Double-Digit Growth in a Slow Economy – A Few Great Businesses Are Doing It

Slow market growth leads to a great deal of uncertainty for business leaders. One thing that is certain is the need to find growth on the earnings line of your business. In the period of 2013 – 2015 the topic was topline growth. Our economy had been sluggish for long enough that we were all eager to get back to growth and a few critical sectors began to grow at an encouraging rate. Pent up demand was a source of optimism. Housing, one of the larger engines for overall economic growth was coming back at growth rates of 15-20%. Automotive had been recovering as well and companies started doubling-down on growth in their top line after several years of stagnation. Enjoying the rising tide is a good start, but growth only when the economy gives it to you isn’t a recipe for long-term success. You are a genius on the rise and most blame external forces on the decline. Being well positioned for the economic lifts and lulls is critical, but outperforming the market is where your company stands out.

Growth in a flat market? Yes. In fact, there are opportunities that exist in that environment that make it very achievable. The sheer fact that competitors may limit their investments can actually open up opportunities, but you have to be in a different mindset than those competitors. One of the example companies we will discuss had experienced a revenue decline over three consecutive years reaching an overall decline of 37%. The timing was such that the economic news covered what was actually occurring, share loss in the core of the business. Using the techniques in this series of articles this business roared back to a growth oriented business with growth rates of 19% annually and EBIT growth of 5x. The success in revenue gains was so rapid, the company reached 100% market share with its number one and number three customers and 60% with its second largest from a base of 7% share with that customer. The economic growth of the category during this period… 4%. The leading competitor was later divested as a business from a very successful publicly traded company. This is what winning looks like with the right goals, processes, organizational structure, development, and… leadership.

Investors would have been satisfied with 4% growth in line with economic factors, but the best businesses take share from others. Very few are winning right now and it comes down to the investments or lack thereof that were made to prepare companies to be winning today. The seeds are planted 18-24 months earlier. If you aren’t taking share today, you probably weren’t making the right investments 1-2 years ago. While we can’t hop in a DeLorean and go back in time, we can start now for 18-24 months from now. Some leaders feel boxed in by the lack of growth. It limits the amount that can be diverted to initiate growth plans and many companies are reducing growth investments as we speak. Will they gain share in 18-24 months or will their competitors? If they all behave in the same way, the current share-stalemate will likely continue in their category. But, what if one makes a few well positioned investments? What happens when a company from the competitive set starts to take market share? Two things, first one or more of the set are then losing share. Second, they have momentum. Momentum that takes a lot of energy to catch up with by those who decide to compete for that market share. Being in a holding pattern, waiting for the next budget cycle, etc. means you are positioned to be at risk as one of the market share donors to a growth oriented competitor.

Is growth possible in a slow market?

I was appointed President of a company that had declined in sales of 37% in three years. The change in strategic direction led to growth of 75% in the 3 years following. While the leadership change was a critical component it was more about making a shift in strategic direction rather than just making a change in the leader of the organization. How did a modest sized company of $180m in sales take $60m in business from the largest competitor in their industry with multi-billion dollar scale? They certainly didn’t outspend their rival. In fact, this gain was achieved without making an acquisition, without adding to facilities, and by adding only a staff of 3 incremental people. Our first revenue began just 12 months after the concept was developed and reached $60m in 3 years. To the scale leader in the industry, the $60m loss represented approximately 2% of sales. On the surface it sounds irrelevant, but what if the economy is only giving 3-4% growth and you lose 2%, well it means you underperform expectations. Think about the flipside at the $180m company that earned growth of 33%? They are truly creators of value for their investors.

There is no single recipe for this kind of performance. You have to use all of your tools. You have to focus on the entirety of your business. This series will discuss all of those areas and results oriented approaches to achievement.

Optimism for pent-up demand has started to wane in 2016. Businesses I speak with are now in a transitional state and confused in many cases. There is an evident shift toward indecisiveness and cost reduction. The obvious truth is that it should never be a choice between growth and cost. This is where “And” comes in. We have to drive high yield revenue and better business efficiency consistently. Too often we limit our businesses by believing it is one or the other. Suggesting that one or the other is more important, takes half your team off the field. If cost is emphasized, are sales leaders striving as hard as they should for new revenue? If revenue is the single thrust of the company, is operations really driving costs as low as possible? Is SG&A drifting out of control if revenues slow? Perhaps.

