How to Significantly Boost the Efficiency of Your Business

1. Introduction

Ways to boost the efficiency of a business are well tried and tested. I have summarised 4 of them in this short paper and would be happy to discuss any or all of these ideas with interested parties.

2. First Principles

“If you always do what you have always done, you will always get what you always got”

The key to boosting efficiency is to look at the business differently, through different spectacles.

New Perspectives = New Opportunities.

So create a process that works and train managers in the process to enable them to drive efficiency. Better still select a small group of entrepreneurs and give them the process and they will produce results 6 times expectations on average! – see my website for examples.

Ensure you select people who:

- Have the power to act
- Are up for it
- Are open to learning
- Work at pace
- Have a range of experience and perspectives
- Preferably entrepreneurial and innovative

See my paper ‘The Entrecode Approach to Business Development’.

3. Efficiency Boosting Processes – An Overview of 4 Processes

3.1 Zero based budgeting

Most budgets are constructed by forecasting sales then estimating costs and what is left is the profit. Profit becomes the variable. In zero based budgeting you estimate sales then state the profit required and the costs become the variable.

So if sales are £100million and we need £10million profit then you can afford to spend £90million max on costs. This forces managers to prioritise what costs are musts and what they then need to cut. Brutal but effective.

3.2 Fixing system slippage

A process that always produces results way beyond expectations is the Fixing System Slippage Toolkit in my book ‘Doing the Business’. You get teams within a business to audit the actual usage (not policy or theoretical) of key systems.

Before you use this process take tranquilisers as you will find things you will not believe – that’s the reason for doing it!

3.3 Value gap analysis

This is quite a complex but very powerful cost reduction and also business development process. Basically when selling complex solutions you need to map the key value points across the process from initial customer dialogue right through to payment of final invoice.

Normally there are internal conflicts in the customer’s organisation across their silos that you need to understand and manage for the customer. This is because different departments using different customer silos can have conflicting drives and objectives and unless these are managed the sale can be lost.

Across this process will be things the customer really values and will pay for and others they will not. So you need to ensure:

- You fully understand the value points across the customer’s organisation.
- Make sure you emphasise and sell the value they require.
- Cut costs in areas they do not value but you offer.

The problem is customers very rarely tell you what they do not value so you keep offering these services and incurring unnecessary costs.

Key Source Read: The Prime Solution, Jeff Thull

3.4 Aligning key individual’s activities with key strategic priorities

Most Business Units have 3/4 key strategic priorities i.e. win work, drive efficiency, control the culture, etc. Successful delivery of these goals depends upon the right people focusing their time on them.

A brutal lesson is to ask individuals to name their 2/3 key strategic goals. Then ask them to take out their diaries and add up the time they have spent on them in the last month….. Argh……. I have done this in 2 businesses recently and their results were in line with previous experiences i.e. less than 5% of key time on the named priorities.

So a major efficiency boost can be made by simply helping senior people link goals and time. If a Director’s key responsibility is say efficiency and they spend less than 5% of their time on it what are the chances of success?

4. Summary

Using these procedures enables managers to look at their businesses through different glasses. This creates new previously unseen opportunities to boost efficiency.

The key insight is that it’s not what you do IT’S THE WAY THAT YOU DO IT that gets results.