Revenue Journal®

When you run a business - no matter how large or small it is - you have a certain amount of energy available to apply to the long list of things you must get done. How you apply that energy will determine how successful you are.

I have been watching companies invest that energy for years. One conclusion I came to early on was that management fads were very distracting and expensive. They seldom, if ever, result in tangible, positive results.

Back in the 80's, it was TQM (Total Quality Management). In the 90's and beyond, it was Six Sigma. In this decade, there's a lot of talk about strategic planning, change management, customer focus, and more. Bain has a lot of information about the latest management fads, having conducted a survey of executives about management tools - and their effectiveness - since 1993.

The problem with the fads is that they dominate activity, usually at the expense of serving basic customer needs. The big companies can afford to bring in consultants, who repackage the same old nostrums in catchy new ways to create new projects for themselves, for which they receive big-time consulting fees. The consultants grow their businesses with this activity. They also publicize their random successes, which gives the business press something new and different to fill their pages. Which, in turn, excites the owners of smaller companies, who try to put the same practices into place at their own firms.

Management fads tend to focus on a company's internal needs and perceptions, rather than on the customer's needs. While everyone is focusing on the fad, the phones still aren't being answered on the second ring, inquiry emails sent by customers visiting the website are never replied to, and the basic questions asked by customers are not answered - by salespeople or on the web.

The real problem with these fads is they are all portrayed as magic bullets: "Do this, and the sales will come flowing in." But there are no magic bullets. Real growth - and profits - come from hard work in these five areas:

1) Ongoing and in-depth awareness of customer perceptions, needs, and expectations. If you know what they want, you can figure out how to give it to them. It's not difficult to do this; picking up the phone and asking open-ended questions is the best method, and it doesn't cost you anything but your time and a bit of ego.

2) Meeting customer needs. Once you know what they want, you need to give it to them. You have five resources at your disposal to meet customer needs: people, products, processes, principled policies, and passion. Your main job, as the leader of your business, is to constantly be asking yourself how you could improve on each of these areas. It would be wise to pay special attention to your processes, as we have found processes to be the weakest aspect of almost all businesses. It's easier to focus on all the other "P's" - but good processes make all those other "P's" more effective.

3) Hard-fisted cash management. If you're starting a business, or running a business, make this vow to yourself: Every time a check comes in, take a certain percentage of it (the same percentage every time) and put it in a separate savings or investment account. This is the most reliable way to make sure that you have enough money when something goes wrong (and something always does). It will give you a treasure chest to use for big, important investments, and will give you peace of mind - which should not be underrated. Nothing is worse than worrying about being able to make payroll; it's the most painful type of stress you can suffer as a business owner. Don't think you can live on the amount left over? Think again. Just be a little less grandiose about your spending.

As that set-aside cash starts to build up, you'll develop a new kind of confidence, that will help you make more sales. You won't feel the need to push; you'll be relaxed. One of the ironies of business is the way that customers are much more likely to buy from someone who doesn't seem to need the business than they are from someone appears desperate to make the next sale.

In addition to setting money aside, think twice before you buy something new. Every new purchase costs you time and effort. If the benefits are obvious, go ahead. Just make sure you give yourself some time to reflect on it, before making the decision, and ask yourself why you're doing it. If it's because "everyone has one," you are probably wasting your money.

4) Personal discipline. I don't care if you work alone at home in your pajamas, or run a multi-national, multi-billion-dollar company. As the leader of your company, you have to be disciplined about the behavior you display to your customers, employees, vendors, and the press. Once you decide to run a company, you must be a leader people can trust. There are many times, in the course of a day, when discipline must control your behavior.

5) Compelling content. You can fuss with your search engine program all day long, but if your site doesn't provide in-depth, credible information, you are not encouraging people to contact you and buy from you. Relevant, valuable content is now the name of the game if you want to keep business flowing in. Content also enables salespeople to answer customer questions. Any way you look at it, relevant content brings customers to you and makes sales. What should that content consist of? Anything that will help the customer solve problems related to your product, use your products more effectively, or understand how your products are made and why you make them the way you do. The more you educate your customers, the more they will value you as a vendor, and the more they will believe the other things you say.

Management fads divert managers from constantly improving the basics. After managers have finished their fad meetings and created their fad presentations and distributed their fad documents to the employees, the employees also have to stop what they are doing and learn the new fad way of doing things. Meanwhile some customer is visiting the website and clicking on the "chat" button, only to get an "I'm sorry, there is no chat, go back to the main site and look for a phone number" message.