3 reasons to build your growth strategy on processes and KPI
When you lay down your company's growth strategy, it is crucial to include your internal processes and KPIs, if you want to secure a healthy and growing business.
" To finish first, first you have to finish."
Walk among the mechanics at the traditional 24 hours Le Mans endurance race and you will hear this line over and over.
The history pages of this legendary track are crowded with fast cars that outpace everyone, right up until the moment when something goes wrong, and they burst into flames. Or end their race behind closed garage doors with mechanical failure.
In 2000, the racing world was baffled as Audi claimed all three podium spots.
To get there, the highly skilled mechanics had to change the rear end of the car.
A process that would take any other team hours to finish, Audi's top trained mechanics executed in less than 4 minutes.
Since their first win, they have won 12 times, and this has made them the second-most winning team at Le Mans ever.
But what does Audi's motorsport history have to do with growth strategy, KPIs and processes?
If you are not into motorsport, bear with me. I will get to the point.
Processes and KPIs prepare your growth strategy for lasting success
What Audi's Le Means history teaches us, is that you can focus on making as much money as quickly as possible.
Maximum growth in minimal time.
But if you want your company to be a top professional organisation which doesn't just win once, but keep winning again and again and again, you must get your processes and KPIs right.
Audi had built a blisteringly fast car.
But even more crucial; They had optimised their internal processes and had made sure all the mechanics knew them by heart. And it was the processes that allowed them to change a critical gearbox faster than anybody else would have been able to.
This gave Audi the ability to react proactively to what would have been a catastrophe for any other team. And win the race while they did so.
Because the entire team knows all the team's processes, they have taken the trophy 12 times since then. And because they make key figure measurements on processes and continuously optimise them, no team has even been close to catching up with them since.
If you want your company to win in the long run, you need to form your growth strategy in much the same way. This is what separates the professionals from the amateurs.
Now, let's see how processes and key figures can help you do this.
1) You can control a predictable business through processes
Many years in leadership has taught me one thing:
Never gamble on anything new, if you don't know your baseline.
If you don't know every corner of your machine and you aren't familiar to how each part performs, you shouldn't head for new markets nor make expensive technological investments in your growth strategy.
Because you want to be able to control and redirect your company according to the challenges you always face in new business adventures.
The tools enabling you to control your company are KPIs and processes.
The KPIs are your sensors. They show you your company's performance. Like Audi's telemetry on their racecar, they let you see where the bolts have rattled loose and where the machine runs smoothly.
I myself, have placed our most important KPIs visibly to all in TimeLog's offices. Then the employees and I can see where we perform and where we need to improve.
The processes are your guarantee for being able to repeat and optimise whenever your KPIs are in the green. And to know how you can tune your company machine if they dive into yellow.
If you have yellow or red key figures, it is crucial to climb into the engine room and identify the broken parts. And that your team can change that gearbox within minutes.
The processes give you confidence that green KPIs are not just symptoms of luck. But are representations for something you can repeat over and over again.
The effect of properly tuned in KPIs and processes is that you can scale your business in your growth strategy.
2) With proper processes, you can deliver what you promise customers
In start-ups, stagnating or struggling companies, it's the lot of the leadership's to infuse optimism into the organisation.
An organisation that doesn't believe in itself can never be expected to deliver better results.
In most cases, new salespeople are brought in to create a turnaround and fill the order book. Subsequently, the optimism rises as new orders come in.
But the optimism is quickly replaced by frustration, both for you, your employees and your customer when you can't deliver what you sold.
If the rest of your company's processes can't keep up with your sales efforts, you quickly work your machine beyond capacity.
I know leaders who run their employees 70 hours a week in a desperate attempt to scale the mountain of work in front of them and catch up on overly optimistic deadlines. After some time, the employees break and the unstable situation is visible to both themselves and their customers.
Alternatively, if you run a company, where you know your delivery processes and have tuned them to perfection, you also know precisely what and how much your organisation can deliver.
Not just in a single manic sprint, but over and over again.
This predictability will be apparent to the customers when your sales consultants can present a properly formulated delivery plan. And they can close the deal assured that the organisation will deliver.
In TimeLog, we have spent the past year working intensely to optimise our delivery processes. And we will continue to optimise them in the future.
Because of this, we can now deliver complete and transparent delivery plans to our largest and most process demanding customers.
If you do business with large organisations, this becomes a sales argument in itself.
3) Without KPIs and processes, you become slow in a changing market
Most growth companies outgrow their mechanisms. They make a lot of money and have fun doing it. But when they reach a critical size, the boat starts to take in water.
The flexibility of the early days is suddenly turned into conflicts between your employees when they can't rely on clearly formulated processes in their work.
And because their KPI framework is not in place, they don't see the danger signs but instead keep their foot on the gas. Because nobody really knows what is going on in the organisation.
Then 2-3 of their biggest customers terminate their contracts, and the alarms go off. But then it is often too late.
In industries with a narrow profit margin, companies quickly learn this. But for companies thriving in a favourable market, this can go on.
Even in companies who have grown tremendously in size, this ignorance stays with them all the way to the stock market.
But then the market shifts and they have no clue what to do. Often, this leads to a frenzy of new hirings and layoffs without identifying the root cause for the lacking performance.
Meanwhile, the competitors have honed their delivery process and found a cost base matching the market.
And they walk away with all the buyers.
You want a supertanker with the flexibility of the start-up
In start-ups, colleagues and leadership sit close together. Everyone is continuously aware of precisely what's happening within the company.
This gives start-ups a degree of flexibility and readiness, you probably envy if you work in leadership in a large organisation.
But you can incorporate this in your company, despite your size.
If you incorporate carefully thought out KPIs from your junior consultants to the board, your sensors are in place. Then you can detect signs of a shift in the market long before it turns into a catastrophe and your customers leave.
Like Audi could see the weakness of the gearbox in the telemetry long before it broke.
If your organisation are in control of its processes and everybody know them by heart, you can react to KPIs, because you can identify the problems in the organisation. You know there are process owners, you know you can initiate corrective actions, and you can rest reassured they will be carried out.
Like Audi's mechanics could change the gearbox in less than four minutes, and the drivers could keep racing.
If you base your growth strategy on these principles, you prime your company to act with agility in the market even when you have multiplied your staff headcount.
Year after year success in a tough field
Following Audi's first victory, demands and rules have changed several times. New technologies have seen the light, and strong competitors have challenged the German team.
But because the team are on top of their measurements and processes, they have been continuously one step ahead of the game. And always ahead of the competitors.
If you use the same principles in your growth strategy, you will reach your targets — year after year after year.
See how process-optimised companies perform compared to average in the SPI Benchmark 2019. You get in-depth insights into 160 KPIs in 622 international companies. If the 230-page benchmark is a bit much for you, we have made an accessible, digestible Executive Summary, which sums up the most critical KPIs and tendencies.