The Right Angle

January 29th, 2012

29 January 2012

The Two Roads to Radical Business Improvement, Paul Ovington, Strategy Partner, RAC

Road to Business SuccessWhere will your business be in 12 months’ time?

Too often we as business owners find ourselves on the inside of a tornado, focused on the problems and challenges at hand rather than building a better company. Do you have a distinct idea of where your company will be like in one year’s time? Do you have a strategy and a plan for getting there? Does your company experience ‘drift’ or ‘drive’?

If you would like to be in a distinctly stronger position in 12 months than you are today you need to get on the business success highway. There are basically two roads you can take, the first is using breakthrough projects and the second is by continuous improvement in key areas.

Business breakthroughRoute 1:  Breakthrough projects.

A breakthrough project is where you develop something new. In general, this is related to what you have currently. The five most obvious types of projects include:

  • Entering a new market
  • Developing a new product
  • Introducing a new service
  • Developing a new capability
  • Introducing a new system

Most companies can achieve such breakthrough projects in a 12 month time-span. It firstly requires the right goal or project to be chosen. There has to be an outcome, which places your company in a stronger market and competitive position. Secondly, it requires that the goal is analysed, broken down into ‘work packages’ and organised as a well-run project.

Route 2:  Continuous and never ending improvement.

The second road to success is through what the Japanese call ‘Kaizen’. Having worked as a manager in Hitachi for 10 years I only know too well what it means and the power that it can have. The Japanese primarily applied the philosophy to product quality and cost reduction. Every day their workforce would ask the searching questions, ‘How can we make this product more reliable?’ or ‘How can we make this cheaper?’

Asking such searching questions enables what we call your ‘recticular activation system’. You become acutely aware of each and every opportunity to make improvements. More often than not each individual improvement can be tiny. However, we frequently overestimate what we can achieve in the short-term, but Kaizen continuous business improvementcompletely underestimate what we can achieve in the long-term. Imagine if you could improve the value in a service by just 0.5% per day. Is that difficult? Absolutely not! Now imagine if you did that 240 days in a working year. That’s a 120% improvement in value. What could that do for your business?

In conclusion, I would encourage you to ask yourself the questions:

  • Where do I want my company to be in 12 months?
  • Which road will I take?


20 January 2012

Can Accumulating Assets Bring Us Prosperity in 2012? by Paul Ovington, Strategy Partner RAC

Conventional View of Assets

When we normally think of assets we tend to think of balance sheets. If we look back in time the term assets meant land, buildings, machinery, furniture and tools. Perhaps we think of them as the boring old things that show up on the annual accounts. More recently the term “intangible assets” emerged and conventionally meant customer goodwill, copyright, patents and intellectual property. Intangible assets increasingly show up on company balance sheets.

As we move more towards a “knowledge economy” intangible assets are becoming increasingly important. What helps us generate value that the market appreciates and people are prepared to buy is increasingly represented by know-how rather than the conventional tangible assets referred to in earlier decades.

Taking a Broader View of Assets Can Help

What is an asset fundamentally? In my view an asset is an item we can either acquire or create, which can be used to generate future wealth. The more assets we have, the more wealth and profitability we can create. The nice thing about assets is that once acquired or created they can be used to generate wealth for a very long time. Mmmm … isn’t that interesting?

So let’s take a broader view of assets – anything acquired or created that can be used to generate future wealth. How about your customer base? Certainly, if you have a larger customer base and the relationship is improved with key customers then you have better asset than previously. This could also apply to a sales funnel in general. How about developing a stronger brand? Again, this will allow you to generate more sales with a higher margin, and this could last for a long period so this is definitely classified as an asset.

Then we can take products or base technologies. Both can be used to generate wealth over a longer-term. We can also count market presence. Say we were able to break into a new market niche, then being in that niche will allow us to generate subsequent sales in that niche. We can leverage off our new market position.

How Can We Use Asset Accumulation to Generate Higher Profits?

Acquiring or developing assets is like making a deposit in your bank account. If you deposit money into an investment account then we can expect a return on that investment ad-infinitum. In a similar way if we continuously and deliberately develop new and improved assets then we can expect more sales and more profit and the effect is not just short-term it is normally long-term.

In conclusion, we should all think about assets in a different way and start to deliberately and systematically develop new and improved assets. Improved profitability will follow as surely as night follows day.


10 January 2012

Woe or wow? by Sarah Williams, Marketing Partner, RAC

There is, supposedly, an ancient Chinese curse – “May you live in interesting times…” Well, this last year has certainly been interesting, and, if the media have anything to do with it, the coming year will be even more so. So what are we, as business owners, supposed to do?

Business battening down the hatchesWe could, of course, simply batten down the hatches and wait for the economic storms to blow over. Tempting though this may seem, there are great dangers to this approach. First of all, there is an almost immutable rule in business – if you’re not moving forward, you’re slipping backwards. There is, put simply, no way just to stay put. Secondly, what will your competitors be doing while you’re keeping dry under the decks? If they are bold, and if they have the right vessel, and the right crew, they may be able to make use of the stormy conditions to drive themselves forward, over the horizon and out of sight. Finally, if you’re not looking around you, and keeping your eye on all the instruments on the bridge, then you may miss major opportunities that appear unexpectedly, as if out of nowhere. It may seem counterintuitive, but more millionaires were created during the Great Depression than at any other time in American history – there’s an excellent article here if you want to know more.

Fundamentally, when things are in flux – as, goodness knows, they are now – opportunities abound. And the lively, flexible business will seize them and prosper.

Opportunity ahead

So, would you rather cry “Woe, woe” like the media, or would you prefer to say, “Wow! What have we here?” The choice is yours.

And, if a business is going to seize the opportunities that surround it at the moment, what do you think it should do first?