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How to overcome the Knowing-Doing Gap

Many people go on courses and learn some very powerful techniques but don’t go on to apply the techniques. Some of these people are serial course/workshop attenders. They have all the knowledge. They can tell you how to solve your problems but they don’t seem to be able to apply it to themselves.

This phenomenon is common and is often called the knowing-doing gap. And it’s possible to overcome it.

The best tool that I have found to do this is one called the DVP tool, a tool often used by change practitioners. This tool helps you understand why there’s a gap and encourages you to create a strategy to overcome the issue. The tool proposes that a rough probability of success with any change endeavour can be estimated by rating three essential factors out of ten and then multiplying the three ratings.

The three rating factors are

  1. D for Dissatisfaction. This is the WHY or motivational factor of the tool. How dissatisfied are you with your current situation. If you don’t have a high level of Dissatisfaction then you will not be motivated to take action.
  2. V for Vision. This is the WHERE factor of the tool. Disatisaction can motivate you to get away from where you are but it doesn’t provide a direction or an end point. Vision pulls you towards change by providing a strong direction and pull towards the change. The vision is how you would like your situation to be in the future. Where there is no vision, there tends to be lots of activity but focussed on the wrong things.
  3. P for Plan. This is the HOW factor of the tool. A clear strategic plan with clear activities and deliverables can help increase the motivation for change. We use a simple one page plan to develop a practical one page summary of an action plan. The Plan shows clearly what will by done, by whom and by when.

So let’s say you have been on a time management course but you are not putting the learnings into practice, what you would do is rate each of the factors.

Let’s say you give 6 out of ten for Dissatisfaction, you give 4 out of 10 for Vision and you give 2 out of 10 for Plan, when we multiply those we get 48 out of 1000. That rating is so low that you can be pretty certain that nothing will happen. Dissatisfaction usually needs to be high for change to occur – a rating of 8 is recommended.

So next time you think of attending a course, firstly ask yourself how dissatisfied you are with your situation relative to the course. If you are not dissatisfied, then ask yourself what’s the value of doing the course.

Secondly, consider the possibilities. Maybe the course will help you build your vision of what might be possible. If you don’t leave the course with a compelling vision of how you can apply the course to your own situation, the workbooks will go and sit on the shelves.

Finally, you should have a practical plan for implementing the learning. On a good course this will be part of the material. If not, do it yourself later, in your own time.

Why you should invest in Management Development

While attending a recent induction session for the SCCUL Mentors Programme, I became aware of a 2010 report by Forfás on Management Development in Ireland. https://dbei.gov.ie/en/Publications/Publication-files/Forf%C3%A1s/Management-Development-in-Ireland.pdf

The Report quotes findings from a McKinsey review of management practices across 14 countries which found that

  • Management Practice in the high value manufacturing sector is above average .
  • Agreggate management practices across all manufacturing sectors in Ireland lag performances amongst similar firms in the highest performing countries.
  • Mean performance in Ireland is also below global averages for almost all sectors of manufacturing other than the high value manufacturing sector.
  • There is considerable variation in performance by sector and firm size, and firm category. Irish firms employing between 50 and 250 employees are ranked just 12th out of 14 countries.

The Report goes on to highlight that there is a strong relationship between management practice and business performance. McKinsey found that improved management practice is associated with large increases in productivity and in output. The research findings suggest that a single point improvement in a firm’s management practice score is associated with an increase in output equivalent to that produced by a 25 % increase in the work force or a 65 % increase in working capital.

Statistics such as those make a very strong case for firms to invest in management development. Who would not want output increases equivalent to a 25% increase in the workforce? If the research is correct and we are starting from a low base, then it must be quite realistic to achieve single point increases in the management practice score.

A first step for any firm would be to carry out a Now Assessment – where are we now as regards management practice. From there establish where you want to be and then put an action plan in place to close the gap.

A very quick way of doing something like that would be to complete our GPS diagnostic which can be found here – https://www.accountsplus.ie/component/content/article/75-growth-and-profit-solutions-diagnostic.html.

If you have any questions about this blog post please contact jim(at)accountsplus(dot).ie

Finding time for Strategic Thinking

This blog update comes from Mindshop Colleague, Paul Hopwood. (http://www.paulhopwoodconsulting.co.uk) Paul is a longtime Mindshop Member and is one of the Support Coaches for Mindshop members.