Growing in a slow economy is entirely achievable, but typically only for a single competitor in the competitive set. The competitor that positions themselves to grow. You should be able to identify one or more specific initiatives that are driving growth in your business. This should be a literal connection rather than speculation. If you launch new products and sales increase you may assume it is from the launch, but I suggest digging into the data and knowing where the sales gains are actually coming from. If you have an initiative to enter new customers and you can track the addition of new customers and the associated sales to those customers, you are on the right track. So long as there aren’t offsetting losses somewhere else, you are likely growing share at someone else’s expense. If you cannot tie the growth in the business to one or more specific initiatives, you are probably just going with the flow. Rising when the market rises, declining when the market declines. It is possible you will gain if your competition falters, but it is as likely you could lose if your competition steps up their game.

This series of articles is not focused only on revenue growth. It is focused on earnings growth. Earnings growth is the measure of achievement. Lower costs, increased revenue, new customers, new products, and the list of favorable topics we often discuss are good indicators, but how often do we see great signs, yet a disappointing fall through to the EBIT line? It is all too common. So, step one for the CEO, division President, or COO is to set the right goal. A singular goal of the EBIT line. Everything else is a Key Process Indicator (KPI). KPIs are wonderful tools and discussed at length in this series. KPIs, however, are not currency. Nor are ratios. Ratios like return on sales, return on invested capital, return on assets, gross margin, etc. are measures of the businesses efficiency at producing… EBIT dollars. Dollars are currency, fuel, and appeal for your investors. Too often we lose sight of the singular goal and drive for achieving our KPIs and ratios. While important, if we hit 6 of 10 do we have the optimum EBIT generation? Maybe.

Even respected managers and Vice Presidents are often misguided by the ratios we use. I frequently encountered resistance to new business initiatives as President of these companies because an initiative appeared “dilutive” to the business as a whole. This comes from living the ratios rather than living the EBIT. A business with a 15% operating income looking at adding sales that deliver 12% operating income would see these new sales as dilutive to the overall business operating income. Perhaps it drops to 13.5%. However, there are more EBIT dollars in total. Imagine, turning away profitable sales just because they are slightly less profitable units than your current units. That is what we do every day when we live the ratios. It happens frequently at all levels of organizations when they are not focused properly. This leaves available business for our competition to pick up and limits some of our growth. There are measures your investors care about and EBIT is the basis. Earnings per share are not influenced by revenue, but by the creation of EBIT dollars. If you are a private company it won’t be value in EPS, but in the multiple applied to value the business. More EBIT dollars times the multiple leads to a higher value of their investment in the business. When we have management focused on the ratio rather than EBIT we have them focused on something not entirely aligned with our investors. When I hear a business unit President or CEO describe a business as a 15% business I know that cascades through the management team as a company led by the ratios not by the earnings.

My advice is to use KPIs to measure achievement of goals cascaded through the organization and ratios when you are measuring your efficiency. Keep the ratios in the boardroom and with investors. Keep the KPIs with your management team and cascading as far as you can in the organization where points of control exist for that KPI. We will talk in this series much more on setting goals, cascading goals, establishing and measuring KPIs, and aligning responsibilities in later sections.

Organizations can become distracted by their KPIs and charts and lose focus on the actual results. It is imperative we not get distracted by activity and charts and not realize bottom line impact.

A few good… ideas

KPIs alone lead to no growth or profit improvement. You need ideas. We can set a goal for growth with a given customer and measure it monthly, but without an idea it may be a waste of time. Now, perhaps your team has been idling by and not putting forth full effort. The mere setting of a goal and tracking it might stimulate extra effort and create some movement. I suspect that is not often the case and I doubt it is a sustainable growth strategy. Remember, you have to build on today’s growth. The “work harder” strategy is a one-timer. You need an idea, preferably a few good ones. They can come from anywhere, but if the organization is not accustomed to having them or not accustomed to running with them, it will fall on the CEO, President, COO, senior VP, etc. to get the ball rolling.

