It’s important for any business to understand not only what it does well, but also how it does it. Without giving away too many trade secrets, here is how I help clients accelerate growth through operational excellence.
For those of you running, or hoping to run, or trying to run, growing and profitable businesses, there are only six metrics that you should be looking at:
Customer retention – What percentage of your best customers are you retaining? Thriving organizations retain more than 85% of their best customers every year.
Employee retention – What percentage of your top people are you retaining? You should be well above 90%.
Revenue per customer – Are your customers spending more with you each year? This metric should be increasing every year.
Profitability – Is your profitability increasing even if your revenues are not? This metric should be increasing every year.
Customer base – Is your customer base growing (meaning you have more customers this year than you did last year)? This metric should be increasing every year.
Vitality index – What percentage of your revenues come from products or services created in the last three years? World-class organizations have a Vitality index of greater than 30%.
How are you performing against these metrics?
In a previous post, I introduced the concept of Operational Elegance. Here is an assessment I have created called The Operational Elegance Index. This Index helps you assess how you can accelerate growth and maximize profitability.
After you have completed the assessment, I would love to hear your feedback on its’ usefulness and discuss how I might be able to help you raise your Index score.
Check out my latest article for IndustryWeek
A thriving operational excellence function teaches everyone else in the organization how to be excellent.
I have partnered up with my friend and colleague Phil Symchych to provide you with strategies on how to accelerate the growth of your business and build more business wealth. Read our practical and applicable insights in the documents below.
I was meeting with a prospective client recently and said those four key words to her, “In order to achieve your objectives, we need to PURSUE EXCELLENCE NOT PERFECTION.” After I said it, she looked at me, stood up and said, “Can you please excuse me for a minute?” Two minutes later she returned with the CEO and the three of us proceeded to have an engaging 90-minute discussion on how we could improve the performance of their people and their organization.
When we pursue excellence, we reward improvement. We provide a clear road map for people to follow. We achieve incremental successes. And we are always able to redefine what excellence means and set new expectations.
When we pursue perfection, we don’t reward improvement. We only reward perfection. What if it’s never achieved? There are only two possible outcomes when you strive for perfection: Success or failure. There is no middle ground. And unfortunately most organizations that strive for perfection, fail. And even though improvements have been made, they are not celebrated, because perfection was not achieved.
The next time that organization set expectations, people are wary and gun shy because they remember the last time the organization failed. I had a client who told me that her Board of Directors still reviews a specific failed project at every meeting. The problem is that the project failed FIVE YEARS AGO!!! And they are still dwelling on it. Why would anyone want to propose any new project if that is the way failure is treated?
Are you pursuing excellence and setting your organization up for success and improvement, or perfection and setting it up for failure?
Check out my latest article for the Huffington Post – Are you Innovative or Opportunistic?