Becoming Systematic,
NOT Bureaucratic:
A Roadmap for Avoiding the
Entrepreneurial Crisis
Ed Powers
Service Excellence Part...
About….Ed Powers
• 26 years in
operations, quality, sales, marketing, and
consulting
• 12 years at Hewlett-Packard
• Opera...
Hitting the “Wall”
START-UP

© 2011 Service Excellence Partners
Hitting the “Wall”
START-UP

INITIAL GROWTH

© 2011 Service Excellence Partners
Hitting the “Wall”
START-UP

CRISIS!

INITIAL GROWTH

~ 50 Employees
$1M-$5M Revenue

•
•
•
•

© 2011 Service Excellence P...
Examples

Sources: Edward Lowe Foundation; A. Davila, G. Foster, and N. Jia “Building
Sustainable High-Growth Startup Comp...
Causes
• Span of control exceeds Founders’ reach
• Degradation in
alignment, communication, and coordination
between group...
A Need for Structure
“The evidence in our study supports the
association between growth and the presence
of management sys...
Systematic vs. Bureaucratic
• Systematic
An approach that is well-ordered, repeatable, and
uses data and information so le...
The Challenge
Is it possible for companies to be systematic
without becoming bureaucratic?
YES! Provided senior executives...
Fundamentals for Success
• People
• Planning
• Execution
• Learning

© 2011 Service Excellence Partners
Fundamentals for Success
• People
• Planning
• Execution
• Learning

Jim Collins
Get the right people on the bus …
and the...
Fundamentals for Success
• People
• Planning
• Execution
• Learning

Jim Collins
Get the right people on the bus …
and the...
Fundamentals for Success
• People
• Planning
• Execution
• Learning

Jim Collins
Get the right people on the bus …
and the...
Fundamentals for Success
• People
• Planning
• Execution
• Learning

Jim Collins
Get the right people on the bus …
and the...
Strategic Management Systems
Leadership

Environmental
Awareness

Planning and
Review
Continuous
Improvement

System of Me...
Hendricks and Singhal Study
100%
90%
Award Winners

80%

Control Firms

Percent Change

70%
60%
50%

40%
30%
20%
10%
0%
Op...
Essential Practices
Practice

What it is

What it does

Value
Propositions

Refined statement of target
customers, benefit...
Example Dashboard
BUSINESS FUNDAMENTALS PROGRESS TABLE
Owner: Ed Powers
Key Bus. Process: Member Services

Revision: 4.0
T...
Essential Practices
Practice

What it is

What it does

Process
Improvement

Systematic problem solving
method (Lean, Six ...
Example Performance Management System
Position Requirements and Goals
Description
Company

Performance Review

Results
Fun...
What’s a Good Roadmap?

© 2011 Service Excellence Partners
Start-up Genome Project
• 2011 study of 3,200 start-ups
• UC Berkeley and Stanford
• 90% of start-ups fail, due primarily ...
Linkage to Start-up Genome Findings

Source: http://blog.startupcompass.co/tag/lean%20startup
© 2011 Service Excellence Pa...
Linkage to Start-up Genome Findings

Process
Management

Enterprise
Metrics

Value
Propositions

Value
Propositions
Source...
Typical Early Stage Roadmap

2. Financial Reporting

1. Business Plan

© 2011 Service Excellence Partners
Typical Early Stage Roadmap

3. Value Propositions

2. Financial Reporting

1. Business Plan

© 2011 Service Excellence Pa...
Typical Early Stage Roadmap
5. Hoshin
4. Enterprise Dashboards

3. Value Propositions

2. Financial Reporting

1. Business...
Typical Early Stage Roadmap
8. Leadership Process
7. Process Improvement
6. Process Management

5. Hoshin

4. Enterprise D...
Typical Early Stage Roadmap
11. Strategic Scenarios

10. Performance Management
9. Strategic Planning

8. Leadership Proce...
Prune the Tree

Less is More!

