What Is Holding My Organization Back? (Part 1)

This question has several possible "answers." Without more information on the outcomes you have been pursuing, it isn't possible to diagnose what is going on. So the starting point is defining the issue.

Is your company operating at peak performance? Do you seem to spend more and more dollars for less and less return? When you invest in expanding the “capacity” of your business does it truly translate into more results (revenues and profits)? If not maybe you didn't invest your resources in the right option—or if you did choose the right investment option, maybe something else is preventing you from getting maximum results.

There are a number of reasons a business can appear to be going full speed ahead toward success and not see results. Some of the underlying causes span the issues alluded to in the preceding questions. Here are some of those frequent constraints:

1. Lack of clear organizational objectives
2. Lack of specific performance objectives for functional groups, teams, and individuals
3. Misaligned performance objectives for functional groups, teams, and individuals—they don’t match the organizational objective
4. Compensation (tangibles and intangibles) reward the wrong behaviors
5. Lack of corrective action for poor performers
6. Lack of role definition in achieving objectives
7. Investing in the wrong places—not truly expanding capacity
8. Inability of the organization to pursue the selected strategy or tactic—skill sets, funding, internal structure inconsistent
9. External perception of company, product, service, or technology does not support pricing or positioning
10. Poor quality in product or service

Organizational alignment and consistency between the internal operations and external perception are critical elements of success. How your organization selects its objectives, pursues its strategy, and gets the internal resources—people, money, and systems—structured are key determinants in generating returns on investment and profits.

Many organizations get caught up in growing revenues and fail to set gross margin and profitability objectives. As a result, the business may see revenue growth, but steady or decreased numbers on the bottom line. Pursuing every sale regardless of cost of obtaining the sale (time and dollars invested, as well as missed opportunities for higher margin sales) and not taking into consideration the cost of servicing a high-maintenance customer may lead to a domino effect on the bottom line. Not all sales are created equal, so arbitrarily setting strategic objectives for revenues may lead to suboptimal strategy selection and poor business tactics.

Organizations also fall into the trap of continuing to use the same tactics in changing or new markets. They also apply the “more is better” rule—through more people, dollars, and so on—without evaluating the effectiveness of existing approaches and processes. For instance, one of the traditional approaches to growing revenues/increasing sales is to add more and more sales representatives. Before taking this step, however, organizations need to determine how effective the current sales force is and whether or not they could generate more sales if

When sales are flat or declining, the solution isn’t to automatically add to your sales force, yet this is often the first step organizations take.

Another trap organizations fall into is investing in infrastructure and activity that isn’t revenue producing, capacity expanding, or organizationally necessary. For example, an organization may be relatively new and establishing its technology and market presence. All the investment is put toward technical staffing, sales and marketing people and activities, and other areas directly related to technology and product development. Little to no investment is made in core business infrastructure—accounting, finance, human resources, and administrative operations. Now these areas are not “revenue” producing; however, they are necessary and critical activities that enable the organization to build the business effectively, know what is going on, and control it (finance and accounting), to ensure the organization has the appropriate skills (human resources), to identify and minimize risk (finance and human resources), and to insure the organization doesn’t waste higher dollar capacity (technical staff) on administrative activities. Sound business infrastructure investment enables the organization to grow effectively and to deploy resources efficiently (but don’t overdo it!).

Yet another trap is spending on image and “I wants” rather than the “content” of the organization. High-end real estate and luxury company cars, traveling first class, and sending the entire technical staff to conferences in foreign countries are generally not wise investments in growing your business.

Next month, we continue to discuss the choices that become obstacles to the path to success including compensation, underperformers, and the changing skill set needs of growing organizations.