This is the fourth and final installment in Cleaning Business Today’s series about overcoming barriers to growth.
This is the fourth and final installment in Cleaning Business Today’s series about barriers to growth. Hopefully, you have already read the first three articles in the series—A Conversation with Jim Alampi, Leadership, and Infrastructure and Systems. In the previous articles, we identified and discussed the leadership and infrastructure barriers companies can encounter as they grow. In this final installment, we’ll talk about how to turn your company into the type of resilient and forward-thinking institution that is ready to seize new growth opportunities and avoid pitfalls. Specifically, we’ll talk about the importance of “smart metrics” and how they are central to a company’s ability to overcome barriers to growth.
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To discuss strategies, I sat down with business expert and thought leader Jim Alampi. As founder and Managing Director of Alampi & Associates LLC, Jim has devoted more than thirteen years to coaching CEOs, executive teams and Boards of Directors in the areas of strategy, leadership, execution and business improvement. He has provided advisory services to or spoken before almost 10,000 CEOs and senior executives regarding the lessons he learned as a senior executive at three publicly held companies and as the founder of three start-up companies. He is also the author of the recently released book, Great to Excellent.
TOM: Could you identify some examples of a smart metrics and critical metrics that might be relevant to the residential cleaning industry?
JIM: Again, we’re not looking for guarantees with these numbers. We’re trying to find early warning indicators. With all the companies I’ve worked with, I haven’t found a company yet that didn’t have some smart numbers. Now, they are not usually easy to find. It might take a couple of iterations to identify them. The test for me is: what are those one or two metrics that, as long as they’re okay, I can sleep well on Friday night. That’s my ultimate test. It’s usually something that’s up the value stream from what you do today as a company.
TOM: Numbers pertaining to the real estate market, for instance, could be a leading indicator or smart metric for residential cleaning companies. Building permits for residential or just an uptick in the buying and selling of residential units could also be important because typically someone needs to clean that unit upon the transaction being completed.
JIM: Yes, exactly. Some examples of smart metrics are how many residential permits are getting pulled or how many permits for repairs or additions. The best example I can think of for a smart number comes from one of the public companies I led. It was a chemical company, and we sold a lot of chemicals to the oil industry. An oil rig has to be drilling or pumping before they need to buy any chemicals. There’s an oil industry statistic that comes out every Friday morning at 5:00 am. It’s called the rig count. It represents how many oil rigs are in operation in the Gulf of Mexico as of that Friday morning. And when I was running that company, I used to be up at 5:00 am every Friday morning to see what the rig count was. I knew that as the rig count went up from the previous Friday, it meant that some companies had towed rigs out into the Gulf of Mexico during the week. And I knew from our own historical data that from the day they towed a rig out it took about six months to get it operational and to the point where they’d need to start buying chemicals from somebody. Since we were the largest chemical distributor in the world – and assuming that we got our fair slice of market share – I knew that when the rig count went up, I could almost guarantee that my chemical company was going to see an uptick in our volume sometime in the next six months.
TOM: How do smart metrics play into strategic planning and execution?
JIM: Every company has the financial and operational numbers that come out monthly or quarterly, but as I’ve mentioned the problem is that when a CEO gets them they are usually cast in concrete and look backward at what has already happened. They don’t tell the CEO anything about the future. In all three public companies I led, the first thing I tried to figure out was the two metrics that, as long as they were okay, I could get a good sleep on Friday night. Obviously, I looked at many other metrics, but to help with strategic thinking and execution, it’s always important to have some early warning trend indicators. Every company I have ever talked to or worked with uses some smart metrics to guide them. It is an iterative process to discover your smart metrics, and whatever a CEO comes up with first will usually be wrong. Keep looking for those “Sleep well on Friday night” metrics!
TOM: How can company leaders prepare in advance for the ups and downs of the business cycle?
JIM: As Jim Collins said, “Get the right people on the bus, the wrong people off the bus and the right people in the right seats.” Level Five leaders pick the “Who” first, then the “What.” If I select leaders who have the right values, intelligence and skills, they will be able to change direction as business conditions change. And what business has never seen conditions change?! The opposite of this Level Five leadership is the “Genius with a thousand helpers.” This is the CEO who has a narrow vision and hires people who can get him there. This approach is wonderful as long as business conditions never change. The three most important contributors to excellent execution are 1) the right leaders, 2) alignment of the whole company around strategic goals and directions, and 3) a culture of accountability.
TOM: Will technology play a role in strategic preparedness?
JIM: Companies usually add technology systems as they grow, often resulting in a myriad of parallel systems, all performing important, narrow tasks. But the problem usually is that these technology systems come from different vendors and they don’t easily talk to each other, which results in having the same data in multiple systems and difficulty getting real-time, 40,000 views of the company without a lot of cutting and pasting and pulling data in from disparate systems. About this time, many companies explore an end-to-end system, often called Enterprise Resource Planning (ERP) that can run the company on a single platform with easier and faster access to data to help run the company better. This is a high-risk, high-cost phase for most entrepreneurs since they rarely implement such all-encompassing systems and rarely do they have someone within the company who has done it multiple times. And most companies usually worry most about the technology which is relatively easy to get right; it is the change management in the way employees take care of customers and perform their jobs that is usually what causes so many failures at this stage.
TOM: Jim, you’ve taken a lot of the concepts that we’ve talked about over the course of our interview and worked them into an integrated process that you call The Execution Maximizer™. You also have a tool that goes along with the Execution Maximizer™. It’s called the Roadmap©. Could you explain what those two things are?
JIM: The Maximizer puts in place the process to move from vision to execution. It works a little bit on the vision side, but much more importantly, it puts in place those fundamental items that need to be part of a company’s vision and then outlines a process to execute it. The Roadmap is the document we use to institutionalize the goals and all those strategic vision items. It’s a dynamic document, so it’s one that we get companies to fill out and use on an ongoing basis. They update the goals quarterly and capture those updates in the Roadmap document. We’ve tried to make it really easy for the small to mid-size entrepreneur to capture their strategic thinking in an easy-to-use format.
TOM: It has been great talking with you, Jim. Thank you for sharing all this great information with us.
JIM: It was a pleasure.
That’s it for our four-part series on overcoming barriers to growth with Jim Alampi. We hope you enjoyed the series and found it useful. You can read the first three articles by clicking these links: A Conversation with Jim Alampi, Leadership, and Infrastructure and Systems.
Tom Stewart and his wife, Janice Stewart, are co-owners of Castle-Keepers, the 1st company to achieve CIMS certification. Tom is a nationally-recognized leader & innovator in the house cleaning industry. He is co-founder and Publisher of Cleaning Business Today.