The Value Equation

2009 Top Ten Trends for Performance Improvement

The following ten trends are what the Top Performers, i.e. the “5 Percenters” are doing to overcome barriers to value creation in 2009. 

In 2009, wealth will be created for ‘perform businesses’ that are the most productive, cost efficient, promote and excel at change, and stay focused on being REALLY good at a few things (i.e. customer satisfaction).  – Garry Meier

P.S. Enjoy!

2009 Top Ten Trends for Performance Improvement: #10: Valuation as your Decision-Making Guide

Using valuation as a tool for decision-making will align short-term and long-term interests as well as remove emotional fears.

The goal of valuation is Profit Maximization.  Your objective is to reduce “Risk and Spend.”  Here are two strategies:

1. Increase near-term earnings by improving levers that impact a combination of Revenue, Operations, Workforce, G&A, and Management Scalability; and
2. Create strategic options for value creation (alliances, acquisitions, partnerships, etc).

Should you invest more in marketing? What about implementing a performance review system?  Contemplate these decisions based on the impact on the company’s valuation and you cannot go wrong. 

2009 Top Ten Trends for Performance Improvement: #9: M&A as a Growth Driver

Mid-market enterprises have the:

1. Opportunity to consolidate fragmented markets (quality investments more important than ever!)
   
2. Capital available to purchase distressed and “cheap” assets (in recessionary times is #1 PE priority)
   
3. As a ‘Perform Businesses’ it is “time-to-shine”; the deals being transacted have positive cash flows and increasing revenue streams resulting in increasing valuations.

 

Technorati Tags: M&Alternative distribution,corporate acquisitions,corporate development,growth capital,private equity growth capital

2009 Top Ten Trends for Performance Improvement: #8: Prevalence of Support Teams

Historically, small businesses’ strategic advisors have consisted of CPAs, CFAs, lawyers, and bankers. Increasingly these advisors are being supplemented by advisors in various forms:

1. 15% of fast growth companies have a formal board of advisors. Here is why:
• To achieve performance improvement objectives (50%)
• Risk Management (50%)
• To receive unbiased influence and outside recommendations (41%)
• Strategic or financing partner (36%)
• To enhance and augment executive management skill (20%)
• To solve current near-term operating issues (19%)
• Preparation for capital, exit, or going public (7%)
  
2. Advisory Panels created that include either customers, and/or partners and suppliers.
   
3. Retained advisors that serve as “Operating Partners” provide performance improvements, focus, and management skill augmentation.

Technorati Tags: Operating partners,management augmentation,strategic partners

2009 Top Ten Trends for Performance Improvement: #7 Management Science

Have you ever wondered why some small companies have a manager-to employee ratio that is lower that faster growing companies?

Getting Started, Moving Towards Pragmatic Focus:

1. Communicate Goals and Financial Performance to all employees. Reporting on performance, whether monthly or quarterly, holds everyone accountable (Transparency of metrics is key).
   
2. Weekly Metrics Discussions. How well people are performing on a daily and weekly basis is the start of employee accountability.
   
3. Business Intelligence (BI) and Workforce Analytics can bring focus on relative performance, rather than just absolute performance. 
   
4. Create an Outside Board of Advisors. Your board can be as formal or informal as needed. Depending on the stage of your business you may need a ‘partner board’ or ‘customer panel’ more than a typical board of advisors.

Technorati Tags: management science,management best practices,manager

2009 Top Ten Trends for Performance Improvement: #6 Leverage Resources and Assets

Here are a few ideas to leverage your resources and assets in 2009:

• Shift company mindset from the “War for Talent" to viewing human resources as a profit center via “Human Capital Best Practices.”
  
• Adopt productivity and management tools such as CRM, Portals, Wiki’s, Collaboration, Social Networking, Web 2.0, BI, analytics, etc..
  
• Leverage networks, partners, and employee relationships to drive alliances, credibility, and revenues.
  
• Embrace best practices from consultants (Lean services for example), outsourcers (insourcing), and providers (latest tools and techniques).

Technorati Tags: best practices,human capital best practics,productivity tools,management tools,networking

2009 Top Ten Trends for Performance Improvement: #5 Outsourcing Adoption is Required.

Both the mid-market and large market have comparable overall revenue potential (50,000 small businesses in the US alone outsource more than one business function!) However, the mid-market produces higher margin outsourcers.

Buyer adoption varies across geography, industry, and company size however for $1M to $100M: nearly 10% outsource the HR function, 25% IT, and 40% part or all of accounting and finance.

The Value Proposition Demanded by Organizations is Expanding:

1. Buyers have moved far beyond cost savings.
2. Outsourcing must achieve strategic, operational, technology, human resources, and risk management benefits.
3. Pricing is changing to on-demand, pay-as-you-go models:
• Buyers moving away from “Per Hire Fees”
• Non-transactional pricing models such as BPO concepts with performance guarantees and earn out pricing will become prevalent
• In a slowing economy, buyers prefer a componentized model (i.e. pay-as-you-go) over a wide-scoping transformation model. Customer potential for multi-process or entire functions has low penetration, especially in the small and mid-market; but partial outsourcing growth is escalating.

 

Technorati Tags: outsourcing best practices,outsourcing adoption,HRO,BPO,human resources outsourcing,IT outsourcing,business process outsourcing,outsourcing trends,small business outsourcing,startup outsourcing

 

2009 Top Ten Trends for Performance Improvement: #4 Differentiated Services Offering

Competitive differentiation can take many forms (all of the following are possible differentiating attributes):

• Innovation
• Service Excellence
• Industry or Specialized Expert (Specialist)
• Total (holistic) Solution Provider
• Low Cost
• Distribution Channels
• Branding
• Game Changer

Whatever you decide, it’s important to:

1. Carve Out Your Niche including:
• Price, product, place, promotion
• Partner to “round-out” your service offering
  
2. Be Known.
• Credible and Compelling
• Be Found Online
  
3. Economic Credit Crunch Ramifications:
• Do the tough work upfront or suffer the ramifications
• Lower risk by focusing on what you can effect

 

2009 Top Ten Trends for Performance Improvement: #3 Product Trends

1. “Productizing” services.
   
2. Bundled and/or Holistic Services Offering – i.e. “Integrated Suite.”
   
3. SaaS - In the technology area most vendors are expected to release SAAS versions of their systems. Some providers are building new versions based on .NET and in some cases Ajax.
   
4. Reporting, Workflow, Integration APIs and Analytics / Business Intelligence are quickly becoming required.
   
5. Many research analysts (Gartner, Forrester, Aberdeen) predict that companies increasingly will gear up to address the new topic of the “High-Performance Workplace” (HPW).
   
6. Corporate Cultural Match is Driving Solutions.
   
7. Offerings Must Include Quickly Achievable ROI.

2009 Top Ten Trends for Performance Improvement: #2: Customer Acquisition via Alternative Distribution Models:

Alternative distribution channels (i.e. customer acquisition methods) for you to examine the “Spend and Risk” associated with each:

1. Proliferation of online sales and service models:
1. Subscription models
2. SaaS models
   
2. Create strategic alliances.
   
3. Leverage channels, agents, resellers.
   
4. Partner with consultants, VARs, integrators.

Technorati Tags: customer acquisition,alternative distribution,partnering best practices,partner marketing,SaaS models,SaaS,subscription model,online sales model