Applying the TOTE principle to business.
In personal development work, the TOTE principle is an iterative problem solving strategy using feedback loops. This principle can be applied equally well to business.
The First T is for Test. Test the environment and identify what needs to be improved. At this stage you also need to be clear on how you will know whether or not an improvement has occurred – your success criteria.
The O is for Operate. Once you have decided what you want to improve, you take action to bring about the improvement. Each individual situation will call for its own set of actions.
The second T is for Test again. After you have completed the action, you test again and check if the desired improvement has been achieved. You will examine if the success criteria have been met. If yes proceed to the next step. If no, go back to step 2 and change or refine your actions.
When the desired result has been achieved, exit. You’re finished.
This simple process is used intuitively by most people. To me, it’s essentially the engineer’s feedback loop.
Applying this to business, you need to firstly decide on what success is. In recent years we talk about setting our target business metrics or our target KPIs (Key Performance Indicators). This is where we establish our success criteria. Then we need to measure the gap between where we are and where we want to be. This is the Test step. Our accounts or other performance reports should be designed to highlight the size of the gap, if any.
Second step then is to take action to improve the performance i.e. to close the gap. This might be the easiest to say but usually it takes the most time.
Third step is to Test again. Our performance reports will tell whether or not our improvement initiatives have yielded the desired results. If not, we need to review what we did and the results we got. From this we should modify our action plans and try again. If yes, we exit and go on to something else.
It’s a nice elegant framework and, looking at business this way, our accounts are a key tool for testing. For them to be successful we need to be clear on our success criteria. Each owner manager should spend some time identifying their own key success criteria and should ensure that they are measured regularly as frequently as is useful.
If you have any comments on this article or if there are any areas you would like to address, please do let me know.