June 29, 2017

Strategic Insights 24



“Culture” & It’s Potential Profit Improvement Effects?

Every social group – family, team, company, country – has a culture often with divisive sub-cultures. “Culture” is simply: “what we believe in and do around here". You can manage your culture with intention and strategic design to great benefit. Or, it will (unconsciously?) manage your firm for poor results; especially in fast-changing, tough times. To paraphrase Tolstoy: all happy distributors are alike; each unhappy distributor (branch) is unhappy in its own way.

Although “culture” is an invisible force, it has been measured and managed. Research proves that cultures that are strong, healthy, agile and clearly defined significantly increase profits, growth and longevity. Great cultures enable ordinary people to achieve extra-ordinary results. They in turn are: engaged; turnover less; continually learning; recruiting most talented friends; and promoting the firm evangelically. Most successful, publicized companies are known for and by their intense cultures: Nucor, Southwest Airlines, etc. By contrast, service-monopoly cultures like the IRS have strong, but demoralizing, non-agile and unhealthy cultures.

If cultures can increase profits by 50-70%, why do some stars like Disney and Zappos offer to educate anyone about their culture secrets? Perhaps they believe, as I do, that:

1.     Competitors won't be able to duplicate their blend of excellent leadership, culture, strategy and execution.

2.     The secrets aren’t really secrets.

3.     Corporate pies could be expanded for all if the students could find the courage to act.

4.     And, the employees who teach the culture courses to outsiders get even more enthusiastic about walking their talk every day.

If achieving profitable changes is culture-dependent, then what’s a culture overhaul cost? It requires no cash outlays, just enthusiastic, sweat-equity from both leaders and associates in step-by-step, educational discussions. If employees sense job-improvement hope, they become both eager students and next-generation teachers for new arrivals.

Culture Management is Most Critical for Distributors

Many big companies have competitive advantages beyond how engaged and team-effective their employees may be. (Think: patents, natural resources, politically-bought concessions, oligopolistic regulations/prices). But, a distributor selling, non-exclusive commodities into mature industries with saturated demand and excess supply can only win with a service-value and cost-to-serve edge.

What then are some of the pre-requisites for achieving a service edge? :

1.     Net-profit analytics to zero in on the historically most net-profitable (core) niche(s). (YT: 101-112)

2.     Re-define the service value equation metrics for the target niche. (YT:113-127)

3.     Identify within the niche: the big winners to love and penetrate more; the big losers to fix; and the few key target accounts to hyper-team focus on. (YT: 118, 134-142)

4.     And, culture changes to fire up all associates to achieve new service levels and to sell “service-value-chain solutions instead of products for a price. (YT: entire section 5: 166-241)

You can subscribe to a net-profit-analytics, web-service, “total solution” for peanuts and be diving into breakthrough, informational insights in a few weeks to do pre-req’s 1-3 above.[2] But, how are you going to fire up your employees to change? What’s in it for them?

Surveys report that US workers’ present morale is at an all-time low after the layoffs and comp cuts of the past few years. With the global economy sinking on all fronts (at 7/20/12), what new, believable, low-hanging, profit-improvement fruit will support gainsharing compensation increases and hope for all? What elements of your culture will you re-align around your net-profit target: niches, service metrics and key accounts? Are your - mission, vision, values, strategy, strategic practices and supporting systems all - articulated, target-niche consistent and thoroughly inculcated into every employee? (YT: 239)

Where and How Do We Even Begin?  

Don’t “dumbsize” your business (as many did in ’08) by cutting costs across the board while trying to sell any and all products to any and all customers whether they are net-profitable or not. Instead do a quick audit of your “cultural beliefs”. Have the leadership team independently (and perhaps anonymously) write down responses to the question in italics just above. Compile the results. Convene and discuss the degree of: clarity, focus, agreement/overlap and company-wide comprehension/motivation. What are the dysfunctional elephants in your culture?  

To live more deeply into the culture-element question above, watch and critique the referenced youtube clips. And, certainly plan on attending the “Advanced Profit Improvement Conference” in Phoenix on September 20-21. Meet with other distributors who are already transforming their distribution businesses with net-profit analytic insights and culture management. For more information go to: www.apicconference.com. Or, feel free to contact me at bruce@merrifield.com.       

[1] Throughout this article there are YouTube (YT) references with #s that are from the 240+ clips (averaging 4 minutes in length) that I’ve already posted (more to come). Go to www.merrifield.com; click on the youtube link; and find the corresponding #(s).

[2] www.waypointanalytics.info (request a team demo)