[BLOG] Dick Borsboom Column: Accelerating the success of your company
A companies’ success is often founded on its market position, product or service they provide and a near perfect execution.
The achieved market position is a result of sound strategic analysis and daring moves (investment) as well as relentless implementation of strategic growth plans to get to that point. It is by definition preferable to be number 1 or number 2 in your chosen market.
The product or service and its perceived value in the market place determine the potential to run a profitable business.
I like to expand a lot on the notion of near perfect execution and what it specifically means for companies operating in Africa.
What is needed for a perfect execution? I will mention a number of ingredients:
1) Clear line of sight. Do the employees know what the company stands for? Are they familiar with the goals and values of the company? Is there consistency in the messages given from the top?
2) Authority and Accountability. Is the organization correctly structured in the sense of who has decision authority and carries accountability for individual actions, departments and profit and loss account?
3) Transparency. Is the accounting function turning out the clear, complete and recent information? This includes not only historical accounts but also forecasts, cash flow calculation, analysis of sales, gross profit margins and cost.
4) Operational Excellence. Is the organization constantly looking for improvement in processes and procedures?
5) Employee engagement. Are employees in general happy and motivated to work for their company beyond the need of earning a living for themselves and family?
6) Sense of urgency. Is there time necessary to process a transaction, get a decision or any other action optimized?
Of course any of you can think of a few more ingredients which contribute to perfect execution. I just choose to highlight these as I have the impression that many of the companies active in Africa fall short in these categories.
1) Clear line of sight. It is more important that internally your employees understand why decisions are made, which strategic direction is chosen, why certain employees are promoted and others not than the effort put into external communication. Every employee should be able to answer following questions: what does the company stand for? What do we sell? How do we make money? How can I contribute to the success of my company? Who do I report to? Who is giving, in regular intervals, information on how the company is doing and how a department can contribute to strong execution?
So far I have not yet seen a company in Africa that is really strong in this. It is probably a result of many companies not fully appreciating that the employees and their actions are the key to success.
2) Authority and Accountability. Any company of a certain size needs a clear organization chart, clearly defined authority levels and with that corresponding accountability. Many companies in Africa are still young and led by the founder(s). This gives often the buzz of dynamism and fast decision making, but is less conducive to clear and predictable structures. You will notice that in companies without clear authority levels and accountability, the entrepreneur (founder of the company) is indispensable. Without him or her, the company will quickly crumble as no one is trained to make the necessary decisions.
3) Transparency. Africa is known in the world as the continent where deadlines are optional. End of this week does not mean anything. Next week a new week starts and that one has also an end. Old information is useless information. There is a severe lack in accounting and finance leadership skills on the entire continent. For near perfect execution it is very important that the executive who needs to decide knows where he/she is, what the consequences of the decision might be and which alternatives are available.
4) Operational excellence. If a company embraces the notion of operational excellence, initiatives are started to constantly improve internal processes and procedures, reduce waste, and become more efficient. Techniques in the area of operational excellence are for instance six sigma and lean. Operational excellence techniques so beautifully applied in companies in the mature markets, with a goal to increase productivity, are hardly noticeable in African companies. This could be since most companies would describe themselves as fast growing and not want to be hampered by bureaucracy. Operational excellence is not bureaucracy, it is the entirety of tools to analyze and improve business processes.
5) Employee engagement. You can’t order an individual employee to be engaged. Truly engaged employees are interested in the company and its success. They are informed and not afraid to speak their mind. They will be reluctant to leave the company (even if offered a higher salary) as they know that they can do something useful. In the past I could clearly see a correlation between engaged employees and profitability. The more engaged an employee is the better the interaction with customers, be it internal or external. In general I have observed that the majority of the workforce in Africa is not engaged; they only want to do the minimum for a maximum salary. These kinds of employees will not significantly contribute to the success of a company.
6) Sense of urgency. Maybe it is the temperature or road infrastructure but everything seems so slow. Productivity would go up in leaps if management and workforce would treat everything as urgent.
Regional Chief Financial Officer,
Dick Borsboom is a columnist on Africa Business Communities
