Four traits of winning companies
Top-performing companies do a better job of listening to customers, are nimble in responding to change, find innovative ways to control costs and are good at getting employee buy-in on corporate values, according to an Ernst & Young survey of senior managers worldwide. Four CGMA designation holders offer insight into these traits.
1 Targeting and satisfying customer demand.
Top performers tend to seek new geographic markets for existing products and services and push harder to broaden existing lines into new customer segments. They also are more likely to buy competitors to increase market share.
Take Osborn International. The privately held US manufacturer makes industrial brushes. The company, which does business in Brazil, China, Singapore and several European countries, is setting its sights on India to tap the growth of the developing economy. Africa could follow.
To establish itself in a market, the company relies on its sales force to track customers’ likes, dislikes and demands, said Jeffrey Schad, CPA, CGMA, Osborn’s vice president of global finance. The information is used to improve existing products and develop new products that may cost more than the competition’s but last longer, allow for automation or are multifunctional. “We want to know what’s on a customer’s mind, what they are mad about, and how can we develop a new product that solves a customer’s problem,” he said.
2 Staying flexible and moving quickly.
Effective organisations respond wisely and rapidly to change. Oilflow Solutions, a UK company whose operations are in Canada, is one example. The venture-capital-backed company is developing an environmentally friendly technology to reduce oil viscosity. The technology is expected to generate the most revenue when applied to speed transportation in large oil pipelines, said Stephen Rue, ACMA, CGMA, Oilflow Solutions’ CFO. But this most lucrative option is also capital-intensive and will take years to commercialise.
The company needed cash to support operations without cutting R&D expenses. The solution was that a more moderate revenue source could be tapped quickly and inexpensively: individual well operators that could apply the technology to boost production of single oil wells.
Within a few weeks, a few of the company’s 25 employees programmed Excel tools that helped the sales team make their case with well operators, Rue said.
3 Maximising efficiencies effectively.
Effective organisations have a better understanding of what drives cost and what drives value. Having up-to-the-minute data on how your products and customers are behaving — and using it proactively — is key, said Brenda Morris, CPA, CGMA, the CFO of 5.11 Tactical, a US tactical apparel and gear company. “For a good executive team, it’s about analysis and understanding consumer trends, coming from a customer’s standpoint,” she said. “Do we see blips on the radar? And what do they mean?”
Aiding the effort are key performance indicators, which can be a mixture of standardised indicators applicable to any industry plus more tailored measures relevant to a specific industry. The key to mustering the data is good technology, such as business performance software, that can show changes in core indicators in real time.
While tight economic times may place a premium on having such systems, “it’s short-sighted to think that by not investing in making your business better that you will get ahead,” Morris said.
4 Making the value visible.
Top companies engage more than others with external stakeholders, and their management effectively communicates the company’s core values internally. “Without clear communication, employees couldn’t do their daily job,” said Jiake Brownbill, ACMA, CGMA, director of JK Brownbill Consulting in London. “If you don’t understand the company’s strategy, it’s difficult to implement it in your daily work.”
Companies have many options to break down often generally worded core values, such as “customers are key”, and make sure employees in sales, accounting or human relations know what that specifically means to each of their departments. Companies can publish information on internal websites, or have the CEO lead frequent conference calls or face-to-face meetings with employees and managers. Quarterly employee engagement surveys can help companies track how well employees understand information that is cascaded down the company hierarchy.
Once internal communications work well, Brownbill said, it’s easier for a company to engage with external stakeholders such as regulators, customers and investors.