Check Your Blind Spots

In my experience, there are a couple of common blind spots related to performance optimization. All aspects of the business need to be continually and carefully reviewed and managed. Frequently, for a variety of reasons, managers fall into the trap of carefully managing only a few aspects of the business. As a result, they fail to see problems or opportunities as quickly as they might havespilling potential profit dollars in the process.

First, all too often managers become too comfortable with adequate overall performance and fail to dig into the details. They convince themselves that everything must be okay because average results are okay. However, the reality may be that the satisfactory average performance is the result of some very good business offsetting some bad business. To avoid overlooking such important information, I encourage our managers to know the profitability of every job, not just average profitability. As an example, if we could eliminate all unprofitable jobs (even though that is a small number of the total number of jobs or a small percentage of the revenues ), we may be able to increase average job margins by a couple of percentage points. That may not sound like much, but a 2 percent improvement in pricing or margins probably amounts to more than a 10 percent improvement in profitability. The main lesson to learn from this: Sweat the details. Always keep an eye out for ways to improve. Technology can play an important role here. For example, our company applies mechanical technologies in many of our service lines. In the same way, you should constantly seek opportunities to use new approaches to extend the applicability of your services or to improve their effectiveness in current applications.

Second, some managers fail to maintain an appropriate feedback loop. This point somewhat relates to the previous point. If there is no established routine to check the details, one risks making the same errors over and over again. In our business, two key drivers of our overall profitability are technician utilization and individual actual job margin. Technician utilization relates to our ability to assign all technicians to billable customer work. Job profitability relates to the actual margin earned on each job. What makes managing these drivers challenging is the large number of technicians in our organization and the very large number of individual jobs we will performover 25,000 per year. Our business system provides the information necessary for these two areas to be thoroughly analyzed each month. As a result, our branches can take quick action to balance their technician resources with current demand levels. Similarly, we can identify low or no profit jobs and learn from them before we repeat those mistakes in another situation.

The third area managers tend to underemphasize relates to future business concerns. The challenge lies in balancing the maintenance of longer- term business development initiatives and momentum while dealing with the day-to-day crises of the immediate business. I call it maintaining the ˜Builder Mindset in the midst of the day-to-day challenges. Stephen Covey asserts that the urgent, but less important, tasks frequently crowd out the non-urgent, but more important, tasks.

Resist the natural temptation to be consumed by time-sensitive, but noncritical job tasks.