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Part IA - The Dilemma
"How do we grow our businesses?" Hot topic. The many ways to "growth" have been written about by a large number of business experts and analysts. A few examples are improving performance, customization, efficiently capturing customer needs, building more value around existing products, and moving customers up the "loyalty" ladder.
These experts and analysts may promote their methodologies as the way to grow but their combined discussions have a common thread: execution and knowledge are two keys to success, and in order to execute well the business has to find out what's working well, what isn't, what "new" (innovation) is needed and what they know about their enterprise and customers.
The way our businesses gain this information, believe it or not, is through assessments. Examples of assessments we already embrace are: when we buy software products we hope they are tested (i.e. assessed for "bugs" or meeting specifications), when we hire someone we assess their skills, critical thinking abilities, and their fit into the organization, and when we acquire or merge with another company we do our "due diligence" assessment. Assessments, in all three of these examples, provide us with information that tells us something about execution, and combined with other facts, helps us develop knowledge we can use to make decisions.
Then, shouldn't we embrace the assessment of one of the most important aspects of our success? Shouldn't we assess our companies' total ability to provide the essential value our customers need? Shouldn't we assess for the information we need to make decisions on which strategic initiatives we develop and deploy to create that value? Shouldn't we do a due diligence on our company's value components, the real reasons our financial statements read like we want them to? Can we ignore this assessment knowing that the purchasing of our value is the foundation of our companies' growth?
To see why an assessment with this focus is valuable, consider the following:
Our strategies, transforming our value into the value customers buy and rely on, are implemented by using our competitive assets such as skills, process, tools, resources, knowledge, deliverables, and time. When these assets' characteristics and performance are not what we expect, need, or want (or an asset is missing), we have what is called a critical issue. Critical issues are what stop the business wide performance we need to produce a change in our competitive advantage - a change in our value position in the market that leads to growth - our strategies' intended goals!
What's a "critical issue?" Basically, it's a value asset weakness (non-performing or missing) that stops the business from moving forward, i.e. it stops the success of the strategies we want to implement that changes our value position.
Our value position equals the sum of all their needed, well performing value assets minus the sum of their critical issues, the "performance gap."
An example of a critical issue: Our skills are part of our value but poor ones or the wrong ones are a critical issue. Another example: We need funding sources to run projects but the ones we rely on have dried up - revenues are down or our ability to borrow is weak. No projects means no new or improved value for sale. Which means revenues will continue the downward trend. Funding is a critical issue.But wait! Is funding really the problem? Could it be related to other problems? Could it be other problems? Funding management skills? Or could it be poor processes, such as loan management or project prioritization? How about the lack of knowledge - e.g. project magnitude or "good enough" requirements?
This points out that it's hard to identify a critical issue's underlying problem without doing some kind of an across the board assessment of all value assets. Proper assessments will help separate the issues' real problems - root causes - from their symptoms, but only if all possible sources are explored! Proper assessments will help get the information needed for making high-quality decisions, helping take the guesswork out of the process.
This brings us to the benefits of doing value component assessments (details on each later on):
First, it's the need to precisely define performance improvement critical issues. We don't want to let the critical issues that stop the success of our strategies become - um - critical, whether we are starting a project - strategic initiative - or in the middle of completing crucial ones.
Second, assessments just might uncover unknown critical issues. In other words, we can use assessments as a "discovery" tool - the discovery of opportunities. Assessments help expose issues and needs that are opportunities to add value.
Third, we know that it's unusual - maybe impossible - for each asset to perform independently of other value components. Each has a relationship with others. More importantly, those who use each asset bring their perspective about how the relationship is supposed to work. Assessments, done well, will use this collaborative approach to find optimal asset performance.
Fourth, assessments provide proof our assumptions about our assets are correct - that what assets we thought were working well "were" and those we thought weren't working well "weren't." This information is very important to our management activities.
Finally, assessments will form a baseline of our entire asset group so we can easily see what's different after doing a future assessment. We use assessments to look for changes in what's important to our present day success and to help us determine the overall quality of the entire group we rely on for competitive advantage.
So, what's the assessment dilemma? In light of these benefits companies have lots of excuses why they don't do them. Notice I used the word "excuses" and not "reasons." Why? Because I believe the very good reasons to use assessments outweigh the most common excuses used to avoid them.
Part IB - The Excuses (plus rebuttals)
Common excuses as to why companies tend not to use assessments to search for critical issues and evaluate competitive asset quality are:
Assessments are hard. They need to be properly defined, ask the right questions, keep an audience's attention, and be connected to everyone's everyday work and its results. Plus, they require people to look hard at themselves and their relationships with others (professionally, of course).
