Learn how this exercise can help you increase your overall revenue and profit
If you’re having issues with your car, computer, or even your health, you turn to a trained professional to diagnose the issues, but do you also conduct “diagnostics” on your business? A good diagnostic exercise can help expose issues and uncover opportunities.
The term “diagnostics” sounds technical, complicated, and intimidating, especially if you’re a time-starved, “I need results now” business leader. It can be if you go it alone and without a roadmap. However, it can also solve some of your biggest business problems and it can also be an incredible way to grow and scale your company or organisation. In both cases it clarifies your priorities that may deliver the greatest impact now and for the future.
As you read on, we’ll take you through Win Enterprises, LLC’s proprietary methodology: Discover ~ Develop ~ Deliver. We’ll dig into each one to help you understand how we think as consultants, as well as the role you can play in a successful business diagnostic. Lastly, we’ll share several real-life examples to give you an idea of what’s possible…
Business diagnostics can be used to tackle a wide range of macro or micro issues in companies, including those that leaders don’t even realize they have. Asking strategic questions is one of the key aspects of running a successful business diagnostic, which leads to hypotheses-based problem solving. These are some of the reasons that clients turn to business consultants to conduct a business diagnostic, along with several of the questions that we ask in each scenario.
- Lack of sales: Why isn’t Sales producing as they should? Is it due to a lack of supervision, poor product or service knowledge, or an unattractive commission structure? Could you cross-sell or up-sell to your existing customer base? What do your customers want, and how well does your product portfolio meet their needs?
- Competitive pressure: What do you know about your competition? Why are you losing market share or sales to them? What are your company’s strengths and differentiators and how can you amplify them? Are you in a position to acquire a competitor or their intellectual property, or would a partnership give you a competitive advantage?
- Profit shortfall: What is the profit margin of your various product lines, and could you review your product portfolio to focus on higher margin products? When you observe your teams working today, what level of waste or non-value-added work is there? Could that be eliminated with process redesign?
- Out of control expenses: Where are your costs and how do they compare to your budget? Are your teams spending money unnecessarily? Are there alternative approaches, tools, or solutions that could increase efficiency and reduce spending? Are your COGS (Cost of Goods Sold) or gross margins in line with benchmarks? Are your overhead costs in line with benchmarks?
- Lack of Productivity: What gets in the way of your team working at its most productive level? What business problems do you notice that you could solve that prevent rework or extra steps? What other waste or non-value-added work could be eliminated? What technology could you add that would make your teams’ jobs easier?
- Skill and experience gaps: Could your problems be solved with more experienced talent? Which roles and desired skillsets would be beneficial? How well do you document “standard work” to capture the best-known ways to do various jobs? How well do you train your team? Do you have adequate cross-training of your team members so that all jobs can be completed, even when team members are absent?
- Disengaged employees or a damaged culture: What are the desired core values in your company, and how well are they in place today? What motivates and excites your team members? What are the root causes for low morale or motivation? How could you better support your team members?
A Peek Behind the Curtain of Win’s Approach to Business Diagnostics
Some consultants may want to run a business diagnostic over the course of a single workday. We’ve even had clients ask us to fit the work into several hours. While it can be possible to conduct a high-level business diagnostic on one small area over the course of one day (we call this the “Rapid Discovery”), we recommend scheduling a series of sessions across several days to go deeper, cover more ground, and to work out strategies and next steps.
We summarise our consulting approach as: Discover ~ Develop ~ Deliver. We find that all three phases are necessary to optimize your performance and maximize your results. Here is a glimpse into our thought process each step of the way:
Phase One: Discover
Running a solid business diagnostic is all about the art of asking thoughtful, open-ended questions. Based on our experience, we are naturally inquisitive as we guide you through the process. These organic questions will spark new ideas and conversation. When this is done correctly, you’ll see your team member’s eyes open up wider – Quite Literally – and say, “Why didn’t we ask ourselves that before?”
When we start the Discover phase, we ask our clients, “What’s the one most important thing that you want to do or change this month, this quarter, or this year?” Once they’ve identified their #1 goal, we recommend that they assemble a team of creative, open-minded, and action-oriented colleagues to participate in the business diagnostic process.
Prior to our first meeting with the entire team, we help to set expectations with the leaders to enter this process with an open mind. Clients can quickly slip into denial when they don’t like what the facts and observations show them, but everything we share – good, bad and ugly – can be tied to a better outcome.
It’s also essential to welcome any and all ideas throughout this process. This mindset is essential because the quickest way to kill innovation is through criticism. The old adage, “there’s no such thing as a bad idea” really applies to this exercise.