There are natural idea people. Hopefully you have a few, but you likely don’t know who they are. Most likely they are people who propose things in meetings that get dismissed. That thing that was dismissed… was probably the beginning of that idea you need. They were probably onto something that others were overlooking. Listening is the start of an idea followed closely by looking. The senior leadership of your organization needs to embrace ideas, foster them, and leverage them. Listening can start with listening to customers, coworkers, competitors, the people in your plants, and surrounding your business. Often times the ideas are incomplete and have to be pieced together. It is rare that an idea just pops in from nowhere. It often starts as a statement of a problem with no following solution. The solution is where your idea fits in. Embracing problems leads to embracing ideas for growth.

The growth idea hierarchy

Level – 1 Permission to grow

This is a focus on fixing your own performance problems that could limit customers’ willingness to award you new business. Your employees and customers can identify these problems. They are areas of delay and underperformance in your business cycle. They often start with “it takes too long to… “. It may be that your delivery performance is average or your customer call center is closed by 3:00 on the west coast. Or, that your return policy is complicated. Or, that you have damage in transit. Or, that you take a long time to process information like invoices, credits, etc. The list goes on and on, but until your business is a good business partner, desirably the leader in these attributes, you do not have “permission to grow” from your customers. They are not likely to shift a portion of their business to a poor performer. If they have to make a move for some reason they will possibly try someone new over a so-so performer already supplying them.

Level 2 – Opportunity knocks

Where are the soft spots in the market. Is there a struggling competitor? Who is in the news? Is your customer struggling? Jumping in to aide a struggling customer is a great growth lever. We did just this in the hardware category and it led to great growth. The customer’s struggles were not financial, they were performance based. Their sales comps were erratic. The merchant needed more consistent performance. We listened and returned with an idea. We built a rapid deployment promotional model to be dropped into 500 stores on a moment’s notice. If the merchant was seeing soft demand, we were the only supplier with a ready to ship promotional program to lift sales within a few days. It infused value and lifted category sales and we got the call every time. It formed a relationship that led to reaching 100% share with the customer.

Level 3 – Unmet needs

What can we listen for in needs? On a single occasion I listened to a customer express a need to the person sitting next to me and within 60 minutes, my company was set in motion to build a new program that reached $60m in sales. While the person next to me was saying “no thank you”, I was sketching out an idea. There were any number of unattractive things about the need expressed, but each one could be overcome if you stopped to consider how. The combination of eliminating those barriers ended up being a better idea for the product overall and when the new idea hit stores… it sold at a rate 18% better than the program it replaced. Before you knew it, it was in 2,000 stores lifting customer sales and ours.

Level 4 – The thing no one even thought to ask for

While leading a faucet business’ commercialization effort I discovered we had an interesting technology in our R&D team, but it was nearly doomed because of cost and perceived complexity. Not to mention no one was asking for a faucet you could turn on by a touch or bump of the wrist. Once we had matured through all the levels of idea generation, we needed that next level that no one asked for. It gets harder as you go and level 4 is the most challenging. The touch-activated faucet would be the most expensive faucet we made. It would be the first to integrate electronics into a faucet meant for the home. It would challenge the plumber or homeowner to not only install the faucet, but to install the necessary electronics, which were likely foreign to them. It would be the first of it’s kind, so likely we would live through the debugging phase along with our customer. Not to mention we had never been asked by a homeowner, a plumber, a retailer, or anyone for that matter to create it. It was a great idea. We just didn’t know it yet. Remember when I said that your idea generators are likely those people who tossed out an idea that was dismissed in a meeting? The touch faucet died 100 deaths in meetings. It was a terrible idea and everyone knew it, just ask around. Fortunately, a few people actually spent the time to research it. We found that no one asked because they couldn’t conceive of it at the time, but once shown it, they wanted it. In our research sessions “where can I buy this?” was the most common question. The consumer had no idea what a bad idea this was. Most of our team applied their filters and logic, not the end user’s.

