As we continue to examine various concepts from our business growth and scaling methodology, the Structure of Success™, I would like to delve into where should one devote their innovation effort?
This decision is similar to how a person chooses to spend their time – there are better uses of their day, and less advantageous activities.
For instance, in your company you could develop an innovation involving how your receptionist takes and distributes messages. While it may improve your communication process, it is not something that is going to be a make-or-break factor in your company.
If you took that same amount of innovation effort and put it into significantly improving your sales closing process, you would most likely reap greater benefits.
You Want to Direct Your Focus
Well known speaker and author Tony Robbins said, “One reason so few of us achieve what we truly want is that we
never direct our focus; we never concentrate our power.”
You want to concentrate your innovation efforts in the most valuable areas of your company.
In my February Newsletter, we examined What Is the True Goal of Innovation?. We started with determining what a successful and thriving business looks like to you.
As we discussed in that newsletter, after you have established the intended destination of, and direction for, your company, you want to then reduce that to writing by creating a compelling Vision for your business. This action will enable you to consider, the next action, which is how do I use innovation to get there?
Determining Where to Target Your Organization’s Innovation Efforts
How do you determine where to target or direct your organization’s innovation efforts to achieve that Vision?
Developing a Strategic Plan may come to mind.
However, I have seen that a significant number of Strategic Plans lack a definition of the things a business must do to achieve its Vision. These “must do” items are called your Critical Success Factors.
By identifying and addressing the Critical Success Factors for your company, you ensure you have a comprehensive and executable Strategy that will enable the achievement of the Vision for your company.
Your Critical Success Factors are then used to target your innovation efforts.
A “Golden” Example of Focused Innovation
A good example of this is Georgia based Goldens’ Foundry and Machine Company, which has consistently focused on product innovation as one of its Critical Success Factors.
Started in 1882, during its almost 150 years it has regularly employed innovation to reinvent it’s products and itself.
It started out serving both a booming textile industry in Georgia with machinery, and the farming community with sugar cane mills and syrup kettles. During World War II they made steering engines for ships, and after the war they concentrated on the construction, agriculture and transportation industries.
Most recently, they added consumer products to their product line.
Their consumer products innovation efforts started several years ago when their foundry manager was talking about how he had broken his ceramic kamado grill. “That was our light bulb moment,” said George Boyd, Jr. one of the owners. “We could make a cast iron cooker, one that would last for generations”.
They then expanded into creating cast iron fire pits.
Most recently, as a result of people being stuck at home because of COVID-19, but still wanting to exercise, they added kettlebells and dumbbells.
What Is A Critical Success Factor for A Business?
Critical Success Factors are the items or actions a company must achieve to reach its Vision—the things that will either make or break the business. Identifying your Critical Success Factors will determine the destiny of your business; they are the foundation of your Strategy. Focusing on Critical Success Factors allows you to formulate your Strategy in small, easily accomplished steps.
Every business has limited time, money, and talent. Identifying your Critical Success Factors enables you to channel your effort into the most important areas for your business and utilize your resources most efficiently to achieve your Vision.
As we discussed in the February Newsletter, the lack of having a clear Vision can lead to being stuck in a “tyranny-of-the-urgent” syndrome in which the organization functions in a reactive mode instead of a strategic mode.
The creation of a Strategy based on Critical Success Factors will move an organization away from simply dealing with the crisis of the day to the strategic execution of your game plan. This will ultimately allow you to move from working in your business to working on your business. By operating in a strategic fashion, you will have a better chance of creating a business that has a saleable value.
Identifying Your Critical Success Factors
Think of Critical Success Factors like the body’s central nervous system—just as your central nervous system directs the muscles of your body, so should your Critical Success Factors direct the actions of your business to concentrate on areas that will yield greatest results from innovation.
The first step in determining your Critical Success Factors is to analyze your business and look for things that must absolutely, positively be correctly done or your company will fail. These are not only nice things to have or do, but items that will either make or break your business—things that you must do well every day to be successful.
Keep in mind that these are “big picture” type things that you need to do successfully each and every day to create a truly successfully business. As you list them, don’t limit yourself, write down each one you can think of.
The Six Categories of Critical Success Factors
No matter the size of an organization there are six areas of a business. A startup company has these six areas and IBM and Microsoft have the same six areas. While IBM, Microsoft, etc. may be a lot more complex than a startup, but every business has the same six areas. These areas are:
1) Vision and Leadership—What is the Vision for your business and what Leadership are you providing to drive your company toward this Vision? Your Vision and Leadership area leads to your Marketing & Sales area.
2) Marketing & Sales—How are you going to market your products/services and what will be your sales process? Then the Marketing & Sales area leads to your Production area.
3) Production—How are you going to produce what you are marketing and selling?
4) Finance and Administration-What will you do to manage your finances and handle administrative activities?
5) Human Assets—How will you best manage your personnel or “team”?
6) Information Technology—What can you do to leverage your internal Information technology area, so it provides you with a strategic competitive advantage?
Armed with knowing there are six areas of a business you can now tackle the second step. This step involves reviewing of the six areas of your company to determine if there are additional Critical Success Factors that you need to add to your list.
Narrowing Your Critical Success Factors
A typical business has between 15 to 25 Critical Success Factors.
If you have identified more that this number, you want to proceed to step three. This step encompasses combining Similar Critical Success Factors or eliminating ones on your list that are not truly make or break factors.
Start by sorting your Critical Success Factors into the above six categories in the order they were listed. You may find a Critical Success Factor falls into two or more areas; if so, choose the area to which it is most closely tied.
Next, check if any can be combined—perhaps they say basically the same thing, one is dependent on another one, or one is an amplification of another item.
Once you have the list down to the manageable goal of between 15 and 25, besides using Critical Success Factors to focus your innovation efforts, you want to use them to monitor how your business is performing. This means you need to translate them to a measurement system for your company (or a set of metrics), sometimes called Key Performance Indicators.
A number of studies have shown the maximum number of Key Performance Indicators a business owner can practically monitor is in the same range as your Critical Success Factors, 15 to 25. I have personally found that very rarely will a business have more than this number of “make-or-break” factors.
Where to Start
Once you have established the Vision for your company, then identify the 15 to 25 make or break, Critical Success Factors for your business.
Next, determine how to use innovation to most effectively accomplish these factors or goals.
The outcome from achieving your Critical Success Factors is that you will make the Vision for your company a reality.
If you could use assistance with identifying your company’s unique Critical Success Factors and then using them to channel your innovation efforts, please contact us using the information below so we can be a resource to you in this critical area.
Fountainhead Consulting Group, Inc. is an Innovation and Business Planning firm. During the past 17, years we have shown over 1,200 companies how to achieve their goals by using our unique, comprehensive, and systematic FastTrak Innovation Program™, Innovation Academy™, and Structure of Success™ methodologies. Using the components in these methodologies, each month we examine an aspect of how to transform your business or organization into a true 21st Century enterprise.
Office: (770) 642-4220
www.FountainheadConsultingGroup.com
George.Horrigan@FountainheadConsultingGroup.com
Tags: entrepreneur, front end of innovation, innovation, invention, small business consulting, small business planning, start a business