• Focus on fewer customer
segments
• Simplify your product
• Review no more than 10
metrics...
Ed Powers
Principal
Service Excellence Partners
ed@se-partners.com
970-235-0078

© 2011 Service Excellence Partners
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Becoming Systematic, NOT Bureaucratic: A Roadmap for Avoiding the Entrepreneurial Crisis

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Most start-ups face an entrepreneurial crisis when they reach about 50 employees. Becoming systematic, not bureaucratic, can avoid this crisis and accelerate early growth.

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Becoming Systematic, NOT Bureaucratic: A Roadmap for Avoiding the Entrepreneurial Crisis

  1. 1. Becoming Systematic, NOT Bureaucratic: A Roadmap for Avoiding the Entrepreneurial Crisis Ed Powers Service Excellence Partners Revised October 2013 © 2011 Service Excellence Partners
  2. 2. About….Ed Powers • 26 years in operations, quality, sales, marketing, and consulting • 12 years at Hewlett-Packard • Operations leadership in 5 early-stage companies and 3 start-ups • Examiner, Baldrige National Quality Award • Rocky Mountain Performance Excellence Examiner and board member • Lean Six Sigma Black Belt © 2011 Service Excellence Partners
  3. 3. Hitting the “Wall” START-UP © 2011 Service Excellence Partners
  4. 4. Hitting the “Wall” START-UP INITIAL GROWTH © 2011 Service Excellence Partners
  5. 5. Hitting the “Wall” START-UP CRISIS! INITIAL GROWTH ~ 50 Employees $1M-$5M Revenue • • • • © 2011 Service Excellence Partners Slower sales Key staff defections Quality and delivery issues Greater stress!
  6. 6. Examples Sources: Edward Lowe Foundation; A. Davila, G. Foster, and N. Jia “Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator” California Management Review, 459, May 2010 © 2011 Service Excellence Partners
  7. 7. Causes • Span of control exceeds Founders’ reach • Degradation in alignment, communication, and coordination between groups • Insufficient knowledge on how to grow and scale … leading to an entrepreneurial crisis Sources: Edward Lowe Foundation; A. Davila, G. Foster, and N. Jia “Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator” California Management Review, 459, May 2010 © 2011 Service Excellence Partners
  8. 8. A Need for Structure “The evidence in our study supports the association between growth and the presence of management systems… Having no systems (chaos) is as damaging to a company as having too many (bureaucracy); and startup companies more often suffer from the former rather than the latter.” Sources: A. Davila, G. Foster, and N. Jia “Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator” California Management Review, 459, May 2010 © 2011 Service Excellence Partners
  9. 9. Systematic vs. Bureaucratic • Systematic An approach that is well-ordered, repeatable, and uses data and information so learning is possible. • Bureaucratic A system of administration marked by officialism, red tape, and proliferation. Sources: “Criteria for Performance Excellence 2011-2012,” Baldrige Performance Excellence Program, NIST; Merriam-Webster (www.m-w.com) © 2011 Service Excellence Partners
  10. 10. The Challenge Is it possible for companies to be systematic without becoming bureaucratic? YES! Provided senior executives add just enough structure at the right time, right place, for the right reasons, and prune the system to keep proliferation at bay. © 2011 Service Excellence Partners
  11. 11. Fundamentals for Success • People • Planning • Execution • Learning © 2011 Service Excellence Partners
  12. 12. Fundamentals for Success • People • Planning • Execution • Learning Jim Collins Get the right people on the bus … and the wrong people off the bus. © 2011 Service Excellence Partners
