Lewis Jaffe is exclusively represented by CAL Entertainment
All businesses exist for the same purpose — to gain and retain customers profitably in order to create shareholder value. It is, and needs to be, that simple! Strong companies always ‘KISS’ to thrive. Companies experiencing chaos need to start KISSing again.
As a CEO, I know how easy it is for senior executives to react to chaotic market conditions by creating c omplicated response systems. Indeed, the larger the organization, the more layers of management, and the more complex the response patterns are likely to be; everyone wants to put in their unique imprint into the plan. The outcome can be a complex compromise that slows corporate response time and confuses customers.
The CEO and management team must keep working against the trend towards complexity. I believe a central role for a leader during chaos should be to articulate basic themes and “keep it simple, stupid” when there is an organizational push to create complexity.
It’s a fact of life that customers often demand complex products and service. This is acceptable; the purpose of all companies is to focus on customers. Chaos emerges when changes in the external environment and within the enterprise develop to meet that demand. How an enterprise selects which external changes it focuses on is critical. Trying to have a positive effect on a situation where the enterprise has no chance of managing a change for the better will only drain precious resources and increase the level of internal chaos. And there is often a drive for efficiency which can ultimately drive complexity; both in the streamlining process, as well as in the implementation of new and efficient procedures. The questions that must be answered are these: are the processes and procedures being employed effectively in leveraging all the resources to create value, and/or are they creating more work and more chaos in the organization? Or put more simply, is the complexity that management thrusts on its own organization in the name of “improvement” the solution or the problem?
Effectiveness should be the goal, not efficiency. Satisfying the customer does not have to produce complex solutions. Customers need to have a simple and positive experience to keep them coming back, while the provider of goods and services needs to allow its representatives to easily interact with customers. Building undue complexity into organizations and business procedures beyond this simple formula costs money and ultimately robs the enterprise of precious resources including time, human capital, cash and repeat business from existing customers.
The foundation for the ‘Keep It Simple Stupid’ approach is staying focused on the 7 “C” words that keep a company on track: Cash, Customers, Co-workers (Culture), Communication, Cooperation, Clock, and
Change. There is significant leverage gained from overlap between the 7 “C” words. Yet straying from any one of these simple concepts can start a chain reaction that can ultimately lead to business failure. For example, it is simple to communicate, but only if open Communication is a core value in the corporate culture. A communicative culture will almost always drive home the importance of focusing on the other “C”s. Conversely, a secretive culture will often emphasize one “C” at the expense of another and fail to communicate even the most basic pieces of strategic information amongst Co-workers.
A few essential business truths help illustrate the power of “Cs”:
If you run out of sales it will be a slow painful death, but if you run out of Cash it will be quicker. This simple adage points out the important relationship between Customers and Cash. The lack of either one is deadly, and only the time frame changes. Customers are the number one source of Cash. Leveraging Customers by generating repeat business, up-selling and referring new Customers should be the paramount focus of every company’s sales team.
Cash is the life blood of every company. There are three major ways companies acquire Cash: (a) operations (a nice way of saying Customers), (b) monetizing assets (finding Customers for non- or under-performing assets), and (c) new debt and or equity. In each scenario there is a Customer, either an operational one, or one for assets or equity. In order to acquire these Customers a solid Communication plan needs to be developed and executed to
justify the maximum value of the assets or equity. Only a multidisc iplinary team (Co-work ers) working together can identify the most effective source of Cash is at any given point in a company’s life cycle.
When the true value of Customers is examined, the loss of one is usually greater than just the revenue they produce. The fact is, Customer retention should be on the minds of every member of the management team – from the finance group, to product management and everyone in between. When a Customer’s expectations are not met, it is usually non-sales personnel that have to Communicate with and retain the Customer. If they don’t have permission to resolve Customer issues, the loss of that Customer is almost guaranteed.
The inverse is true, as well. If a Customer is a resource drain, it is usually non-sales departments that assess the expense of keeping the Customer. A review of all Customers should be done on a periodic basis, and non-sales departments should be represented in the review process. Part of the review process should incorporate an evaluation of the procedures used to gain new business as well as the Communication channel used to keep Customers informed about products and business processes.
If Cash is the life blood, then Co-work ers are the brains. There is too much talent in most organizations that never gets used. Their ideas and suggestions are ignored with no good reason. This talent pool needs to be managed and leveraged, encouraging them to add value within their specific jobs and to the organization on a holistic level.