The touch-activated faucet was one of the biggest game changers to hit the market. Surrounded by a solid advertising campaign it drove demand for people to replace faucets that were perfectly good just to get the feature. I visited a Home Depot one day and I was listening as usual. I stopped to talk to the plumbing associate, you know, the guy in the orange apron. I told him who I was and whom I worked for and that I was just looking at the aisle to see what was going on. I did this often. I said “let me know if you need anything.” He did. He said “I need those touch faucets”. We had not shipped the first unit yet. We had been advertising because we thought it would take some time to create a little demand. I asked why he needed it. He then let me in on the fact people had been in asking for it and that he had a list of people to call when they came in. I had to know. I had to know how many were on the list. It was 11 people who were waiting. 11 people at one store. There are over 2,000 stores. Not all stores had 11 on a list, but there was demand. The best part they knew and the plumbing associate knew what brand it was. It was a key building block of pushing a brand from third place to first place in just a few years.

Once you are listening, start looking… closely.

It also pays to look. Growth of the EBIT line is not just from revenue, but improving the yield of all that revenue we already have. I refer to it as our business efficiency. Most refer to it as cost. To me cost leads us down other paths like cost of goods and SG&A. Important ones to be sure, but not the same as business efficiency. Business efficiency to me is the elimination of waste. Duplication of inventory, extra labor, extra movement, higher transportation costs, delays that increase our lead-time, any one of 1,000 things that make us less financially efficient beyond just our cost of goods sold. Looking is how we tend to uncover these inefficiencies. Could a person actively look and discover $8m in cost inefficiencies in a business of $180m? Yes. More significantly, the organization already thought they were the picture of efficiency. This is because they were more efficient today than yesterday. They used the wrong yardstick. They measured off of previous performance, not optimum state.

A hardware company I was appointed to as President had a number of business inefficiencies, but was improving. Every day was a bit better than the previous, so we were on the right track. We were just not aiming high enough and not looking closely enough. I found three key areas that led to enormous business efficiency gains by looking first hand. Walking our distribution center I found several pallet locations that were occupied by one tiny carton. I asked if there was another location in the DC for that exact SKU. There was. In fact there were many. Looking at those, they were all partially used. I also found cartons in other areas covered with dust. The first clue in how old the inventory was. Observation number three came when looking at incoming containers from Asia. There was empty space. Why? We could have stuffed it with anything and that anything would have shipped essentially for free. With these three visual observations I started investigation warehouse utilization, excess and obsolete inventory, and container utilization. When I first asked, I was told we were world class in all three. It would have been easy to accept that point of view and say, “thanks for looking into it.” I wasn’t looking to be a little better than yesterday. I wanted to eliminate these three waste streams and take it to the EBIT line. Or, I could choose to use it as pricing power to gain some business. Anything is better than applying those dollars as we were, in waste.

Warehouse utilization – After analysis by a few bright minds, we set a goal to empty 20,000 pallet locations from a total of 50,000. We might have been the first management team ever that set a goal to use less of our fixed overhead. That’s right, we wanted to empty out 40% of our warehouse and leave it empty. Once we achieved that we could consolidate a second warehouse into our primary and we could even take on a tenant in the remaining space. Closing the second DC resulted in $2m saved. Bringing in a tenant resulted in $1m in benefit by distributing a sister company’s goods using our fixed overhead. Later, the luxury of this new found space allowed us to enter a new business selling a new category of products without having to add fixed overhead, so it facilitated our growth. Not bad for just the first of three visual observations. A $3m improvement in business efficiency.

Excess and Obsolete inventory – We peaked at $15m in E&O at one point. There were all kinds of reasons, but all manageable. From my broader observations which included looking at customer level P&Ls, inventory reports, monthly adjustments for E&O led me to the realization Rome was built in just a few days. A few days a year created the mass of E&O. They were events that could be managed differently. We set an E&O goal not to sell it off, which was our previous goal, but to minimize creation of new E&O. I set the figure at $100k per month in new E&O, which would be a maximum of $1.2m per year. I was met with warm smiles and one party who told me it wouldn’t be possible because our best ever was $5m. We set the goal. We measured it monthly. We had a variety of people accountable to physically report out each month on their area of ownership in E&O creation. Our inventory planning group stepped up with great analytics and reduced our risk by better planning and management. The real tipping point came from the sales team. One lucky sales leader had to show a $400k write off in their review one month. Just the opportunity we had been waiting for. An event we could learn from. In this case a large customer discontinued an item and decided to do it immediately. We had $400k in inventory on hand and no other customer. E&O was born. However, we did something about it. We discussed with our sales lead that we needed to go back to the customer and firmly suggest they take the inventory and sell it through. It was reasonable, but we hadn’t always done this. We acknowledged that a discount may be necessary, but we had to get it sold through before it was gone from shelves. That is when the real dust builds up in the warehouse. She held 3 calls with the customer and sold all of the inventory through giving a reasonable discount to move it. The result of this one example? Not a $400k write off on our P&L, but revenue of $600k. We were on our way. Two years later after I moved to another division, I visited and went straight to the E&O keeper. I had to know what the number was. Was it $1.2m as we set in the goal? No, it was $800k. The company had eliminated a waste stream of $14.2m that spanned years. In a single year it was work approximately $3m in EBIT.

