How to Align Your Team for Optimal Execution

I recently completed the implementation of the Critical Factors Management System into a $4.5 million manufacturing company that had been operating at a loss for the past six months.

As is usually the case, I cannot mention the name of the client but they are typical of many small businesses that are run by intelligent, passionate and capable entrepreneurs who have all of the industry knowledge and relationships, along with a brilliant product or service, that you would think are critical to business success. Yet, they are struggling or failing to reach their full potential. WHY?

I knew the answer to the first question I asked my client before I even asked it – how could a company that was profitable two years ago with only $2.2 million in sales be losing money now that they were operating at $4.5 million?!

The reason I asked the question was to see if he realized that the answer was simply this – there is a big difference between knowing how to DO something and knowing how to RUN A COMPANY that does what you do.

Thankfully, he did. He understood and was ready to make that transition from running a business (being good at DOING something) to running a company (being good at GETTING THINGS DONE through other people).

And thus, I could help him because his job, as the CEO, is to hold the vision, have the industry know-how and relationships and focus on inspiring his team to excellence. My job, as his Outsourced COO, was going to be to assist him, to execute his vision through his team.

Up until two years earlier, he had pretty much done everything himself. He worked night and day for years to learn as much about his industry as possible and develop the relationships critical to his success. And then, two years ago, as he started to grow, he started hiring people to do a good deal of the work that he had been doing. At first it was easy to manage his workforce – even though he did not recognize he was micro-managing them.

This is typical. As more people are added, it becomes more and more challenging to ensure that they are all operating efficiently. And, if you are micro-managing, in essence all you are doing is increasing your workload because you can’t be everywhere at once and watching everything everyone does. He had reached this stage and he was getting burned out.

Of course, my first order of business was to take him back to the beginning and clarify his Mission and Vision. You are familiar with this approach if you are familiar with the 7 steps of THE PIP. If not, you may want to download THE PIP Checklist.

Once we clarified his goals including his unique value proposition (Mission) and where he wanted it to take him (Vision) we worked on refining his strategy. The truth is, while I think we renewed his enthusiasm for why he is in business, he had been pretty clear on his goals and his strategy; the biggest problem was alignment.

When your car is out of alignment – you know it. It just doesn’t feel right. You feel less in control and you know you’re wasting gas and tires.

It’s really not that much different for a company.

When your company is not operating on all cylinders – when things are out of synch – you feel less in control and you know you have diminished productivity and profits are suffering.

In his case, his company was growing at a relatively fast rate but it lacked the proper structure to enable him to maintain control. And that is what was causing the burnout.

He certainly hadn’t dedicated himself to building a company for the love of becoming a harried business owner.

So we implemented the following structure which now enables him to lead with the calm control of a CEO of a strategically aligned team.

This is the structure I use for every company. It will work for yours as well.

We recognize that every company is unique and rightly takes pride in that uniqueness. At its essence, however, every company, whether for-profit or non-profit, services or widgets, Fortune 100 or Startup; has six critical components:

  1. Product or Service – someone needs to be responsible for the conceptualization, refinement and development of your product or service to ensure it meets your customer promise
  2. Marketing – you can have the greatest product or service in the world but if no one knows about it…
  3. Sales – awareness of and interest in your product or service needs to be converted into revenue
  4. Operations – the product or service needs to be produced, warehoused, distributed and supported
  5. Finance – revenue must be collected, bills must be paid and money must be managed
  6. Administration – strategic planning, legal, risk management and human resources support the entire organization

By taking the VISION of the company and allocating the goals to these six functional areas of every company, we start the process of creating the alignment necessary for efficient and effective execution of the business strategy.

This is a simple structure that every member of the company can readily understand.

Product or Service

What is your product or service? Does it fulfill your customer promise? Do you make changes every time the sales team learns something about a competitive product? How does that impact the operations team responsible for producing the product? If you do make changes, has the finance team analyzed the impact on profitability?

You see, someone needs to be responsible for ownership over the conceptualization, refinement and development (not production) of your products and services. Marketing, sales, production, etc. cannot be allowed to make changes without coordinating with the Product/Service Manager.

