A Simple Solution
Over the last twenty years, I've developed an intense appreciation for world-class chiropractic care. Don't jump ship on me here... Hear me out! I'm not referring to the Homer Simpsons of the industry who we'd never need to tell "less yacking and more cracking." I'm talking about the absolute experts in the field who are genuinely dialed in on identifying the underlying issues causing the problem rather than throwing opiates at the problem-like so many MDs have been doing for far too long!
In late 2005, I was in a pretty nasty wreck. I was able to walk out of the emergency room after a series of X-rays, albeit in quite a bit of pain, but the ER doc handed me one of those little sheets of paper for some sort of cocktail that would have prevented me from operating heavy equipment for the foreseeable future. I wasn't running any such equipment then, but you get the point. Rather than getting the prescription filled, I called in a favor with my friend who owned a chiropractic practice and headed straight there. He immediately found the root cause of my pain and started working toward resolution. I won't pretend he fixed me in one visit or even ten. I was hit head-on by a kid going more than sixty miles per hour (in a thirty-five-mph zone) and had one of the nastiest cases of whiplash my friend had ever dealt with. Although the cure wasn't immediate, his approach to fixing the problem rather than masking the symptoms kept me from what likely could have ended in opioid addiction, and he helped me get stronger through the process!
With that example in mind, let's tie it back to what's killing your profitability and consider why that approach matters if you want to have even the slightest chance of finding the right prescription... In more scenarios than I can count, I've seen companies jump on the latest thing being touted as the holy grail for improving organizational performance. Just like there was a time when prescribing multiple oxy refills seemed the right thing to do because of the significant immediate effect, any proposed solution for capturing that lost profit can feel necessary if we've had enough money slip through our fingers. But we're likely just treating a symptom without identifying the root cause. And that root cause so frequently ties back to poor leadership in one area or another.
An article I found called "The Impact of Effective Leadership on Organisational Performance" opens by stating, "Today, companies are struggling with a lack of skilled talent in the labour market and high staff turnover rates. Plugging payroll gaps from outside the firm is becoming challenging, which leads to poor organisational performance. Add to that The Great Resignation and the issue grows bigger." While that statement points to a reasonably specific issue that can kill profitability, the article's focus has a much broader view. In emphasizing how leadership (good or bad) impacts profitability, the author referenced a Forbes.com article about a study done with a Fortune 500 commercial bank that closed with this statement: "In summary, poor leaders lost money; good leaders made profit; and extraordinary leaders more than doubled the company's profits in comparison to the other 90%!"
Don't misunderstand what I mean when I suggest A Simple Solution... I'm not about to pretend that identifying and addressing the issues that are killing your profitability will be easy-but fighting through the loss of profitability ain't easy either! What I will make a case for is that correcting the root causes of that lost profitability is much simpler than we've been led to believe. Before we start working through the specific areas that are most likely those root causes, there's one big mistake we need to avoid.
Soft Skills Drive Firm Results
I can remember the phone call like it was yesterday... One Friday evening around seven o'clock several years ago, a friend called as he was sitting in the parking lot at a high school football game where one of his kids would be playing with the band during halftime. I'm usually exhausted by Friday, so I was all but asleep but decided to answer since he rarely called unless it was something important. He was the CEO of a local company and was frustrated about a conversation he had earlier that day with that organization's board of directors.
The rub was based on the expectation that had been placed on him to develop stronger relationships with his direct reports. I'll spare you the details of the entire thirty-minute conversation, but one part that stands out to this day is when he said, "My job is to get results! I don't have time for that touchy-feely stuff..." During his time in that role, the organization's revenue had doubled. The challenge was that nearly all the managers who reported directly to him were ready to jump ship! I immediately responded to his comment: "You don't have time not to work on the touchy-feely stuff!"
Like so many other executives I've interacted with over the last twenty-five years, this extremely fast-paced and task-oriented guy had convinced himself that the organization's success was based solely on his sheer grit and technical expertise in the field. While each of those things certainly contributed to the organization's overall growth, ignoring the touchy-feely stuff ultimately resulted in him leaving the organization and moving his family across the country.
I don't share that story to condemn my friend. He's a fantastic person, and I hated watching it all unfold. That said, there's a powerful lesson for all of us who have accepted leadership responsibility: the soft skills often considered touchy-feely drive firm results!
In Good Leaders Ask Great Questions, John Maxwell states, "One thing that holds many talented and intelligent people back from being good leaders is a lack of people skills. Someone with weak people skills can become a reasonably good manager, because management is focused on systems and procedures. But nobody without good people skills can be a great leader!" Confusing good management with effective leadership is a costly mistake made by far too many organizations and executives. I've already cited a Harvard Business Review study on the direct impact leadership has on a team's performance, and I'll do it once more here: "Increased commitment can lead to a 57% improvement in discretionary effort...which produces, on average, a 20% (more) individual productivity."
If we want to address the things that are killing our profitability, we cannot afford to write off the critical skills necessary for driving results as touchy-feely! To do this effectively, we need to consider each area these skills can impact, so let's identify several of those before beginning to work through action steps for each one.
A Different Set of Metrics
In all the years I worked in manufacturing, specifically with the various lean initiatives that were rolled out, one phrase I heard as often as any other was "What gets measured gets done." At one point, I worked closely with a production supervisor to fabricate and assemble a few dozen rolling bulletin boards. These contraptions were made from two-inch square tubing, welded together and painted blue (to match the equipment), with a 4' x 8' sheet of plexiglass mounted inside that frame. Once the plexiglass was mounted, we fastened twenty or so clipboard clips to each. These were not-so-affectionately called "Glass Walls." When placed in a given work area, the Glass Wall was where all the important metrics were recorded. If it was kept up to date (and that's a whole different story), anyone walking through a given work cell would be able to stop at the Glass Wall and know the productivity, scrap, overall efficiency, safety rates, and a dozen or so other things in real time-or at least to the last hour.
The Glass Wall idea was outstanding for tour groups because we could provide a quick rundown of most of the process in one spot before walking through the area. When a manager walked through, they could get a quick snapshot of how things were going for the day. For times when corporate executives visited the facility, those same Glass Walls held daily, weekly, and monthly data that served to show trends or identify issues that needed attention. In concept, a tool as simple as the Glass Wall can provide tremendous insight into productivity and profitability-if it's kept up with and if the things being measured and recorded are indeed important. Sustaining any initiative ties back to consistency and discipline. The challenge I saw with those Glass Walls came from trying to keep track of too many things, some of which only mattered to a few people (who rarely went near the work area).
Even with the flaws in the process, we saw measurable improvement in many metrics we tracked on those Glass Walls. Some progress likely tied back to the idea that the things being measured tend to get more attention. But why am I sharing all that with you now?
For every organization I've seen track numbers like those (productivity, efficiency, up-time, downtime, scrap, safety, etc.), I've seen dozens that have had absolutely nothing in place to measure or track what have ended up being their top profitability killers; those things that so many executives brush off as being soft or intangible... Moving forward, I fully intend to give you the tools to break that mold. Step by step, item by item, I will provide you with a process for identifying your top profitability killers and outline how building more effective leadership into your organizational culture is the solution! Understand me here, though: making this change will require us to look at a different set of metrics than most of us ever have...
