Every small business owner should focus on what the customer values.
Your Business Professor was struggling to manage my part of a $200 million dollar project at an All-Staff Meeting. There were whispers between my directors and some of their back-benching assistants. Something was odd about their conversations. Their language was off-kilter.
In hushed tones I heard, client specs … I stopped. Were they talking about – me?
I looked at the very well-dressed attendees and played a hunch.
“If your paycheck does not have my company’s name on it,” I asked, “Please indicate by raising your hand.”
Two-thirds of my “team” were outside consultants.
I got mad. For no reason. I wanted control-control-control of everything, everywhere.
I thought that I had to be “hands on.” “The Old Man In Charge.” “The Source” of all wisdom and to be the giver of directions. I was somewhat confident about my authority over the consultants and their far-flung staff. But I feared that my influence would not extend outside of that conference room. I was, of course, an amateur manager. And insecure.
But I would learn. I would start by becoming an (out)sourcer’s apprentice. I had to learn what was important and what was less so. Some parts of my business deserved more of my immediate attention than others.
Entrepreneur Richard Koch writes on this discernment using Pareto’s Principle:
“Unless we have numbers or 80/20 Thinking to guide us, most things always appear more important than the few things that are actually more important.
Even if we accept the point in our minds, it is difficult to make the next hop to focused action. Keep the “vital few” in the forefront of your brain. And keep reviewing whether you are spending more time and effort on the vital few rather than the trivial many.” (Koch 1998)
Author Andrea Gabor recounts the story of Jack Welch, former GE CEO, in “The Capitalist Philosophers.” Welch speaks of the difference between the ‘critical’ and ‘core’ parts of a business:
“In the late 1980’s, during a period of intense competitive ferment, [Peter] Drucker was summoned back to GE …
“Make sure that your back room is their front room,” recalls Welch. It was a statement that helped define Welch’s approach to a wave of outsourcing.
“In other words, don’t you do guard services at your plant. Get someone who specializes in guard services” to do them for you. Get rid of in-house printing, in-house conferences services, any business than isn’t the core of your focus.
Explains Welch, “[Drucker] made it very clear what a waste” it was to be in marginal activities where, inevitably, GE would put its “weakest people.” (Gabor 2000)
(I advise students to only work in the core of a business because that is where the owner is going to put his best people.)
How does the small business owner determine the difference between the core of a business from the merely critical component?
The core of any company is what the customer walks away with after dealing with your small business. Critical functions support the core.
The non-core, critical parts of your business should be delegated to outside companies. For example, payroll is critical to any business, but it is usually a back-office role. Anita Campbell, the Founder, CEO and Publisher of Small Business Trends, suggests that this is a function that should be outsourced. She outlines three reasons:
- It frees up time and resources to focus more on your core business.
- It gives you access to more technology and expertise to perform payroll well.
- It reduces costs and risks.
Outsourcing can be more efficient (faster, better, cheaper) and effective (advances organizational goals).
This is an opportunity for small business creation. If your passion is lawn care service then create a landscape business. Do not lead a grounds maintenance operation at an accounting firm.
If your passion is bookkeeping, then build a bookkeeping firm. Do not manage the back office bookkeeping at a lawn care company.
Core for one company is critical at another.
Critical at one company is core for another.
The focused CEO cares about core. Because core is what the customer values, it is of first importance. ‘Critical’ is an unfocused blur of support units.
My project team was a majority of outsourced talent and these consultants were then doing their own outsourcing. Seamlessly (to me), the consulting firms were sub-sub-contracting downstream to the Indian sub-continent. Or Kansas? I didn’t know.
And it didn’t matter. The service was Fast, High Quality and Less Expensive.
I majored in the minors and minored in the majors worrying about issues that would not affect what the customer needed.
I stopped my madness. I was getting my core needs met. The customers were delighted. The consultants and all those non-core, critical tasks were getting done in other time zones.
I didn’t need to micromanage and over-control competent staff. I didn’t need to be everywhere and to do everything. My team and the various consultants were able to get my project done on time and on budget. Which was more than this amateur deserved.
Outsource Photo via Shutterstock
Source: Small Business Trends