Sometimes leaders can be their own worst enemies. Learn five signs that you’re the bottleneck of your business.
One of our clients had 5000 SKUs and we showed him analysis-wise that only 600 products made 80% of sales. We recommended the CEO to discontinue at least 500 very costly and unprofitable products. We showed him the data over and over again. But at the end of day, the CEO didn’t want to drop one single product because the products were like his “babies” and he did not want to “kill” them. Lesson learned: Products and services aren’t your children and you shouldn’t have an emotional over-attachment to them.
Common CEO Pitfalls
All failures in the business world have to do with not taking disruptions into account or failing to realize that your value proposition has become obsolete. When the big data shows you that certain products don’t make sense financially, you should consider removing those products from your portfolio. This is one example of a lack of CEO focus. Doing a results-oriented job is not as easy as it seems, especially in times of crisis. But there is one common mistake I have seen in numerous companies. Employees are very often “just not” doing what they are supposed to do. And even worse, their boss, the CEO, is very often not doing what he/she is supposed to be doing either.
CEOs can get trapped in the daily business and the incoming operative problems, mail, social media, and non-strategic tasks. They are busier with efficiency than with effectiveness. Doing the right things versus doing things right. The key challenge for a CEO is to make sure that he/she and his/her team are focusing and executing on the right things every day. And that doing the right things leads to profitable growth.
CEOs have to define where the company will be in the next two years and not take part in every single decision that his or her managers are responsible for. CEOs have to define the long-term vision and the fundamental business model elements facing the current crisis. They also have to have a clear plan that generates financial value and gives the company a competitive advantage.
5 Signs You’re the Bottleneck
Signs that you, as the CEO, are becoming the bottleneck of your company’s growth:
1. Almost every single decision, oftentimes operational issues, has to be double-checked with your office.
2. There is no accountability of the Sales, HR, and operational leaders. Weekly meetings lack solutions and best practice recommendations.
3. Lack of agility to resolve problems.
4. Distraction and procrastination due to too many tasks, unclear goals, fear of change, or fear of failure.
5. The company fails to achieve sales and profit goals.
Distraction Kills Your Business
“Distraction kills your business. You and your key employees have to be focused.”
CEOs are responsible for strategy. And strategy is a synonym for renunciation. To focus, CEOs have to make trade-offs. How much time do you spend on operational issues? How often are you in the 80/20 zone?
Through the years, I’ve seen that many CEOs, especially of SMEs, fail to see the BIG PICTURE; whereas the most successful CEOs have become 80/20 masters. The most successful CEOs lead their companies to achieve ambitious goals by energetically focusing on the most important actions. For example:
– They develop relationships with their key clients and prospects to understand market needs and requirements.
– They frequently talk to their key employees, especially their sales people, and retain them.
– They are aware of disruptive trends and key challenges. As a result, they are better prepared for unpredictable crises.
– They set clear goals and communicate the importance of strategy execution.
– They empower employees and show them the importance of the 80/20 rule.
You need to focus on the 20% that will deliver you 80% of the desired results. Every decision and action has to be made consciously if our time is to be used effectively. CEOs are responsible for hiring focused people who are better than him/her. CEOs should not be there to execute 80% of the whole work that only results in 20% of the important results.
Thomas Michael Hogg, author of Profitable Growth Strategy, is a consultant and mentor with more than 20 years of market and work experience in Germany, Switzerland, the US, and Mexico. Thomas has been an advisor to global companies such as PepsiCo, adidas, Campbell’s Soup, Johnson Controls, Bulkmatic, among other multinational companies, SMEs, and nonprofit organizations. He is the author of “Profitable Growth Strategy – 7 proven best practices from German companies” and a columnist at El Financiero. Thomas has been featured in Bloomberg TV, CNN, El Economista, SalesTech Stars, Milenio, Reforma, Mexico Industry, Cluster Industrial among others. He has also been a speaker at the Mercedes-Benz innovation week.
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