiative, there are four key components to your change strategy:
  1. Identify the key objectives and desired outcomes for the organization – What do you want to accomplish?
  2. Identify the ideal future state for the organization to achieve those outcomes – What will the organization look and feel like once you have accomplished those desired outcomes?
  3. Identify and engage key stakeholders, then empower them to make decisions in the best interests of the organization – What's in it for each of the key stakeholder groups? Why would they support the change?
  4. Apply practical and sustainable strategies to achieve the desired outcomes – How can this change most effectively be achieved?
Most organizations don't ask these questions, or often any questions at all. When you don't consider these questions, there is a gaping hole in your change strategy. We don't need methodologies or to be trained on different belt colours, we simply need to answer the right questions and develop a mindset that allows us to consider how the change will impact the people inside and outside our organization.
 
Is change readiness a core competency of your organization or simply an afterthought tied to the latest methodology you are using?

Please note that we grow our business through referrals and would never be too busy to speak with a friend, family member, acquaintance or colleague if you think we could be of assistance.

Please contact Andrew Miller at 416-480-1336 or visit our website at www.acmconsulting.ca

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© Andrew Miller. All rights reserved. 2014.