By Jim Tompkins, CEO, Tompkins Associates
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Hello, this is Jim Tompkins, the CEO of Tompkins Associates and Tompkins International back with you today for the 2nd podcast in our 10-part series on Profitable Growth. With us today is Bruce Tompkins, the Executive Director of the Tompkins Supply Chain Consortium. Bruce will be discussing how to enhance your organization’s focus and how to position yourself to be ready to support profitable growth.
Jim:
Bruce, getting an organization focused on any goal, but especially something as all encompassing as profitable growth is a real challenge. How would you get started with the organization?
Bruce:
Thanks Jim. First and foremost you have to make sure everyone in the organization understands what profitable growth means and how it is achieved. Not everyone in an area is a finance major and understands the relationships of the profitable growth concept. It is critical to break profitable growth into its component parts and make sure people really understand it.
Profitable growth is not just about more revenue, or cutting all costs. Nor is it spending money on as many projects as possible. It is about growing revenue, controlling costs and doing it with sound, logical investment. People tend to focus on one aspect or another, but they must see the whole picture.
Jim:
What are the key actions leaders can take to get their organization to focus on profitable growth as part of their culture, especially if that culture does not exist today?
Bruce:
One important, and fairly obvious, thing to do is to make profitable growth a part of everyone’s daily job. Managers must figure out how to get everyone contributing on a daily basis to improve what they can influence and make the contributions where they can. Contributions can come from improved products, cost reduction ideas, supply chain improvements, process improvements, customer and supplier interactions, pricing and promotions, and on and on. Anywhere revenue, costs and spending exists.
A second key task of leaders is to defuse culture and historical issues that take energy away from a profitable growth objective. Talk to people, ask and answer questions, respond to rumors and push for peoples understanding of what profitable growth can mean to everyone. Failure to get out in front of ‘old baggage’ will cause a loss of focus and energy which leaders can’t afford.
An important part of doing this is to look for ways to do 'more with the resources available.’ Focus on priorities that are drivers of profitable growth with the people that you have. Don’t turn to a cut, cut, cut, mentality or your gains will fade away and not be sustainable. I think one of the important things about all of this is that it is not something you do over the short term. It is a long term, and a fairly sizeable, task. You want to make sure that whatever you do is sustainable.
Jim:
What does your experience tell you about how organizations react to being asked to possibly go beyond the scope of their current jobs as they support the ideals of profitable growth?
Bruce:
My experience is that people react very positively when given an opportunity to contribute to a higher level company goal. They feel that they are more valuable to the company and more valued by the company. This kind of focus can really energize people to contribute even if they are not always in a position to contribute on major company level initiatives. Care must be taken to manage this initiative in such a way as to bring out the best in people as they do their daily jobs and make decisions.
Jim:
How can you tell if your organization is ready, willing and able to support a plan of profitable growth?
Bruce:
This is definitely a difficult question to answer. It is like answering the question “How can you tell when a young couple is ready to have children?” There are a lot of factors that come into play, and I believe that an organization may be ready when they understand the importance of changing processes and practices to get better results. There must be an attitude of continuous improvement with the ultimate objective being to grow the business's profitability.
I think the organization must believe in, and trust, their leadersship. This is necessary for everyone to benefit. You can also tell if the organization is ready when they have a real spirit of teamwork and thus can help one another. No matter how enthusiastic one person, or one group, or one department is, it takes everyone to move the needle on a profitable growth initiative in a positive direction. It is a very challenging and all encompassing thing, so it takes everyone’s support and guidance to make it happen.
Jim:
This is my last question Bruce. Measuring the impact of the organization's, and people's, contribution to profitable growth is not easy to do. What suggestions do you have to show the organization progress that is being made over time and how their efforts are playing a part in the performance of the company?
Bruce:
First of all it takes some time, so there must be some degree of patience and assumptions that efforts are paying off. I would say the most important things to do are:
One subject I have stayed clear from thus far is incentives. In order for the organization to fully support an over-arching goal like profitable growth, there has to be consideration for rewards and recognition. I do not believe that incentives are everything, but they must be considered within the context of the culture of the organization in order for them to be effective.
Jim, thanks for letting me share my experience on the topic of profitable growth. Back to you.
Jim:
Bruce, thank you for being with us today, we really appreciate it. Great input for our listeners. I look forward to our listeners joining me again in two weeks as we welcome back Greg Hazlett, a Principal in our Global Supply Chain Services group as he tackles the subject of how to enhance solution selling for profitable growth. I look forward to speaking to you again real soon.
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