As we guide clients through this first Discover phase, we ask the group questions like these:
- Why did you pick this initiative or the problem that we want to solve?
- How did it become a problem?
- If aspects of your current approach are working, why are they working?
- Do you need to review metrics, data, or first-person insights to get to the root cause of the issue?
Phase Two: Develop
In the next stage, we help clients outline solutions to the problem or problems that they identified in the Discover phase. At this point in the process, clients might have clarity about the precise next steps to follow, or they might only have the goal and first step clear. When this is the case, we help them establish a series of “check” points, and follow “Plan~Do~Check~Act” (PDCA) cycles. This helps them frequently reassess, apply what they learn, and refocus their team on the highest leverage actions.
In the Develop phase, we ask the team questions like:
- What are possible solutions to the problem that we identified in the Discover phase?
- Which ones seem most plausible or achievable, and why?
- Why are you excited about this particular solution?
- Do you need metrics, data, or first-person insights to confirm our thinking?
Phase Three: Deliver
This next and final phase can be the most challenging because it’s where the execution begins for our clients, but it’s also the most exciting. It’s all about delivering results, implementing the solutions, and executing on plans. Here are the types of questions that we might ask in the Deliver phase:
- What do you think might happen if we test this scenario in real life?
- What resources (budget, people, etc.) might you free up with this solution?
- What are the steps you can take to implement that solution?
- Who can take ownership of each step?
- How will you know that the solution is working? What KPIs or metrics will you need to track?
We ask clients to give their teams the autonomy and resources they need to create change. Internal culture might need to shift as a result of the business diagnostic process. That’s why it’s essential that leaders and managers support their teams and celebrate with them throughout these accomplishments.
Recent Problem Statements and Solution Examples:
Is There More Opportunity for Improvement?
We recently worked with a manufacturing client that was a spin-off from a company that was known for its operating system. They wanted to know how well the operations were running today and how much opportunity there was for improvement. They were not broken; they wanted to get better. We studied the processes, observed the team members building the product, and conducted a variety of analyses. We discovered that they still have over 30% improvement in their productivity for the area studied which, when combined with the other areas, added to a few million dollars of profit they didn’t know they had.
How Can We Increase Our Volumes?
This is a common question we are asked, probably because when your production volumes are pumping, a lot of other problems seem to go away, including your profit shortfalls! In one recent example, the company’s location was producing only about 60% of the target, which hurt profit and also created a space problem, as raw material inventory ordered by the supply chain group was coming into the building faster than it was shipping out as finished goods to customers. This, of course, suggests a supply chain problem, which then required us to take a deeper look into that as well. By the way, since conducting the business diagnostic this location is now producing at record levels.
Where Is My Supply Chain Broken?
These days, everyone seems to have challenges in their supply chains! We recently helped a proactive company find a better way to manage their international sourcing and logistics to improve their service and reduce costs in the process.
How Can We Work Better as a Team?
Leader and team effectiveness is one area that every company can take a closer look at. What if you could review analytical reports to understand your own strengths and weaknesses better, and have visibility to the preferences and work styles of the other members of your team? Imagine that you have an analytical way to look at these areas for you and your team. Just how much more impact could you and your team could have? Could you come closer to reaching your company and team goals AND simultaneously achieve higher personal satisfaction? This is one area we love to jump into, as it ALSO helps all the other business results.
What happens if you don’t conduct a business diagnostic?
You can probably answer this question yourself. Think of a time when you got excited, dove in, and implemented a process improvement or a sales or marketing strategy with rapid speed, relying on your inherent entrepreneurial spirit or drive to “Get-R-Done”. Did you hit roadblocks weeks or months later? Did you waste financial and human resources on the effort? Maybe you even lost customers? If you have a laundry list of regrets when you think about that particular initiative, think about what would have happened if you partnered with a consultant to run a business diagnostic exercise beforehand.
The business improvement process that we follow forces our clients to take the time to think, and not just “do”. They create a solid foundation of information, which helps them develop realistic strategies and goals, as well as clear, actionable next steps to solve their business challenges.
The other thing that happens if you don’t conduct a business diagnostic is… NOTHING! If you don’t conduct detailed business analyses, you won’t know your team’s full potential. You could be missing out on improved performance levels or financial benefits. As a result, you probably won’t have the necessary information to launch new improvement initiatives.
For more insights from our team, please visit our podcast page here and select season four episode eight (Click HERE), or, if you want to discuss more 1on1, feel free to schedule a complementary consultation with a member of our team by clicking on this link: https://go.oncehub.com/Consultation30
Leave A Comment