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Executing Business Strategy – A Practical Guide

“Based on the book, “The 4 Disciplines of Execution (4DX) 1 ”, and experience working with SME businesses, this is a practical guide in how you can put all four elements together to better deliver and execute your strategy.”

Brian is a business owner of a large retail business with sales revenue of $20 million per annum and 100 employees who work across different locations. In the latest economic downturn, his profit margin has halved, his competitors have increased and customer’s numbers decreased. Despite all of this, he has still managed to retain his experienced staff. He has a clear business strategy. The hardest part, where does Brian start?

Does your team know what the VIP Goals are?

Brian knew that in order for him to be able to execute his new business strategy, he needed the profit to be able to invest. Therefore, knowing his cost base was stable, it was easy to see that the declining sales revenue was driving the poor performance on his profit and loss statement. Thinking about what his VIP goals could be, he realised that two major drivers for sales revenue were the number of customers that visited the store and how much they bought. Therefore, he selected the following two VIP Goals:

  1. Increase customer numbers from FY13 baseline
  2. Increase customer profitability from $24.50 to $30 per customer

Does your team act on Lead Measures?

Brian didn’t want to just track the goals each month; he wanted to select measures that focused on what actions the team can take in order to drive achieve the monthly sales targets. Focusing on tracking actions (inputs), rather than results (outputs), he decided to put in place the following measures for sales team:

Business Objectives Lead Measures
Increase customer numbers from FY13 baseline o  Number of customer events per month

o  Number of targeted promotions communicated to customer database

o  Number of advertising campaigns completed

Increase customer profitability from $24.50 to $30 per customer. o  Items per Customer Basket

o  Average Sales per Customer

o  Product Knowledge per Sales Staff

Does the team keep an Insightful Scoreboard?

Brian certainly tracked how his business was performing and shared this information with each of his Managers. He left it to each Manager to then communicate this with their team. He knew some did this better than others.

To make it insightful and ensure that any team member, with a quick glance, could tell whether they were winning the game or not, Brian realised that he needed to simplify the monthly reports and also standardised the information across the teams.

He created a one page “Scoreboard” that not only had the critical performance data but ensured that team members could see how they were tracking against the budgeted target.

strategy

How does the team keep on Track?

Keeping team members focused over a long period of time takes commitment and Brian knew that he needed a system to keep everyone on track, even when he wasn’t there.

Given that he was an SME, he didn’t have the time or money to implement a fancy system. He decided to revamp the Manager Meetings to become the system in which all activities would be managed.  He changed the agenda to provide equal time between responding to previous performance data and also future actions to close the gap. It became the main vehicle in which they monitored, tracked and gave feedback on each store’s performance.

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About the Author

Tim Miles

Tim Miles is the co-founder of  Miles Management Consulting which supports business owners and leaders to drive better business performance.

Tim has vast experience in the strategic and financial management of businesses with a particular focus on cash flow and profit improvement, strategic thinking and performance reporting.  He has extensive knowledge of business start-ups and acquisitions as well as exit and succession planning.  Tim is an adviser with Supertrac, a corporate advisory firm specialising in business divestments, mergers and acquisitions.

Tim is a Fellow of the Institute of Chartered Accountants (FCA), Graduate of the Australian Institute of Company Directors (GAICD) and a Certified Exit Planning Advisor (CEPA) with the Exit Planning Institute (EPI).

If you have any specific questions or would like to suggest future blog topics, please do not hesitate to contact Tim on tim.miles@milesconsulting.com.au.

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