Recapping the Importance of Business Velocity
Earlier this this week I explained that business velocity is important because it determines how fast a CEO will achieve his or her goals. I defined velocity in an equation where Direction + Speed = Velocity.
I said a business develops velocity through its primary components of leadership, people, and systems. Leadership supplies direction while speed is supplied by employees and the systems they use.
One thing to keep in mind is that when I use the term “systems” I am not just referring to technology. but rather, all the processes of the business used to perform work and satisfy customers.
Because velocity is dependent on all the components of a business working together in harmony, it is a metric that can be used the measure the overall health of a business. As such, the primary job of a CEO is to build velocity and eliminate elements holding it back.
In this article I’m going to briefly cover how weaknesses in any of the three business components adversely affect velocity. No doubt you have experienced one or more of these in your career.
Clear Direction, Good People, Weak Systems
This leads to frustration in both management and employees as the proper procedures and operating systems are lacking. This situation can even arise when departments or divisions that are dependent upon each other fail to communicate or work well together.
Such as the case with a large financial client of mine. They had talented people and reasonable direction, but their IT division was a major bottleneck that delayed many innovations that would have saved time and enhanced the customer experience. That division had good people as well but lacked the systems and procedures to implement needed improvements. Unfortunately this IT bottleneck led to a demoralized workforce as employees had to rely on antiquated processes.
Clear Direction, Good Systems, Weak People
Situations such as these lead to underperformance as insufficient talent is present to take advantage of the direction and systems.
This problem occurred in a division I managed for a bank. We knew what we wanted to achieve, and we had just acquired an outstanding system to take us where we wanted to go. Unfortunately the operational requirements of the system outstripped the technical capabilities of our people. We were left vulnerable and underperforming until we outsourced the technology to our vendor.
Good Systems, Good People, Weak Direction
This leads to a disinterested workforce that just shows up to collect their checks. Good employees will soon migrate away to look for more interesting challenges.
One of my clients provided specialized financing for the healthcare industry. They had strong lenders and underwriters as well as a good system to fund the loans. However, they lacked the direction in leadership to keep the team focused beyond the next transaction. The manager was so focused on doing one deal after another that he failed to motivate the employees with a longer term vision. As a result, the work seemed purposeless beyond a paycheck, employees lost interest, and the division folded.
Time for You to Look for Drags on Your Company’s Velocity
- What is your long & short-term direction? Can you clearly articulate them? How are you communicating direction to your team?
- Does your team know your direction? Can they articulate it as well as you can? Do they know actions to take on a daily basis to speedily and effectively go in your direction?
- How effective are your systems, processes, and inter-division relationships? Are you coaching them for alignment? Are you measuring appropriate performance? Are you challenging people to cut the time needed to perform tasks in half? Do your systems delight customers?
- Have you taken stock of your talent requirements to ensure they meet the needs of your organization? What talent or skill are you lacking, and how should you acquire it? Training? New hires?
- Which of the three components of your business…leadership, people, systems…is creating the greatest drag on velocity and needs your attention now?
Free Velocity Assessment
CEOs of qualified companies can receive a free 60 minute velocity 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.