Container utilization – A partially filled container is hardly a smoking gun, but it did led me to wonder about the thousands of containers we brought in annually. How full were they? Were they partial because of weight restrictions? Could we manage inventories so that we could cube them out? The first answer was that it wasn’t a big problem and that we were “very good” at managing container utilization. OK, lets keep looking. I looked at a dozen over a week. I saw too much air inside. I asked for the data and found we were 85% utilized. Every 1% utilization was worth $300k per year in freight costs. Getting to 95% would be worth $3m in essentially free freight. We set a goal of 95% then put people in place who were accountable for reporting their plans and progress monthly. The first 5% was achieved through great management by our team in Asia that worked with suppliers and photographed each outbound container. Inventory planners placed orders that more aligned with filling a container rather than a convenient order size. The next 5% required more effort and a broader team. This is the important part. Someone had to lose in their KPI for the company to gain. The next 5% was essentially taken up by pallets loading the goods. Taking out the pallets and floor loading was going to help our container utilization, but hurt our labor productivity unloading. This became a team win, not an individual one. We experimented with a few containers and methods of receiving, while there was additional labor in receiving we found methods to keep it in check while driving a net savings. Rather than saving $3m we saved a mere $2.5m.

That is $8.5m saved in business efficiency from looking. It requires curiosity. If you look at your distribution center or factory and see boxes, you walked by too quickly. I saw dust on some. I saw small cartons in some. I saw air space in containers. You have to wonder why in each case or you get nowhere.

Achieving our goal of EBIT growth is the combination of driving business growth that not only takes advantage of market growth, but incremental share gain and the highest level of business efficiency. This series will discuss in depth how to achieve this goal by driving high yield growth and discover greater business efficiency in organizations who will be positioned to deliver greater than expected value for investors.

About the author

Rick has led four businesses through rapid growth and profit expansion in his 27 year career. Rick is an accomplished executive having led four distinctly different businesses through significant transformation to become the leading companies in their categories. His history is one of creating and executing business plans that drive overall business performance and EBIT growth through a series of processes that optimize costs and business efficiency along with significant growth, a combination that maximizes EBIT performance.

Rick led Marketing and commercialization efforts for Carrier’s $2.5 billion dollar residential appliance business driving a decade of leading innovation and channel expansion. Carrier became the undisputed leader in efficiency and environmentally sound products transforming the HVAC appliance industry. The impact of this work was captured in a Harvard and Darden School of Business case studies.

Rick led Delta Faucet Company into a rapid growth curve by defining a new path and trajectory. These efforts took Delta from a distant 3rd place in the industry to a clear leader and number one overall. More than doubling EBIT through innovation, product development, R&D, and channel expansion. Rick developed and implemented a rigorous process for business and innovation planning that led Delta to explosive growth for not only its industry leading Delta Faucet brand, but also the luxury brand, Brizo. Delta’s growth trajectory was so strong with growth of over 60%, the company was taken beyond the core faucet business and into bath fixtures as an added element of growth.

As President of Liberty Hardware, Rick used a balance of business efficiency and his business development processes to lead Liberty though a series of rapid growth cycles reaching a rate of nearly 20% year over year, while the market was nearly flat. With a renewed focus on growth and development, Liberty expanded its business rapidly and extended into a new platform of products. With revenues nearly doubled and the business processes driving new efficiencies, Liberty saw EBIT growth of 5x.

