Belief Formulas

Most of us as leaders and managers understand that business is about people.  With the right people, a clear and worthwhile aim and good leadership you can achieve anything.

How then can business be reduced to formulas?  More to the point, why would you want to do such a thing?

Well of course business is measured using formulas; profit margin, growth, return on investment, customer retention and so on.  Used with intelligence and insight as key performance indicators these measurements can drive action and improve life for business owners.

But that's not the kind of formula I'm talking about.  I'm thinking about meta-formulas, "belief formulas" that capture a belief about business.

Perhaps the most famous of these is the formula that links employee satisfaction to customer satisfaction to profitability explained by Heskett, Sasser and Schlesinger in "The Service Profit Chain".  There are data supporting this linkage but in essence it describes a way of managing a business based on beliefs about people.

The Scaleup Formula captures another belief; that owner-managed businesses all reach some revenue ceiling when the owner cannot find the hours to spin any more plates and for a business to grow beyond this point it must fundamentally change, and so must the owner.

Scalable businesses consist of repeatable processes operated by autonomous employees, with some kind of feedback and improvement loop using reviews.  The role of the business owner is to create and nurture this system, rather than being the person that makes all the decision and deals with all the problems.

The Scaleup Formula is:

Standardised processes * accountable employees * regular reviews = a scalable business

What are your belief formulas?

www.thescaleupformula.com


Comments

Post a Comment

Popular posts from this blog

It's about the management, stupid

Image
To paraphrase the famous US election slogan "It's about the economy, stupid.", research (1,2) has yet again shown that the most important factor in business performance is the quality of management. Not how much the company spends on technology. Not how much digital marketing they do. Not even how much is spent on R&D. Just how well the business is managed. Really simple, doable stuff.  A clear purpose.  A usable orgchart.  Useful job descriptions.  Repeatable written processes.  Measurement and regular review. None of these are difficult to do, although implementation does take time, determinationa and resilience on the part of the owner and there are some basic techniques to learn. If you would like to learn how to apply better management techniques to your business then take a look at this website . 1) What Drives Differences in Management Practices? Nicholas A. BloomErik BrynjolfssonLucia FosterRon JarminMegha PatnaikItay Saporta-EkstenJohn Van Reenen, A...
Read more

Scaling - gotta love the numbers

Image
There are two critical elements to running a scalable business:  People and Numbers. We know that a scalable business is one where the owner focuses on developing the capability, capacity and accountability of employees.  But you need numbers to do that. If you want to delegate properly you must delegate the responsibility for a business result - not a task.  To do this, you need a clear, agreed definition of success and this is almost always a number. If you want to develop employees you must develop their business understanding, commercial awareness and ability to plan.  All of these things require conversations and coaching based around numbers; what they should be, what they actually are and what needs to change to close the gap or improve. If you want employees to consistently succeed by achieving their number then what is delegated must be a repeatable, teachable, measurable process. Some business owners think applying numbers to managing employees will be ...
Read more

Do you even measure productivity?

Image
Is low productivity built-in to UK small businesses? One benefit claimed for Brexit was forcing UK business to address its woeful productivity.  Particularly in the SME sector our productivity is far worse than that of our competitors and there is a school of thought that says ready access to cheap labour contributed to this (although opinions vary of course – these are economists. In particular, countries such as France and Germany have had the same access to labour without it depressing their productivity in the same way). Be that as it may, many UK businesses have faced labour shortages and wage increases.  The news bulletins run interviews with under-pressure business owners, most of them saying: I cannot get the staff so I am limiting capacity and turnover I have had to raise wages to get or keep people and I can’t pass that on in prices I am paying higher wages but that doesn’t translate into more productivity The gist of these opinions (from albeit a tiny and edited sam...
Read more