Chapter 8: Organisation and Dependencies

Continuing with the chapters of the“10 foundations of business success”, an excellent very practical book by my friend and colleague Guy Hamilton.

If you missed any of the articles in the topic, see links below

Series Intro – 10 Foundations of Business Success

Chapter 1: Market Segmentation Part 1

Chapter 1: Market Segmentation Part 2 – The Steps

Chapter 2: Customer Needs – You only have a business if a customer wants to buy your products.

Chapter 3: Value Propositions – What a customer perceives as good value is all that matters. A business view of value does not count.

Chapter 4: Customer Experiences – When a customer really engages with a product or service they become a passionate advocate for it. This is at the heart of repeat or referred business.

Chapter 5: Metrics and Performance Management – What gets measured gets done. It is as simple as that!

Chapter 6: Dealing with “the Competition” – If managed well, competition is fuel for a vibrant business with a continuing right to win.

Chapter 7: Tasks, Accountabilities and Competencies – Good leadership often is no more than making sure everyone clearly understands their role, their tasks and where they fit in the big picture.

Today, I bring to you, the 8th Chapter: Organisation and Dependencies – There is a direct link between running a joined-up business and good financial outcomes.

With a good business plan in place and key tasks identified, the next step is to consider whether your wider organisation, and the people in it, are fit for purpose and can deliver the required results.

Just as legacy business processes can create inefficiencies when not adapted to a new business model, an organisational structure that worked well in the past may not be efficient for a new business strategy.

Let’s be very clear. By organisational structure we are not referring to a chart defining who does what, with black and white reporting lines. The whole point of a good organisational structure is to group together people and resources in a way that delivers the best joined-up outcome for a business.

A significant problem often found in small businesses is the lack of clarity as to who does what, and who is responsible for delivering what. Roles and responsibilities are often blurred. An organisation chart is about organising the people for and resources for the best commercial outcomes.

When setting tasks and responsibilities for any business there will be a dependency on different parts of a business delivering their piece of the puzzle on time and to the required standard. These dependencies can become points of failure if they are not managed well. So here are some rules to help focus thinking in this key area of managing successful business.

RULE 1. Base your organisational thinking, structure and resource allocations on your business objectives.

RULE 2. Identify key dependencies and quantity associated risk/s.

RULE 3. Build an organisation that manages dependencies effectively.

RULE 4. Assign every organisational dependency to an accountable party who “owns” the risk.

RULE 5. At every significant business chance, re-assess identified dependencies, accountabilities and contingency plans.

RULE 6. Focus on external dependencies, as they are more difficult to manage and control than internal ones.

The Steps:

There are a number of very simple measures that can be used to better organise people and resources and manage material dependencies.

1.   Start with your business objectives and assign resources.

2.   Consider how best to align resources in your business to deliver the customer experiences and value promises you have committed to.

3.   Ask your staff and external suppliers where they think a process can be improved and what organisational issues are getting in the way.

4.   Identify and quantify all material dependency risks in terms of the likely loss in sales volumes or increase in costs.

5.   Alongside any legal services agreement, draw up a clear record that defines in simple terms the basis of the supply agreement, key success factors or deliverables that must be met and the commercial outcome required.

6.   Make sure a statement of work has tangible measures and set clear expectations that must be met.

7.   During contract negotiations make sure there has been a robust discussion around “what if…” scenarios.

8.   Undertake regular review meetings to assess actual performance against your tangible measures.

A key discipline in any growth business is pragmatic delegation of responsibilities through an organisational structure, defining levels of authority to ensure bigger issues get referred up the line, while smaller and day-to-day issues are handled by the person responsible for the related task.