Velocity and Hidden Profitability
From a previous post you may know that there are three components to your business that produce the direction and speed needed to generate velocity. They are leadership, people, and systems. Leadership creates direction, while people and systems generate speed.
You may also have read the post where I described how weaknesses in any of these three components can reduce business velocity.
In the next few posts I’m going to dive deeper into business velocity and specifically address the issue of hidden profitability.
Today I’ll discuss one area where hidden profitability can be remedied in the leadership component, short-term changes in direction.
Short-term Changes in Direction
Short-term changes in direction are part of life in business as variations occur in your company, industry, and customer space. Smart CEOs know how to make the right changes without adversely impacting the company’s strategic direction or core values.
Short-term changes in direction can be taking advantage of new situations, such as when a competitor goes out of business, a new acquisition candidate appears, or a talented employee becomes available to you.
These changes can also relate to less positive events, such as increasing fuel prices for a transportation company, or higher costs of money for financial institutions. The loss of a key employee or the breakdown of a major system would also fall into this category.
- Failing to make appropriate adjustments can lead to missed opportunities, and that creates hidden profitability.
- Having a communication system in place as well as a good decision-making methodology will help keep you aware of the changes that could be made as well as increase the likelihood that you will make the right decisions.
Here are a few real life examples of short-term direction changes made to salvage difficult situations:
- Two of a client’s best employees came in at the end of the day and announced one of them had to quit because they were dating. My client had no clue this was coming, and at this point his business was operating smoothly. He had to make some quick adjustments to maintain the operation’s level of service while finding a replacement for the departing employee.
- In a preschool my wife and I owned the state government changed its tuition voucher policy without letting us know, causing us to lose 40% of our revenue in 30 days. Needless to say we had to make short-term changes in marketing and personnel, but we did not compromise our strategic direction or core value.
- How do you become aware of the short-term changes you need to make?
- What criteria do you use to evaluate short-term changes in direction?
- What short-terms changes do you need to make?
- How do you now you need to make them?
- What’s the right way to make them without compromising your strategic direction and core values?
- A more detailed discussion on hidden profitability and its impact on velocity is available if you desire to read further.
Free Velocity and Hidden Profitability Assessment
CEOs of qualified companies can receive a free 60 minute velocity and hidden profitability assessment. This could be just what you need to more tightly focus your direction, increase your speed, and have an amazing year. Call 479.263.0774 to see if you qualify.
Scott McClymonds blends strategy, insights, and execution to help CEOs think faster, lead better, and win bigger. He is an expert at creating business velocity and converting hidden profitability into real profits. Scott can be reached at 479.263.0774, [email protected], linkedin.com/in/scottmcclymonds, or @ScottMcClymonds.