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Quick Tips To Getting Your Customers To Book Online

You finally made the change from the traditional pen and paper way of taking reservations to a new kennel management software. It helps you manage and optimize your day-to-day operations, but you’re finding some of your customers are still hesitant about the switch to an online booking system. The system is simple and intuitive to use. Customers are bound to love it when they give it a try, but it’s getting them to that point that can pose a challenge. You switched to a kennel management software to save you time, especially when it comes to scheduling your bookings.

Luckily, we’re here to help. We’ve come up with a few tips to help all of your customers get on board and start booking more easily. Because really, they’re going to love it.

VISIBILITY

If you want to grab the attention of new and return customers, you have to make sure that your BOOK ONLINE NOW button or link is easy to find. It should be visible on every page of your website, in all of your advertisements and every email you send out. This call to action will get your customers’ attention and help them realize they have the option to book online. Make sure it is easy to see and access!

DISCOUNTS

To make your new system more appealing to customers, you can offer a special rate for customers who book online. This will give your customers more incentive to switch to online reservations and even return for a repeat appointment. They’ll be thrilled to get a discount and you’ll be left with more time to run your kennel rather than answering phones and taking reservations.

PROMOTE, PROMOTE, PROMOTE

Promoting your kennel’s new online system is crucial. Often, customers aren’t even aware that your kennel accepts online reservations. It’s necessary to have a button or link on your website, but it’s also important to promote your booking system through social media and word of mouth. Posting and engaging with your customers frequently on social media, in person and on the phone can help in getting the word out.

Additionally, it could be helpful to change your kennel’s voicemail for customers who call after business hours or when you are too busy to answer the phone, explaining that they can book online 24 hours a day, 7 days a week. Be sure to emphasize the convenience that an online system offers and tell your customers at every chance you get. You can write a blog explaining why making a reservation online is easy or why you decided to make the switch and promote it on your website and social media.

Another quick and easy way to promote your online booking system to your new and existing customers is through email.

PERSONAL EMAILS

With kennel management software, whenever a customer books online, you can send them an email right from the software to thank them. This offers a personal touch and helps to cultivate a relationship with your customers, making them more likely to request a service online in the future.

EMAIL CAMPAIGNS

If you are offering a discount to customers for booking online, send out a promotional email campaign. With various email services, it’s easy to send emails that reflect your brand. This is a great way to reach all of your customers quickly and efficiently and get the word out.

A kennel management system can really help you save time and money, but it’s easiest when your customers are booking online. Try out some of these tips to help transition from phone calls to online reservations.

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Advantages of Having a Good Quality Management System for Your Business

A business cannot be run single-handedly. It requires cooperation and collaboration from all its members. Moreover, innovative thinking is one such skill which would help in the growth of your business. However, the key component which is very important for any kind of business is to have a strong supportive quality management system. A huge amount of investment goes behind building up such a system for your business to operate smoothly. Given below are some of the reasons on why one should do so.

• Saves time and money: Time is the most important factor for any business. Thus, the time you spend on setting up an efficient quality management system along with its policies would definitely prove to be fruitful in future. Your employees would be well aware of the workflow which in turn would reduce the scope for error. This would save time as well as money.

• Happy customers are the best for any business: Having an efficient quality management system would help you deliver the best services to your customers. Increased and consistent customer satisfaction would definitely prove to be beneficial for your business as all the focus would be on the quality of the service provided.

• Reduced risks: Setting up standard policies and systems leaves no room for error in internal as well as external processes. An efficient management system also has the capability to foresee the threats and vulnerabilities to the business before they arise and hence these can be addressed much before they can actually cause loss to the business.

• Increased awareness about your business among people: The most important factor which is considered by all businesses worldwide is to make a strong presence in the global market. This is where a quality management system comes into play. It makes your business and its services visible among all sections of the market. It also helps you to have a smooth flow of operations at work by properly documenting the business processes and maintaining checks at regular intervals of time.

• The quality of the product is improved: Such a system enables you to focus on the quality of the products offered to the customers. This, in turn, helps you improve the quality of the product to a great extent. All aspects of quality starting from delivery to customer feedback are taken care of by this system.

• Get an edge over others: Nowadays, customers value quality more than the price of the product. Thus, if you have a good quality it would give you an edge over other companies offering the same product.

