How pitiful processes can kill a company
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As I help CEOs increase their revenues, I often find that they are not aware how inefficient their companies are, from the point of view of their buyers and business partners. They don't realize how much their own systems are broken - and how much those broken systems reduce their sales.
Why is this? Because CEOs depend too much on their employees for information. When I interview their buyers and business partners, the picture painted by those interviews is completely different than the picture painted by the employees.
It's not that the employees are being deceptive. It's that they assume that the CEO is aware of the problems, and is not going to change them. They try to make the best of their situation, devising workarounds for some of the inefficiencies, and just accepting others. They are also insulated from the effect that pitiful processes have on buyers and business partners. Sure, they hear the complaints, but they aren't aware of anything they can do about them.
For example, let's say I interview business partners and find that they all say the same thing, using almost the same words: "This is the most difficult company that I do business with. If I had a choice, I would not be buying from them." CEOs are often shocked at this perception. The employees are not as surprised. "Yeah, we hear that all the time," they'll say. "Our dealers are always complaining."
In other words, the dealers were trying to get the message to the CEO, via the employees, that it was too difficult to do business with the company. Every so often, the CEO will get involved in a particular problem. But rather than seeing that problem as part of a larger issue, the CEO helps resolve that specific problem and then goes back to depending on employees for input.
It's also quite common for employees to have a "victim" mentality. "Oh, sure, that's an inefficient process," they will say, "But it's always been that way. I've tried to change it, but the CFO and the CEO are sold on that [specific software program or specific process], and no one listens. So I gave up."
Obviously, if your dealers (or other partners or buyers) all hate to do business with you, and would jump ship in a nanosecond if someone offered a workable alternative, you are in a dangerous situation. You are easy pickings for an aggressive, smart competitor, who could take over your market in less than a year. I've seen it happen many times, and not just in the tech industry. It happens in all industries. You can map the pattern:
1. Company is started by a few dedicated people, focusing on a product that turns out to be popular.
2. Dedicated people work hard, do many things right, and end up at the top of their market.
3. As the company hires more people, the CEO and other founders become increasingly insulated from their buyers and business partners. Sure, they hear complaints, but they assume "Dealers always say those things." Besides, the company is making money, and is leading its market.
4. No one pays much attention to processes and systems, to the point where inefficiencies become the norm rather than the exception.
5. Business partners and buyers become frustrated and start to gripe about their negative experiences.
6. The company's true "brand" becomes their inefficiency and bureaucracy, unbeknownst to the CEO, who spends most of his time listening to employees and obsequious consultants.
7. A competitor that knows full well what the company's weaknesses are, starts to build a business strategy designed to take advantage of those weaknesses. Existing businesses - and the markets and products they have created - are an easy target. Most of the hard work has been done. The original company has identified the need and the audience, and has built credibility for that kind of product. It's relatively easy for a competitor to offer an improved product, a lower price, or better service.
8. The competitor makes inroads, enticing customers and business partners away.
9. One day the CEO comes to work and starts to realize that his numbers are on a downward slide and don't seem to be recovering.
10. CEO brings in consultants who waste time and money focusing on the wrong problems.
11. Company slips drastically to the point where it cannot recover.
12. The competitor becomes the established market leader.
13. As the competitor grows, it starts to become as vulnerable as the company it overtook, and the cycle starts all over again.
You can trace the ultimate demise of most failed companies back to step #3. Insulation from business partners and buyers is the beginning of the end.
Don't depend on your employees to tell you what is going on. They're depending on you to know what is going on, and to make appropriate changes. The only way to know what is really going on is to interview your partners and buyers on a regular basis - and don't dismiss their input. Accept it and act on it.
Be aware that your processes and systems can make you or break you. Pay more attention to them. If they're healthy, your company will live long and prosper. If they're not, they are a silent cancer.
"What's enchanting? A book that tells you exactly how to grow your revenue." - Guy Kawasaki, author of Enchantment: The Art of Changing Hearts, Minds, and Actions
