CHAPTER 18

Change: How about…the Process?

Change the Process

Suppose you’re a business that needs local people to do the work, like a pest control business, a landscaping business, window washing, or any such people-intensive, yet local business. You’ve grown phenomenally in your home city and now are doing the same again in another city. Yet, once you left the original operation running under the watchful eye of your trusted lieutenant and you embarked on tackling the new city, you find it’s not working as smoothly. It should be because this time you’ve set the new region up in a way that is easier for you to set it up, and therefore want to move on eventually to city #3, and so forth. You’ve hired numerous people, none are like your trusted lieutenant in your home city—but you know that, you’re not expecting that. Nonetheless you have hoped that you will find someone entrepreneurial enough so you can leave this operation in their capable hands. But these people just aren’t settling in. What’s going on?

Finding people that are hardworking and entrepreneurial, and willing to work to your formula is very tough indeed. Let’s look at what you’re expecting these people to do. You’re expecting them to win over new customers, each time they go visit a new home. Then you are expecting them to “do the work.” Then collect the money. And follow up. All on your formula, yet in their perception, they’re doing all the hard work themselves, so why are you the boss? And being entrepreneurial themselves, they can see there’s an opportunity to do this all for themselves and cut you out of the loop altogether.

So how can you do things differently? Remove some of the ands from the above description of their role. Any ideas? One way would be to change the processes and split the roles of finding customers, doing work, and collecting money, so that you centrally do the customer acquisition, customer relationship, payment collection, and follow up. So that the only task you are expecting your workers to do is the work itself, for which they will get paid. And if you feel they are instrumental in winning the client over in the first visit, then maybe offer a commission for each new client signed up.

We know this will feel like a big departure from the model you used in your home city, where you were able to hand over to a lieutenant all of your established daily routines. The point being, when your ambition changed, and you decided to set up city #2 and so forth, you needed to make a huge change to your business operation. If you didn’t make fundamental changes to the components of the business, the growth you desire may leave you stuck back on the plateau or, worse, city #2 may be an abject failure.

Don’t Make or Buy?

Throughout personal and business life, one has to constantly make decisions. In fact, it is never as simple as make or buy. There is a third dimension: ignore.

We raise the possibility to ignore here because it is really powerful and all too infrequently engaged. Why is it that when you appear to reach the fork in the road, one always feels it has to be “we do this ourselves” or “we have others do it for us” as the only choices? What, pray tell, is the cost of doing nothing at all?

People are often in this third category. Someone in your business will scream and shout about needing an additional member of staff. The need will appear so urgent that you have to acquire this person fully trained via an agency, right now. Clearly that’s the buy option. Agency fees will be pricey—and if they’re not, you are simply paying someone significant sums to trawl resumes from the Internet. This new staff member will be pricey, and it might be six months before you or they discover it was a mis-hire and you go through the whole process again. The make option is to take an untrained (in this arena) person from elsewhere in your business and let them grow into the role. This might be an option for a Legacy Person—you remember, someone acquired a while back but who you now only pay JIC. But, the third option, you could choose to do nothing at all.

The vacuum of this third option will, however, incur the displeasure of the person requesting the hire unless ameliorated in some way. The first way is to remind them who the boss is, whose money is funding his or her wages, and so on. The second way is to go for a little shared blame allocation, that is, “we can’t afford it.” But the best approach for all is to look at this as a catalyst for a process review. Whilst we can hear you say “this is not doing nothing,” the outcome certainly is.

Narrowly, a process review would look at the job seeking to be filled and simply to see if it can be eliminated. However, simple common sense would also include a look both upstream and downstream in the work flow leading to/from this appointment to see if the process can be made leaner and more efficient. Don’t make the common mistake of stopping this enquiry at the boundary walls between departments or activities. It might be a change elsewhere—may be demolishing a boundary wall or even soliciting a change inside a supplier company of yours—can render this post (or another) redundant.

Would you repaint (or hire someone to paint) your garden fence if you were going to demolish it in another month and plant a row of conifers instead? No, of course you wouldn’t. “Ignore” has its rightful place in the “make or buy” decision tree.

Do You Make or Buy?

When Britain was still great, it was the workshop of the world. Cotton was brought to England to be spun on machines made in England and operated in England, so that it could export cotton-based textiles worldwide. Giant railway works existed in Britain so it could make steam trains from scratch and send them worldwide—perhaps to further the collection of cotton and the distribution of wares. Even the steel for the Sydney Harbour Bridge in Australia was made in England, half a world away from its intended place of use.

