Let's get to it:
"Knowledge is Power." Don't know who said it first but
whoever did "hit the nail on the head." Does all knowledge
create power? I think not. For example, what good is sophisticated
computer systems knowledge if a company lacks the commitment and
implementation skills required to convert that knowledge into a world
class delivery system. I say that knowledge is power only when a company
can effectively convert that knowledge into a relevant competitive
The most valuable knowledge that manufacturers should pursue is
customer knowledge. Lack of in-depth customer knowledge was a root cause
of the torrid over production of telecommunication equipment in 2000. Result:
inventory write off in the millions of dollars for many hi-tech companies
in 2001. Without real time customer data, companies will never improve
sales forecasting process, optimize product designs, nor reduce related
engineering change activities. Our lead article today address the issue of
"Customer Connectivity." Guided by executive leadership, every
person in the company should be involved in obtaining real-time knowledge
from their key customers.
If your company is to emerge from the business downturn as an industry
leader, employees will need to think and act like entrepreneurs. To this
end, our second article delineates the "how to." From the
"New Work Habits for a Radically Changing World" we present Mr.
Price Pritchett's article, "Behave Like You're in Business for
"To Get Results, Hit the Right Note." In an article written
for Fast Company, conductor Roger Nierenberg makes a great case against
criticizing workers. Our third article tells what we should be
doing--it's from the sidebar of his Fast Company article.
Pricing Trends is back by popular demand.
We finish the newsletter with the sidebar, The Power of Focus"
from Soundviews book review "Profit From the Core."
When it comes to obtaining Competitive Knowledge, don't pass-up on
ordering our tutorials for your business teams. Your teams will learn why
and how our Kaizen Based Lean Manufacturing methodology builds the
foundation for MRP, ERP and lean manufacturing success. For details and
ordering information, Lean
We suggest that you both print and archive this newsletter for current
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This newsletter has reached your desk because we share a common
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Bill Gaw, President Business Basics, LLC
NEWSLETTER - JULY 2000
Featured Articles in This Month's Edition of CKN:
1. Customer Connectivity
2. Behave Like You're in
Business for Yourself
3. To Get Results, Hit
the Right Note
4. Pricing Trends
5. The Power of Focus
Training for Winners
by Bill Gaw
The reality of Customer Responsiveness is in the eyes
of the beholder – the customer. The sooner we realize and accept
our customers’ perceptions of our products and services as reality, and
accept it as our challenge, the sooner we will earn their confidence and
become their permanent supplier of choice.
Customer connectivity represents a set of business
processes touching on all aspects of the company. Customer satisfaction is
a great deal more than the clichés "getting close to customers"
and the motto "the customer is always right". Since some
companies sell to a variety of customers with varying and even conflicting
desires and needs, the goal of getting close to the customers, and the
motto that "the customer is always right", are somewhat vague.
We have also found no meaningful business philosophy in the terms
"market driven" and "customer oriented". Most business
gurus use the phrases interchangeably and have difficulty in defining and
communicating their scope and meaning. Successful business leaders go
beyond these clichés and strive to provide their selected customers with
products and services under the business philosophy of Customer
Because different customers have different needs, a
company cannot effectively satisfy this wide range of needs equally. The
most important strategic decision in the pursuit of Customer Connectivity
is to choose the most important customers. All customers are important,
but invariably some are more important than others. Collaboration among
the various functions is important when pinpointing key target accounts
and market segments. This done, sales people know whom to call on first
and most often, the people who schedule production runs know who gets
favored treatment; those who make service calls know who rates special
attention. If the priorities are not made clear in the calm of planning
meetings, they certainly won’t be when the sales, production scheduling
and service dispatching processes get hectic.
Customer connectivity starts with customer selection,
however, the next phase is just as important. Company executives must gain
a thorough understanding of their customers’ buying influences and their
relevant needs. Such customer information must be communicated by these
executives beyond the sales and marketing functions and permitted to
"permeate every business function" – the R&D and design
engineers, manufacturing/quality people and field-service specialists.