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Project Management Screw-Up 4 – We Didn’t Do A Good Project Schedule

I can remember vividly my very first project schedule. My manager gave me the mission statement and an overall timeframe he thought it should take for me to complete the project. I diligently broke the schedule down to lower levels of detail. I continued to divide the overall timeframe among the tasks and assigned people to the tasks. I worked for days on end with my face buried in a computer screen developing the schedule. What I ended up with was a horrendously detailed project plan that had no logical dependencies identified, people being asked to complete 40-hour tasks in 15 minutes, and some people being asked to work 200 hours per week to get their work done. But by golly, the schedule met my manager’s timeframe request.

Sadly enough (for me), this is a very true story but one that I don’t think is too terribly uncommon. It’s pretty easy to ignore reality at times when you’re developing a schedule and to skip some fundamental steps in completing your schedule. You may get everything to look good on paper, but the result may deviate significantly from reality.

How it happens:

The project schedule was either too detailed or not detailed enough – A project schedule is only effective when it is able to help you know that everything is on track and that you’re going to be able to complete the work on time. When your activities are at too high a level, you risk losing accountability, missing out on key dependencies or expose yourself to “90% complete syndrome” when the team reports progress that is not real. When your activities are at too low a level, you can frustrate your team members by unduly micro-managing them, creating a greater administrative headache for yourself, and confusing the team with an excessive number of activities to manage. Either of these can spell schedule slippage and can severely impact successful project completion.

I’ve learned to use two rules of thumb when defining the appropriate level of detail for a project plan:

Can the activity be assigned to a single person to complete the activity?
Can the activity be completed in less than 40 hours?

Let me explain my question rationale. In the first question, I have found that explicit, clear lines of ownership are vital to ensuring that activities are completed. Whenever there is an activity assigned to “the team” or some other group of people there is no single point of accountability thus no one truly owns the task. Therefore each and every task should have a named person that takes the heat if the task isn’t completed on time.

In the second question, the more time an activity is given to complete the greater the likelihood that you will be surprised at the last minute that the activity was not completed on time. I’ve gotten burned way too many times on an activity getting to 90% very quickly then taking twice the amount of time to finish the last 10%. Now, it’s not that I’m a distrustful person or that I think that people are overtly trying to deceive me. No one wants to miss a deadline and thus will continue to report that they are on target and hope that everything falls into place if things start going awry. Sometimes it works; sometimes it doesn’t. I prefer to leave as little to chance as possible. So, I’ve zeroed in on a 40-hour rule of thumb because it allows you to divert train wrecks on time but also doesn’t micromanage the team member. Depending on your environment, you may want to use something other than 40 hours, just be definitive and consistent in what you use.

The project schedule didn’t correctly address dependencies between tasks – When designing your project schedule, you need to keep in mind how those activities relate to other activities and define them accordingly. Establishing clear dependencies between tasks and having a true understanding of the critical path (the string of tasks that are the longest point between the start and finish of the project) is in my view one of the most important components of your project schedule. As you’re designing your schedule activities it’s helpful to keep dependencies clean by defining clear finish-to-start relationships. There are ways to accommodate this using most common project management software packages, but I recommend keeping your dependencies simple to understand and manage.

The project duration was too long – When designing your schedule, keep specific focus on the length of time that you go between celebrating successes. I’ve become a strong advocate of keeping project phases to no longer than three months in duration. This is not to say that, if you are implementing an Enterprise Resource Planning system that you should try to do the entire implementation from software selection to implemented system in that three-month timeframe. What I am saying is that you should phase the project in such a way that there is a defined beginning and end to the phase within three months. Why would I say such a thing? Simple; people (particularly management) live in a short attention span theater world and over time will become discouraged and lose interest if a project drags on too long. So OK, you’ve figured me out, I’m just breaking a $10 bill into two $5 bills, but I’ve seen teams perform better when they are able to have mini celebrations at the successful end of each phase because at any point in time the end of the phase of work is no more than three months away. This also gives the team and management logical review points to look at the project’s mission and ensure that it is in sync with management’s current priorities.

Some of the tasks didn’t produce useful deliverables – When you’re defining your project schedule, make sure you’re continually asking yourself these questions:

What is the deliverable that will be produced out of this activity?
What will it look like?
What happens if we don’t do it?