But almost none of this happens today. Machines made by Germans, Japanese, and Chinese are now sent to remote and poor countries to manufacture cotton garments a few cents cheaper than anywhere else for us to buy in our local shopping malls. And when did you last hear of any country exporting a railway engine, steam, or otherwise? In pure Adam Smith economic speak, his laws of comparative and absolute advantage have been taken, used, and abused to the nth degree.

We have to ask, because only when you are being truthful with yourself can we discuss make or buy, properly.

Now, it could be the reason was historic and over time that reason has disappeared. In that case, doing it now because you always have is probably as close to Lemming-like leap off a cliff mentality as we are going to find. Wake up!

Could it be a very real reason that you’re based here, and not in some far off, efficient, production center, because you can’t stand foreign food? Wake up!

Could it be that you’re making your product here because you have to be, because your customers are here? Plausible if you’re selling freshly cooked pizza or ready-mixed concrete or legally necessary if your key contract(s) demand it, but these reasons in practice cover very few real situations.

Truth is (probably) you are still making widgets only because you haven’t sensibly explored not making them yourself! We’ll take that as a fact, and on that basis there is no point in going through all the subprocesses you undertake to see to what extent these can be bought in (if physical) or outsourced (if otherwise) at a lower total cost than taking the do-it-allyourself approach?

Just promise us, as you go away and ponder this, you remember that when comparing make or buy, you are fairly charging the make option with its full share of overheads. Not just the rent for the floor space the machine sits on, but also the space taken up by its raw material in store. Not just the staff costs of those who work the machine but their share of the office people (who pay their wages, order the materials, you, etc.) and the office costs like the coffee, the factory cleaning, and so on. We haven’t finished yet. Have you allowed for the time when the machine is idle due to not being used 24/7 × 52 weeks? The cost of the machine itself and any repairs or servicing?

Taken to extreme, if you bought everything rather than made anything, there’d be no need for HR, accountants, premises, equipment, vehicles, and so on. Indeed, you could jump out of the loop altogether and simply license someone else to make your widgets for delivery to your customers. Then you could be on a tropical island (assuming the weather, scenery, and food were to your liking) just banking the license fees. Tempting, isn’t it?

OK, we were a little harsh on you. Maybe you are making the widgets because you truly have some proprietary method (other assets) that gives you an advantage in the making, in which case you should be doing the reverse of the above, and offering your lesser known competitors the chance to outsource their production to you. Why? To allow them to focus on a different value add, maybe in a different geography or with other complementary products. Making their life a little easier for them, and improving your own strength in your industry.

Leverage Your #1 Asset

Mostly in this book we have considered your business as a single entity. That makes sense—the all for one, one for all is how a business works. But maybe the changes you want to make are around a single asset—your most valuable asset—which hitherto is underemployed. Let’s park widgets for a moment and think of a few other examples.

A pizza restaurant chain—you have fancy pizza ovens and great evening trade—but what to do in the day time? How about pizza-making classes? Hold classes for adults who’ll doubtless buy wine from you whilst learning. Likewise holding classes for kids, who will certainly bring accompanying adults (see wine) and want soft drinks and ice creams as well as a ticket to the class. And why sell tickets to the class one at a time? Instead, how about you offer the class as a birthday party package? And if they’ve learned, they’ll want to be able to make them for themselves. So why not sell them the tools, pizza mix, and other nonperishable ingredients? You could even consider a subscription pizza service.

Do you own a 24/7 gas station? Why not become a parcel collection/ delivery point for your locality making it easier for your outworking neighborhood to get their Internet purchases? Earn fees from the Internet company or your patrons, who doubtless will become more loyal to your gas pumps too. Install electric points and you gain more friends, who may well buy coffee and doughnuts from you whilst their car feeds itself outside.

As a veterinarian practice, why not stock the large packs (we’re thinking 10- to 28-lb sizes) of your recommended dog food for sale to your clients? You know their car is outside—they’ve just brought their dog in it. You know they are focused on the animal’s well-being, have their credit card to hand, and are not minded to do price comparison or Internet shopping at your point of sale.

As a trades business, be it a gardening, decorating, plumbing, electrical, visiting people’s homes, why not develop an (annual) peace-of-mind service call and sell it as part of wrapping up whichever task put your business in front of the customer? That gives you an opportunity to contact the customer again any time after say nine months and make the service appointment timing to help fill your quiet spots.

Back with widgets. Why not approach your best customers and find out what, outside of widgets, they find painful to buy or build themselves and offer to be an outsource supplier of them? This might achieve better utilization of your people and equipment and of course, the deeper you are in with your customer, the less likely they will want to sever the relationship sometime in the future.

Pause: Did you make notes of things in the Action This Today section in the back of this book? If not, please take this opportunity to review the prior pages to identify again any thoughts and ideas you want to follow up on.