How to increase the profitability of your business
If businesses want to stay in business they must have a product or service that people want and are prepared to pay for. With those key criteria in place, the quest is to become increasingly responsive to the customers’ needs: there is a close link between responsiveness and profitability. Responsiveness is giving customers what they want (courteously, of course), when they want it (within an acceptable time frame), at a price that matches or exceeds their expectations. The six qualities identified as contributing to increasing an organization’s level of responsiveness, and, therefore, its profitability are as follows…
1. Make and implement decisions on a timely basis—calculate your Decision-Making Index.
Improved decision-making enhances profitability, so it’s imperative for decisions to be made in an appropriate time. And you can calculate
your Decision-Making Index, which will prove invaluable in improving turnaround time associated with decision-making. Calculating your Decision-Making Index is a relatively straightforward process involving
• measuring the number of times the matter under consideration has to be addressed,
• measuring the total time spent on all considerations of the matter, and
• measuring the total time from receiving the matter for consideration until the final decision is made (excluding legitimate time waiting for information crucial to the decision).
Double Your Profits in Half the Time (Flanagan and Thomas, Simon & Schuster 1996) has the details.
2. Set and adhere to priorities—calculate your Priority Index.
‘I don’t have enough time (to do something)’ is our way of telling others that that ‘something’ is not a priority at this stage. We have learnt that setting priorities ensures not only that we do first things first but also that we avoid grasshopper behavior—hopping from one task to the next, keeping very busy, achieving very little, and often finishing up where we started. Priorities must be set according to the important functions of the organization’s business—not according to individual preferences—and what is important is determined by the needs of customers. Calculating a Priority Index (hopefully arriving at a low one) will provide a valuable picture of task completion in planned order.
3. Adapt to change—calculate your Flexibility Index.
Few people, if any, can hope to make the right decisions every time: flexibility is called for, and involves adapting to achieve the desired outcomes within an appropriate time. Flexible workplaces are eight-to-ten times more responsive than others. Calculating your Flexibility Index will involve
• identifying conditions or situations that require change,
• allocating time to undertake those changes, and
• noting the time actually taken to complete these changes.
