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The Circle of Business Success
This process is nothing new; large and small companies have been using it for years. Often called “Closed Loop Process” for continuous improvement, this system is easy to consider, but takes determination, dedication and a well-respected senior leader to “champion the cause” to be a valuable tool. Otherwise, it is all too easy to overlook or take for granted. Don’t let its simplicity fool you. It packs a serious punch.
Here are some things to consider.
Q. Why use a closed loop E-P-E cycle?
A. To gain increased efficiencies in forecasting, funds allocation, planning and continual improvement in sales, operations, marketing, promotions and financial performance.
Through this process, every aspect of business should be central to the organization. What I mean is that everything should be available to the entire planning team, from marketing and sales to operations, finance and senior leadership. A single marketing calendar for promotions, sales strategic planning so that it can coincide with marketing, finance to ensure that funds will be available to support the sales and marketing activities and operations to ensure that staffing levels, raw materials and resources are on hand and ready for production. The entire supply chain is affected, and therefore should be an active participant of the “Circle” team.
Q. Is one of the stages the absolute most important aspect of the process?
A. Undoubtedly, the continual evaluative portion is the hinge pin to the closed loop cycle, but it is useless if not used to produce constant improvement, enhanced and informed planning, and therefore feeding the continual evaluation stage.
Effective evaluation is only possible when published, formal policies and guidelines help clarify and support the planning process. Clear guidelines and accounting practices will help ensure that the process leads to positive outcomes from the planning and execution. Not reconciling the business with past performance will likely create a circle of repeated lack of success. The impact of an incorrect allocation of resources will have a detrimental effect on execution and effectiveness of any strategy in the execution stage. Past performance is a clear indicator of how effective the planning and execution of past events or activities actually were. Ongoing analysis of operations, sales, field service deficiencies and the like will help to create a bit of momentum within the organization, and is therefore the most critical aspect of the three phase circle of business success process.
Planning is most fruitful when the information gleaned from poignant evaluation; when every person involved in the planning process is in agreement. Through centralized information sharing, candid input from the field as well as executive management, effective planning stands a better chance at successful execution. Cross-functionality of information is a difficult step without some sort of centralized information share system. That’s why integrated management systems software is such a valuable tool for mid-size and large enterprises.
What can the entrepreneur and emerging enterprise do without investing ten’s of thousands of dollars in an information system? That is a question that is not easily answered. Some companies use a series of spreadsheets for reporting, evaluation and cross-functional information sharing. Primitive tools are better than no tools, or flying by the seat of your pants, as oftentimes seems to be the accepted model.
Ensuring Effective Execution: It’s one of those vicious circles: if the planning stage is weak due to ineffective evaluation (or the lack thereof) the problems in execution will only get worse and more difficult to be managed. With centralized objectives, a thorough plan based on past performance and an eye toward continuous improvement, the execution phase can go smoothly. It will depend on the operations sense of professionalism, ability to adjust weakness identified “on the fly” and the ability to make the most of the other two phases.
Entrepreneurs and emerging enterprises can be every bit as effective using this process, with or without an integrated information system. The strength of leadership, the will of the champion and the active, positive involvement of other team members can create a winning atmosphere, a growing business, and a successful outcome, even in these difficult economic times.