Marketing

Marketing and Sales are often combined. They should not be. Marketing and sales perform completely different functions. The primary responsibilities of marketing are:

  1. Create Awareness
  2. Inspire Trial

Of course, marketing must achieve its objectives by promoting the customer promise. It must be constrained, however, by the actual features and benefits of your product or service (coordination with product/service manager). It must generate the leads necessary for sales to generate the revenue required to meet company goals (based upon sales’ performance metrics) as well as the budgets established by finance.

Sales

The primary responsibility of Sales is to convert the leads from Marketing into revenue. Again, sales cannot make promises that the product or service does not meet (coordination with product/service manager and marketing), cannot offer discounts that are not within the budget (coordination with finance) and must be held accountable to established sales metrics (calls, presentations, closing ratios, etc.)

Operations

Operations is a big component. It includes purchasing, production, warehousing, shipping/receiving, customer service and facility management. Obviously, Operations must coordinate with all aspects of the company. For instance, with regard to:

  • Product/Service management (could different materials be used to make the product lighter/faster/stronger/more efficient…?);
  • Sales (can production keep up with sales? – this is a major consideration, for instance, with aerospace companies attempting to meet a promise of on-time delivery);
  • that customer service provides up-sell opportunities to Sales, etc.;
  • work within the budgets set by Finance and ensure, among other things, that shipments do not go out to suspended customer accounts;
  • etc

Finance

Finance has four major functions:

  1. Accounts Receivables – ensure on-time collection of payments from customers with a goal of minimizing 60+ day receivables (an important consideration for improving bankability)
  2. Accounts Payable – effective management of accounts payable has the potential to make a major impact on cash flow (the lifeblood of every company). Proper management of accounts payable means improving vendor relationships. If, for instance, you can extend payments by 30 days with every vendor, that buys you a month of additional cash flow.
  3. Cash Management – to the extent you are generating a profit, you want to ensure that any cash balances are working for you. You will, of course, re-invest these profits back into your company but there are innumerable financial instruments that can generate returns on investment greater than simply leaving them in a checking or savings account.
  4. Financial Analysis – historical, pro-forma, breakeven, purchasing, etc. analysis is critical to ensuring realistic company goals and the performance metrics and budgets necessary to achieve those goals

Administration

All of the foregoing components support the customer experience. Administration supports the overall organization and includes:

  • Strategic Planning
    • Develops the overall company strategy but not in a vacuum. As per the Engagement step of THE PIP, the strategy is finalized with the input of all of the foregoing components.
    • Monitors overall company performance through reports generated by Finance. 
  • Administrative Support
    • Each component of the company may have administrative support. All administrative personnel should report to and be coordinated at the Administration level.
  • Risk Management
    • All aspects of insurance.
  • Legal
    • Self-explanatory
  • Human Resources
    • Human Resources must be like Switzerland. Thus, it is separated from all other aspects of the company. Beyond recruiting, managing payroll and benefits, , and overseeing the on-boarding, performance review, compensation review and termination processes, Human Resources must provide an absolutely objective safe-harbor for employees to discuss and resolve any misunderstandings, grievances or conflicts.

Again, these examples are an oversimplification of how these components integrate but, as you can see, even the most complex company can be broken down into these six components which provides a readily understandable structure that enables everyone to see how they coordinate with each other.

And, when we break the company down into these six components, we can generate a complete business model. We can take the Vision for the company, break it down into the necessary performance metrics and budgets, allocate them to the appropriate personnel within each component of the company, monitor performance and know precisely what needs to be done and when in order to get the company back on track.

My client now has an aligned team. Everyone not only understands their responsibilities but, more importantly, they know where they fit into the overall business strategy; they know how their performance relates to the performance of the other members of the team; and, as a team, they know how their performance impacts the overall success of the company.

(By the way, my 30 MINUTE EXECUTION Planning Worksheet provides a quick way to allocate goals to these six functional areas. You can download it FREE by clicking here)They are motivated and working as a team with a unified goal. As a team, they will WIN!

Are you ready to create an Aligned and Engaged team?

If you haven’t done it already, download our FREE PIP Checklist. Alignment is a component of the 7 steps you can start implementing today to create sustainable increase in productivity… which leads to sustainable increase in profitability… which leads to sustainable increase in business valuation… which leads to sustainable increase in bankability.

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