  13. 13. Fundamentals for Success • People • Planning • Execution • Learning Jim Collins Get the right people on the bus … and the wrong people off the bus. Dwight D. Eisenhower Plans are nothing. Planning is everything. © 2011 Service Excellence Partners
  14. 14. Fundamentals for Success • People • Planning • Execution • Learning Jim Collins Get the right people on the bus … and the wrong people off the bus. Dwight D. Eisenhower Plans are nothing. Planning is everything. Larry Bossidy Execution is … rigorously discussing how’s and what’s, tenaciously following through, and ensuring accountability. © 2011 Service Excellence Partners
  15. 15. Fundamentals for Success • People • Planning • Execution • Learning Jim Collins Get the right people on the bus … and the wrong people off the bus. Dwight D. Eisenhower Plans are nothing. Planning is everything. Larry Bossidy Execution is … rigorously discussing how’s and what’s, tenaciously following through, and ensuring accountability. Peter Senge The only sustainable competitive advantage is an organization's ability to learn faster than the competition. © 2011 Service Excellence Partners
  16. 16. Strategic Management Systems Leadership Environmental Awareness Planning and Review Continuous Improvement System of Measures People Work Systems © 2011 Service Excellence Partners Results
  17. 17. Hendricks and Singhal Study 100% 90% Award Winners 80% Control Firms Percent Change 70% 60% 50% 40% 30% 20% 10% 0% Operating Income Sales Total Assets Employees Return on Sales Source: K. Hendricks and V. Singhal, “The Impact of Total Quality Management (TQM) on Financial Performance: Evidence from Quality Award Winners” DuPree College of Management, Georgia Institute of Technology, March, 2000 © 2011 Service Excellence Partners Return on Assets
  18. 18. Essential Practices Practice What it is What it does Value Propositions Refined statement of target customers, benefits, and costs/tradeoffs Sharpens and simplifies the product or service to the most important attributes to design, market, sell, and deliver Enterprise Dashboards Interlinked system of metrics for each manager Focuses management and staff on the most important activities and results Hoshin Kanri Japanese breakthrough planning, deployment, execution, and review system Focuses and aligns the entire organization on a short list of goals and strategies Process Management Definition and documentation of key workflows and their relationships to key metrics Uncovers disconnects and identifies improvement opportunities © 2011 Service Excellence Partners
  19. 19. Example Dashboard BUSINESS FUNDAMENTALS PROGRESS TABLE Owner: Ed Powers Key Bus. Process: Member Services Revision: 4.0 Target, Goal & Limits RED ITEM Review GREEN YELLOW 1.0 Delivery 1.1 30-DAY Overall Occupancy Monthly <65% 65-70% >70% 1.2 90-DAY Overall Occupancy Monthly <50% 50-60% >60% 1.3 Avg. Utilization (nts/cert yr) Quarterly <30 30-34 >34 1.4 Cancellation Rate Monthly <15% 15-20% >20% 2.0 Responsiveness 2.1 Monthly Escapes Workload (Calendar Year) Monthly <=240 241-300 >=301 2.2 Monthly Over-time Hours per planner Monthly <5 5-10 >10 3.0 Quality 3.1 Overall Satisfaction Monthly >4.75 4.5-4.75 <4.5 3.3 IRS Planner Scores Monthly >4.87 4.76-4.86 <4.76 3.4 Service Recovery Percentage Quarterly <2% 2-3% >3% 3.5 Service Excellence Scorecards Overall Monthly >90% 85-90% <85% Entity: Private Escapes Dept.: Operations Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 52% 65% 67% 58% 48% 62% 62% 62% 46% 60% 54% 52% 50% 53% 53% 45% 40% 40% 26.8 23.7 24.0 28% 21% 25% 15% 13% 14% 13% 11% 9% 45% 40% 179 212 241 200 190 216 237 230 3.25 5.18 5.25 7.50 3.56 5.54 8.85 3.7 Dec 53% 61% 12% 49% 49% 23.3 10% 205 3.44 210 1.25 224 4.85 219 3.15 4.70 4.83 4.78 4.80 4.81 4.81 4.82 4.79 4.82 4.84 4.93 4.96 4.95 4.95 4.94 4.93 4.95 4.95 2.1% 1.3% 2.1% 90% 92% 92% 88% 86% 91% 87% n/a 89% 4.86 4.97 4.87 4.94 0.8% 93% 4.85 4.95 93% Escapes1shared documentsOperations[Ops BFTs 2007.XLS]BFT A “Balanced Scorecard” comes from: • Financial and non-financial metrics • Leading and lagging indicators 19 © 2011 Service Excellence Partners 12% 93%