When these technologists, for example, get unvarnished feedback on the way
customers use their products, they can better develop improvements on the
products and the production processes. If, on the other hand, market
people predigest the information, technologists may miss opportunities for
Customer connectivity must be predicated on team
dynamics and commitment. Serial communications, when one department passes
an idea or request to another routinely, without interaction can’t build
the team dynamics and commitment needed for Customer Connectivity.
Successful new products don’t, for example, emerge out of a process in
which marketing sends a set of specifications to R&D; R&D sends
the conceptual design to design engineering which sends finished
blueprints and designs to manufacturing. But joint design/development
reviews and decision-making, in which customer's and supplier's functional
and divisional people share ideas and discuss alternative solutions and
approaches, leverages the different strengths of each party. Powerful
internal and external connections make new product development
communications clear, coordination strong and commitment high.
Establishing effective business relationships with key
customer personnel is paramount to making it easy for customers to do
business with your company. From the shop floor to the front office, we
must establish "one-on-one" customer communications that provide
real-time customer input relative to business relations, product
performance, and field service. We must convert these communications to
action plans and put forth our best effort to quickly resolve all issues.
Let’s remember that being nice to people is just 20% of providing good
customer service. The important part is designing systems that allow you
to do the job right the first time. All the smiles in the world are not
going to help you if your products or services are unsatisfactory.
Individual and team direct-line communications with
customers is the best approach to obtaining timely and relevant "how
are we doing" feedback from customers. Customer satisfaction surveys
are tedious, possibly supplier biased and not very accurate in their
customer service portrayal. We prefer a "one-on-one" customer
Training for Winners
2. "Behave Like
You're in Business for Yourself"
by Price Pritchett
Your employer wants more than your body, more than just your arms and
back and brain. Your employer wants you to act like an owner.
Why is this? And what does it really mean?
One reason why you need to think and behave like you're in business for
yourself is because organizations are breaking into bits and getting
flatter. There's less hierarchy. Fewer layers. The move is toward small
scale, decentralized business units−sort of like mini-enterprises,
or self-contained work groups−that operate more independently
Organizations are reshaping themselves in an attempt to become more
entrepreneurial. They want to get closer to the customer. They want
decisions to be made by the people who are closest to the information. And
they want to be able to move faster. The idea is that only small
units are agile and adaptable enough to thrive in today's world of
So now we're seeing a lot of self-directed teams, "Empowered"
employees. The management ranks are shrinking rapidly, and this means more
power, information, and responsibility flow through to you.
You'll need to assume more personal responsibility for the success of
the entire enterprise, rather than focusing narrowly within the boundaries
of your old job description. To act like an owner you need a sense for
managing the whole. You need peripheral vision.
Consider how you−personally−can help cut costs,
serve the customer better, improve productivity, and innovate. Constantly
think in terms of commercial success, how you and your group can
add directly to the financial health of the organization.
This could prove to be more "freedom" than you prefer. For
example, if you've found comfort in "working for somebody
else"−e.g., having other people call the shots, supervise you,
and stand accountable for problems and results−you may start to
sweat. On the other hand, behaving like you're in business for yourself
gives you the chance to really shine.
Besides all this, though, thinking of yourself as
"self-employed" is the mindset that serves you best in
the years to come. Organizations simply aren't going to look out for
people's careers like they did in the past. Odds are you're on your own.
Much like an independent contractor, you have to "build your
business," uphold your reputation, and satisfy the people who pay for
So operate as if you're self-employed, and carry personal
responsibility for your own career mobility. Whether you look at it from
the perspective of your employer, or from the angle that you'r3e a
one-person show, it pays to behave like you're in business for yourself.
Training for Winners
3. "To Get Results,
Hit the Right Notes"
by Roger Nierenberg
If you're in charge of a team that has been under performing, how do
you change its behavior? How do you communicate without offending or
alienating members? "No one wants to under perform, yet so many
people do, "says conductor Roger Nierenberg. Why? "Because there
are an enormous number of parameters for judging performance and most
people don't know what aspect to work on. But as the leader, you stand on
a podium and therefore have access to the big picture. Things that are
amazingly obvious from the podium and not at all clear from the chair.