The value of an assessment's results is only tied to the decisions they help and the actions they spawn. If the results of the effort sit in someone's desk drawer then there is no value. Action plans need to be part of the assessment with a commitment from management to implement them. This includes reviews that monitor their progress.
I have always been amazed how it was always easier to "wheel spin" - redo work, sometimes over and over - than to understand what could go wrong before it went wrong. Re-work costs time, money and (sometimes?) customer loyalty.
And as far as "trying things" go, isn't it better to be trying things that have the best chance of succeeding? The time and money to do the "post project analysis first" (assessment) will pay off even though it looks like a delay.
A major benefit to performing "post project analysis first" is that, as with a post mortem analysis, you get the "critical thinking" of other company representatives about the assets you use. An asset that you or I think is working well could be someone else's issue or, at the very least, they would bring a different perspective on its performance.
Isn't it better to know about delays, and what could cause them, before they become critical? Delays in hiring people (didn't know the resource requirements), in getting the right training at the right time (new skills needed for new markets), or understanding the customers' real needs (I can't count the times customers wanted something other than what was provided or they wanted additional bells and whistles near the end of projects).
By the way, see the previous item about rework!
Everyone's real job is to fully understand how their job quality affects the final value for sale - how it affects the results customers expect to experience. It's everyone's job to understand how their assets affects the value chain, to make sure a link isn't missing, or broken. It's not just management's responsibility.
I have never been in an organization where everything was working fine (admittedly, by my set of criteria). When a company decides that their value is "good as it can get" then they have come to some important conclusions (e.g.): not to be their market's leader (for the long term), not to keep up with change, not to monitor the effects and results of implemented initiatives, not to acquire new customers, and not to develop "most valued customers." There are more examples but in order to avoid each of these "nots" just mentioned, companies have to know where their assets position them at all times. Assessments help acquire this knowledge.
Treating symptoms can be time consuming and otherwise costly. How many times has management tried to fix problems, like sales by providing sales training or improving quality by hiring more quality techs or adding more testing time? And how many times have the initiatives failed because they were working on the wrong problem or ignoring related issues. Too many, I'm afraid. And working on issues "one at a time" could create problems with other related assets if the effects of the relationships aren't included in the problem analysis and developed solution.
If operations are this complex, it requires assessments of all assets because it requires common and up-to-date knowledge by all involved! We need an attentive watch by the entire company on how well our assets are performing. We don't want the "events" to be lost markets, lost customers, or lost opportunities. We want our processes and operations to be changed by anticipating events and identifying the optimum set of assets to focus on them, applying the assets to our value creation system with proper care.
If there is a problem(s), by ignoring it, will it will go away or fix itself? I haven't seen that happen often. Whenever problems fixed themselves it was usually a temporary fix to get a process "working" so a project wouldn't be delayed. So it looked like the problem fixed itself. But the temporary fix became permanent. Because the fix was situational, things usually got worse, not better.
By the way, why wait for a problem to happen in the first place! Fixing a problem in the middle of project doesn't sound cost effective to me.
Bottom line on this excuse: there is no bad news from the results of an assessment, only good. Knowledge about the customer, company operations and assets can only lead to a better market position if the knowledge is used to improve company value.
Note: Threats: Excuses or Opportunities? Some might say that, for example, political unrest, monetary rates, or technological change are threats that have nothing to do with our company's value components since we have no control over them. Wrong! If these threats are important to the welfare of the company, then we need to have the skills, process, tools, knowledge, and resources - value assets - to make sure they don't become critical issues. Plus, the fact that they are important to our well being, creating assets to manage them only enhances our competitive position. Proper assessments will point out threats as opportunities or leave them as risks we are willing to take.
Because a company's competitive value components, the source of critical issues, are the building blocks of the benefits that customers buy (don't forget, they expert results from their purchase), and since "if you want to manage something, you have to measure it," evaluating competitive value on a regular basis is essential to the success of a company's ability to compete effectively and grow! We shouldn't let our companies fail to reach their goals because we neglected obtaining a profound understanding of our customers needs - knowledge - and of our abilities - execution - both important to growing markets! If we use an excuse mentioned above to avoid gaining this understanding, we need to make sure that it's a valid reason.
Assessment benefits mentioned above are described in detail in Part II.
Jonathan Narducci uses his 30+ years of experience in business, management, and quality systems to lead international companies in their search to locate and implement the ideas that helps craft the business performance needed for the business results expected. For more information visit www.narduccienterprises.com
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