  20. 20. Essential Practices Practice What it is What it does Process Improvement Systematic problem solving method (Lean, Six Sigma, PDCA, etc.) Addresses root causes to ensure maximum results and permanent improvement Leadership Process Definition of the organization’s Mission, Vision, and Values Creates alignment and engagement throughout the rank and file Strategic Planning and Review Definition of 3-5 year goals, strategies, and major investments. Ensures the organization effectively manages long-term change Performance Management Three documents that define key tasks, outcomes, and continuous learning for all employees. Provides context, focus, and encourages learning and development Strategic Scenarios Listening posts and triggers to modify the strategic plan. Increases organizational agility by quickly responding to market shifts © 2011 Service Excellence Partners
  21. 21. Example Performance Management System Position Requirements and Goals Description Company Performance Review Results Function Individual Development Plan Objectives Tasks Timeline © 2011 Service Excellence Partners Strengths Opportunities
  22. 22. What’s a Good Roadmap? © 2011 Service Excellence Partners
  23. 23. Start-up Genome Project • 2011 study of 3,200 start-ups • UC Berkeley and Stanford • 90% of start-ups fail, due primarily to selfdestruction and not competition • Founders who learn are more successful • Marmer Stages define phases of development Source: M. Marmer, B.L. Herrmann , E. Dogrultan, R. Berman, “Start-up Genome Report Extra on Premature Scaling,” March, 2012 © 2011 Service Excellence Partners
  24. 24. Linkage to Start-up Genome Findings Source: http://blog.startupcompass.co/tag/lean%20startup © 2011 Service Excellence Partners
  25. 25. Linkage to Start-up Genome Findings Process Management Enterprise Metrics Value Propositions Value Propositions Source: http://blog.startupcompass.co/tag/lean%20startup © 2011 Service Excellence Partners
  26. 26. Typical Early Stage Roadmap 2. Financial Reporting 1. Business Plan © 2011 Service Excellence Partners
  27. 27. Typical Early Stage Roadmap 3. Value Propositions 2. Financial Reporting 1. Business Plan © 2011 Service Excellence Partners
  28. 28. Typical Early Stage Roadmap 5. Hoshin 4. Enterprise Dashboards 3. Value Propositions 2. Financial Reporting 1. Business Plan © 2011 Service Excellence Partners
  29. 29. Typical Early Stage Roadmap 8. Leadership Process 7. Process Improvement 6. Process Management 5. Hoshin 4. Enterprise Dashboards 3. Value Propositions 2. Financial Reporting 1. Business Plan © 2011 Service Excellence Partners
  30. 30. Typical Early Stage Roadmap 11. Strategic Scenarios 10. Performance Management 9. Strategic Planning 8. Leadership Process 7. Process Improvement 6. Process Management 5. Hoshin 4. Enterprise Dashboards 3. Value Propositions 2. Financial Reporting 1. Business Plan © 2011 Service Excellence Partners
  31. 31. Prune the Tree Less is More! • Focus on fewer customer segments • Simplify your product • Review no more than 10 metrics at any level • Pursue only one major breakthrough each year • Run the entire company on 10 pieces of paper • Send single page reports • Conduct no more than one standing meeting per week • Reduce sign-offs © 2011 Service Excellence Partners
  32. 32. Ed Powers Principal Service Excellence Partners ed@se-partners.com 970-235-0078 © 2011 Service Excellence Partners

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