A Model for Breakthrough Innovation and Profits.
The
core elements of our model are illustrated here via the following
example:
Company XYZ
manufactures and markets two product lines: (a) computers and (b)
printers, copiers, faxes. The company has worldwide presence.
The company
generates and tracks daily detailed balance sheet and income statement
data per each of the two product lines for every geographical region (whether
it is a part of or the whole country) which has annual sales of ABC
dollars ($US.) Each business group is assigned a unique name and or code,
example, Breakthrough Business Team 1026 (BBTTM.) Now the specifics:
1. Each BBT forms a
team. Each BBT MUST DELIVER to the company a NET PROFIT of 10% or higher,
depending on industry or market segment standards.
2. The size, scope,
strategy and action plan of each formed team is to achieve this
objective. After all companies exist to make money, among other things.
3. The team manages
this BBT and reports to a senior management sponsor through its
team-appointed leader continuously and as it might be required.
4. The team gets
compensated based on the results of its BBT as well as that of the whole
company (At the beginning, there has to be a transition period where the
compensation is partly fixed salary and partly bonus based.) For
example, the BBT contributes about 70% towards a member's compensation
and company XYZ puts in the remaining 30% or so.
5. This team does
about 70 to 80% of whatever needs to be done for inventing, developing,
manufacturing, marketing, selling and servicing the products within its
BBT. The remaining 20 to 30 % which constitutes certain support groups,
are also rewarded based on performance. However, these groups might be
given a higher percentage of fixed salary (based on overall company
yield) and lower % of bonus.
6. Members should
be willing and able to "put on many different hats" as well as
train each other either on the job or by attending special courses,
seminars, etc. A member can, at times, participate in more than one
team.
7. Team members
review their peers based on objective, business performance criteria that
they and senior management establish. High performers get rewarded with
more bonus and an opportunity to move-up in the company. Poor performers
are given the opportunity to basically "shape-up or ship-out."
If they show no improvement over a reasonable period, they are let go.
There is no point to having "dead wood" around.
8. The supplier,
customer and other external groups which might play a key role in a given
BBT's success need to be also engaged. There are many ways to accomplish
that.
9. There is a group
of company members which handles dispute resolution and arbitrates
when issues come-up that are beyond the team leader's ability
and/or responsibility to do so.
10. Each team has
complete and FREE access to information which pertains to its BBT. There
is no need for marketing to tell engineering: "Trust me, I know what
the customer wants this new product to do." Or for engineering,
manufacturing to tell management: "We can not do this, we can not do
that, that's impossible, etc."
Now, the team must
go get the required data, be willing as well as able to solve problems
and make its BBT profitable. If a given team's BBT broadcasts early
warning signals that is not doing well, then there is no bonus and
possibly more severe penalties. Also the team and senior management
sponsor know every moment how the BBT is doing, so they have the
opportunity to be proactive rather than reactive.
The bottom line
is the
decision making process is being collapsed to a handful of ultimately
responsible (even though senior management technical is the top authority
by company structure) and intimately knowledgeable, in-house experts who
are in continuous contact with every aspect of the business. This
eliminates the many fat layers of management where decisions are made in
sterile corner offices, exec. suits, conference rooms and everything else
but the "trenches" and the "front line", where it
counts.
Obviously there are
a lot of issues which either I purposely left out due to space
limitations or need to be addressed more thoroughly or from a different
prospective. However, this is only a model, not a cure for all ills.
Unfortunately, it is not something that we can buy a book on, read about
it, implement its recommendations and expect breakthrough results.
Company culture plays
a "make or break" role in the successful implementation of this
model. Therefore, we have to keep in mind that the above model needs to
be applied in a slightly different form and must take into consideration
many other things which might be unique to a specific company.
Now, some of you
may wonder: Does this model work? Yes, it does. Just check out a number
of smaller, fast growing companies around you. They might not do all of
these things but do enough of the above to make a difference to their
bottom line.
I have personal
experience in this area both as an ex-employee of a rather large company
for about ten years as well as a consultant to many large, medium size
and smaller start-up ventures for almost eight years. I know what works
and what does not because I am constantly where it counts: in the
"front line" with the customer, suppliers, employees and top
management.
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