Part of the complexity that gets built into organizations are fiefdoms. Fiefdoms stifle the interaction and creativity in the organization. Even worse, they discourage Communication between Co-workers. Managers protect turf; salespeople protect customers and so forth. It takes resources to “protect and insulate” these fiefdoms – yet they rarely, if ever, add value. Leveraging the talent pool of Co-workers can unleash immeasurable amounts of human capital that can drive the enterprise forward, resolve problems and enter new markets. This only happens when there is a corporate Culture that fosters Communication between Co-workers and leverages the entire organization for the benefit of Customers and ultimately shareholders.
Communication is more than just a two-way street. Nowhere is this more salient than in business. CEOs need to recognize that listening and observing is part of Communication; that understanding is the underpinning of Communication; that empathy is the facilitator of Communication; and that body language provides a wealth of non verbal Communication. This full spectrum of interaction must be employed to be successful. Paying attention to the situation, both inside the enterprise, as well as outside in the competitive environment, will add significant value when it comes to planning a strategy to manage the chaos.
The Culture of the organization has to foster cooperation within the enterprise and with all if its partners. A lack of Cooperation can arrest the development of relationships that could become critical on the road to success. Cooperation between enterprises develops strategic relationships and partnerships that leverage the power of each enterprise in ways they would never have the resources to do it alone. In troubled company situations this may be the only way to access these precious resources needed on the road to recovery. In healthy companies cooperation with partners that leads to accessing their resources can shorten time to market and/or increase market penetration to a greater depths.
Lastly, if you can’t measure Change, you can’t manage Change. Communicate what goals are important, measure the progress against the goals, and Communicate the progress. This simple process is the means to keep a healthy company healthy, and is the first step in repairing a declining company.
It is often said that during the life cycle of a company, the only constant is Change; to which I would add, “…and some laws of nature.” (The purpose of including these laws is to give some context as to why things can deteriorate so quickly within an organization and why applying KISS creates value). A brief look at why things can deteriorate so quickly within an organization and why applying KISS creates value helps explain my point:
n Boyle’s Law: This refers to the relationship between volume and pressure. When pressure increases, volume decreases. A company in chaos will be managing an employee base under pressure. In this environment less work will get done; therefore, it becomes even more important that only work that adds value is performed. Unnecessary work, which often adds complexity yet no value, must be eliminated.
- Charles’ Law: This refers to the relationship between temperature and pressure. When pressure increases, temperature increases. People under pressure have a tendency to react poorly. Managers need to Communicate clearly and effectively to get the most out of their teams under these conditions.
- Newton’s Law: An object at rest tends to stay at rest; an object in motion tends to stay in motion; unless acted upon by a greater force. Here again, a simple reminder that management must Communicate the goals of an organization to ensure that employees are channeling their energies efficiently; not too slow, but also not out-of-control.
- Entropy: Everything runs to disorder/chaos if no external forces act upon it. This flies in the face of “if it’s not broke, don’t fix it.” Constant fixing and fine tuning is required to avoid certain chaos.
Accepting, embracing and learning from these simple laws of nature and the constants of change and will allow an enterprise to deploy the appropriate resources needed to manage through any challenge the company faces.
With a strong foundation based on the 7 “Cs”, management is empowered to simplify the complex. Use all of the tools available, leverage all the assets including human capital (Co-work ers) the process. This is accomplished by managing the resources within the enterprise. Deploy Cash wisely and make sure there is a ROI in a reasonable time frame, one that keeps the company living within its means. Inspire Co-work ers by enabling a Culture where the enterprise will take every advantage of all the skills and ideas within the talent pool. Make it easy for Customers to do business with you! Change. Everything changes. Fighting it will deplete precious resources, denying it will have your competitors pass you by. All of this has to be done while one of the most perishable assets is not wasted, time. The Clock always moves, even if the enterprise does not. Most importantly, Communicate. Communication plays the pivotal role in all of these business truths. It is the glue that holds all of this hard work together. Communicate to everyone within the company. Let them know what the company’s goals are and what their respective roles are in achieving them. Let those on the outside know what they can expect from your organization and communicate the compelling reason your company is importantly different and why they need to do business with you.
The concepts laid out here focus on getting back to the basics and simplifying the processes and procedures that drive the enterprise. The process of returning to KISS is not a simple task. It takes focus, perseverance and lots and lots of hard work to execute a plan that returns a company to a KISS organizational culture.
Getting back to the basics, keeping things simple, picking the right goals and communicating them mark the path to success. If you know how to KISS, you know how to thrive through chaos.