If you don’t have satisfactory answers to each of these questions, then seriously consider whether or not the activity is necessary. Remember, every activity that you do should be getting you one step closer to successful completion. If you can’t articulate what the activity is supposed to produce then chances are you don’t need to do it.

The team didn’t understand the plan – Your project team needs to have complete buy-in on the tasks, the durations, the team assignments, the dependencies, and the deliverables. What I’ve seen work well is doing shorter, more frequent informal reviews with team members while you’re developing the schedule. I’ve seen project managers hold themselves up in an office or conference room for days on end, emerge from their cave with the schedule to end all schedules, and then have the other team members storm the Bastille because they don’t see how they’re possibly going to be able to accomplish what the project manager expects (recall my opening store about my unrealistic schedule). It’s days like those that the project manager wonders why he or she didn’t take over the family delicatessen instead of doing this stupid project manager job. Get the buy-in along the way; it helps you avoid rework, allows the team members to feel more included in the process, and will produce a better quality plan that the team will believe they can achieve.

Warning Signs:

Tasks aren’t getting done on time – Chronically missed deadlines on tasks can be due to unrealistic task durations, poorly defined dependencies, poorly defined work assignments, or project distractions. Diagnose the reasons for the missed deadlines immediately before the snowball rolling down the hill turns into an avalanche.

Tasks assigned to “the team” or some other group of people aren’t getting done – Any time that a specific name is not attached to a task, it is easy for team members to assume that someone else will do the task because no one is specifically held accountable for task completion. If you want things to get done, make sure that there are specific names beside each of your task and that each team member feels personal accountability for getting their work done.

Team members aren’t aware that they were supposed to be working on a task – It’s an ugly situation when you’re getting status updates from team members and a task that was supposed to be completed last week wasn’t even started because the team member didn’t even know they were supposed to be working on the task. Make sure that work assignments are crystal clear and that team members know what tasks they are supposed to have completed by when.

Team members are confused as to what they are supposed to produce for a task – So you assign a task to a team member and the day that the task is due the team member produces a deliverable that looks exactly nothing like you were expecting it to look like. The deliverable now needs to be reworked which means other tasks are going to slip as a result. Be clear about what deliverable needs to be produced and ensure that you and the team member have a common understanding of what it needs to look like.

Turning it around:

Get real with the schedule, and fast – Don’t delay; get the schedule in shape quickly making sure that you’ve defined all the right tasks, durations, dependencies, and resources to get it done. More importantly, don’t go into a cave for days on end to do; make sure you are getting input on the schedule frequently to avoid an unrealistic schedule.

Do focused reviews with team members – On some projects, I have developed supplemental documentation which explains key tasks that might be confusing and even gone so far as to produce a template of what the deliverable out of the task needed to look like. I prefer to do mini reviews as the plan is being developed to ensure that the team is putting their thumbprint on the plan and that any confusion points can be addressed early.

Keep dependencies simple – While it’s great to clearly understand dependencies between tasks, I’ve also seen plans that are overly complicated because the project manager built in serial dependencies between tasks that could actually be performed in parallel. This could be due to an assumed dependency between the tasks or because the project manager is anticipating that one person will be doing both tasks. Before defining a dependency, put rigor into making sure that the tasks are truly reliant on being performed serially.

Highlight tasks which are due in the next 1-2 weeks – I’ve learned through experience that solely relying on the project schedule as the communication vehicle for a project team is not always the most effective way of ensuring tasks get done on time. Depending on the experience of your team, they may not understand how to read the schedule and may miss some key tasks that need to get done. I’ve learned to use either status reports or e-mail reminders to individual team members reminding them of what they need to do and when it needs to be done. It puts a bit more work on the project manager, but it better ensures the team member knows what needs to be done by when.

Take Aways:

Make sure all your lowest level activities have a sole owner and are no longer than 40 hours in duration
Break your project into phases that don’t exceed three schedule months
Know the critical path of tasks through the project and keep clean finish-to-start dependencies between activities
Make sure that your activities have associated deliverables that are relevant
Ensure the team buys into the plan along the way; don’t do a grand reveal when the plan is complete.
Remind and highlight team members of tasks needing to be completed within 1-2 weeks

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