Your job as a leader is to communicate a sense of how things could
be−and to show people how to achieve that vision.
How do you do all that? By giving direction, not criticism. Direction
points to the way things could be. Criticism, on the other hand, points to
the way things were. It doesn't enlighten people. Direction tells people
what to do whereas criticism tells people what not to do. Here's a
criticism: 'The percussion section is playing too loudly.' A direction is.
'Make sure the audience can hear the woodwinds.'
It's much harder to process a 'do not' instruction than a 'do'
instruction, because the 'do not' means you have to locate a behavior,
inhibit it, figure out what to replace it with, and then replace it. The
'do' instruction means something more direct: 'do this.' You're offering a
new vision, a different tool. Leadership is about preparation. It means
actually inventing a whole new experience and then communicating it to the
people you work with. If your team executes your direction and results
improve, then people begin to put their trust in you. That's how you gain
credibility as a leader.
Training for Winners
from Bottom Line Business
MIXED OR WEAK
A good time to buy, with prices dropping more than 8% so far this year, as
manufacturers step up efforts to reduce excess inventories.
Computer Screens: Prices of flat-panel
models continue to slide. Some 15-inch screens sell for as low as $499
after a manufacturer's rebate.
More price erosion ahead---especially for machines that do 20 to 69 copies
per minute (cpm)---as printer manufacturers promote new multifunction
Due to slack demand, prices are declining nearly 24% per quarter---double
the pace of late last year.
Steel: Latest 10% to 20% boosts on sheet won't stick, as demand
continues to lag well behind year-ago levels.
NEW PRODUCTS/NEW PRICES
Phones/computers: Samsung's SPW-1300
cell phone/PDA (with Palm OS) comes with an innovative color display. Availability:
August. Price: About $500.
Electronic components: Prices of SRAM
chips, currently weak, should firm up after mid-year---enough to push up
the average 2001 price by 11.5%, to $5.87.
Power transmission equipment: Rising
material and component costs could result in a 3% price increase this
Training for Winners
Power of Focus
by Chris Zook with James Allen
Companies that have a few, highly focused
core businesses are more likely to exhibit sustained growth than companies
that are diversified and more unfocused in their building of growth
platforms. Ample evidence supports this viewpoint:
- Most companies that sustain value creation possess only one or two
strong cores. A tightly focused, sustained value-creating company
will usually pull ahead of a rival embedded in a diversified company
with no clear purpose or core. Anheuser-Busch leads in the beer business
over Miller, which is part of a packaging foods conglomerate. Nokia
leads the cellular phone business over rivals like Motorola and
Ericsson, both companies with many separate parts.
- Private equity companies often achieve their greatest success by
buying orphan businesses from diffuse conglomerates, thereby creating
focus. Many of the most successful leveraged buyouts stem from
strategically under managed, noncore businesses (with profitable cores
at their centers) that are purchased and revived by new owners who allow
those companies to become freestanding businesses.
- Spin-offs usually create both focus and value. Before PepsiCo
spun off its $14 billion restaurant business (which consisted of Taco
Bell, Pizza Hut and Kentucky Fried Chicken), that business deviation
from the company's soft drink core was seen as an anchor, keeping Pepsi
from mounting a firm challenge to the more focused Coke−and
keeping the restaurant business from challenging McDonald's supremacy in
the fast food market. Since the spin-off, both Pepsi and the restaurant
business (re-christened Tricon Global Restaurants) have done well.
- The few companies that became smaller and still created value are
those that restructured to focus on a strong core. Guinness, the
famed Irish brewery, had entered into more than 250 non-core businesses
and watched its core business−its Stout beer−erode in market
share. Once it sold 150 of those businesses, moving operations back
towards its core, its stock increased in value more than 10,000 times in
Training for Winners
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