The most expensive phrase in business…

Author: James Groot, Corporate Advisory Partner in Yorkshire

 

Businesses over the past decade have suffered an increasingly relentless focus on performance: how to improve margins, how to grow sales, create savings and work out what levers can be pulled?

We have entered the world of deep data analysis and are able to analyse trend after trend, using algorithms to predict potential outcomes. Consultants are employed to identify areas of optimisation, deploy cutting edge technologies and outsource operations.

But the phrase that is still uttered is: “that’s the way we’ve always done it!”.

This is as common as it is infuriating.

Just because something has always been done that way does not mean 1. It was right in the first place; 2. it has kept pace with change over the last two years let alone the last five or ten; 3. it is cost effective; 4. it is best practice for your industry or even other industries.

Common pitfalls include:

  • Sales approach – blanket email campaigns versus targeted and curated marketing. Whilst the cost of this is low, it is a blunt instrument given new technologies available to marketeers;
  • Pricing – using the same price list for the last ten years (a real example) to price for current work. Pricing should be updated regularly to react to market conditions, availability and cost of inputs;
  • Margin – costings should be updated to reflect the latest actuals, particularly given current inflation;
  • Inventory ordering – given the plethora of tools available today and the flexibility of supply chains (or at least previous flexibility of supply chains) dynamic ordering should be strongly considered;
  • Reporting – not using the latest tools to automate reporting and dissemination of performance throughout the team - and then holding people to account. The days of management reports taking weeks to produce should be long gone. Anything over a fortnight from month end is too long;
  • Understanding where a business makes and loses money – in this day and age there isn’t any excuse for this. Which customers, products, markets, contracts are profitable, which are not and for those that are not profitable, why not?

 

So, what should businesses be doing?.......Challenging the status quo. There is no monopoly on good ideas and nobody knows everything.

So, reach out to people. Ask them what they would improve, what issues they have overcome and compare stories. Bill Gates famously said, “get a lazy person to fix a process. They will find the best way of doing something.” We are not suggesting laziness is a positive trait! But thinking laterally or getting a different perspective does challenge the status quo.

At Cortus Advisory Group we have lots of experience of supporting and working with companies to improve and overhaul their operations, giving management teams better insight and control to drive performance.

For more information please contact jgroot@cortusadvisory.co.uk