Very often, the biggest constraint for business owners is their time. Those who make time to think strategically tend to punch above their weight. We know this intuitively, but operational issues can easily get in the way.

“Strategy is the great work of an organisation. In situations of life and death, it is the Tao of survival or extinction. Its study cannot be neglected – Sun Tzu “The Art of War”

“Plans are useless, but the process of planning is indispensible” – Eisenhower

If you are guiding your business or a customer on their strategic agenda, it’s your job to isolate the right quantity and quality of strategic thinking time.

Here are 10 tips for doing so:

1. Split board meetings between strategy and operations. This could potentially be done in separate meetings, possibly with a smaller steering group
2. Schedule the dates for the entire year ahead and never cancel the meetings
3. Use the One Page Plan as a framework. If you are discussing something that isn’t on the plan – either the plan is wrong, or you probably aren’t being strategic
4. Get the administrative protocols right – E.g. agenda in advance, circulate papers a week in advance, start and finish on time, bullet point minutes of actions and follow up action progress between meetings
5. Be aware of where the conversation is leading while keeping a balance between strategic and operational issues
6. If there are some short-term, burning issues, factor them into the One Page Plan, but don’t get bogged down – decide how they should be tackled outside the meeting (e.g. project team) and move on
7. Be conscious that you don’t spend too much time managing exceptions (i.e. actions not completed and excuses). This is a total waste of everyone’s time
8. Ensure someone is responsible for keeping the meeting strategic. Usually this will be the chair or facilitator
9. Make your planning process iterative. Don’t put all your effort into the annual away-day, but evolve the strategy as you go along
10. Define the rules for each meeting – E.g. ego-less, listening, not interrupting, allowing everyone a turn to speak.
Do this well and everyone will get good value from their strategic time and be able to reduce the time they waste fighting fires.”

As always, if you have any questions on this blog post, feel free to contact jim (at) accountsplus (dot) ie.

ERP: Developing Cross-Functional Buy-In

Today we have a guest post from John Donagher of BSM. A few years ago, I did some work with BSM on developing the client requirements for RFPs for ERP systems. I worked with John then and he is very knowledgeable about ERP and implementing ERP. John recently posted this on his own Blog.

Most organisations are comprised of multiple departments, and when it comes to implementing ERP the impact is felt right across the organisation. Resistance and apathy are major project risks, so how can they be avoided?

The last thing an ERP implementation project needs is a lack of willingness from parts of the organisation to fully engage with and support the project. Negativity can take two forms: resistance and apathy. The root causes for resistance are typically fear of change and a lack of understanding of the rationale for the project. Apathy often results from a feeling that the new system is being imposed, rather than having views regarding what’s required taken into account. ERP implementations are difficult at the best of times, but dealing with resistance and apathy means even more risk for the project.

The road to developing “buy-in” for ERP starts at the beginning of the system selection process. Getting people involved, ensuring their voices are heard and that they’re made to feel part of the decision-making process is one of the best ways to guarantee their long-term engagement with the ERP project. A starting point is to have every department affected by the ERP implementation represented on the system selection project team. Far too often we in BSM see the Finance and IT departments taking the lead role, and while they certainly need to be involved in the selection project they’re generally not best placed to specify the system requirements in other functional areas. A structured selection process with cross-functional involvement can create a positive atmosphere around the ERP project, with dividends accruing right through the implementation in terms of good will.

Buy-in can also be developed through effectively managing and focussing on the business benefits of the ERP project. Ensuring that business benefits are understood, quantified and owned by the business is another important element in achieving buy-in: a manager who understands how the system will improve his area, and who has bought-in to delivering those benefits, is likely to be a strong advocate of the project. If the project is strongly focussed on business benefits, and managers are clear on what the benefits are and are responsible for delivering those benefits, then the project is far more likely to be successful.

This Blog was written by John Donagher, Senior IS Consultant at BSM. If you would like further information on developing cross-functional buy-in please send an e-mail to John Donagher. linkd.in/ZRlLhW

Unit Price v Total Cost

Today’s blog update comes from Mindshop founder, Chris Mason.

“In today’s ever increasingly competitive global market the question on how to compete on price always comes up.

People believe that the only way to compete is to be the lowest price supplier of their goods or services. Unit price is only one factor in deciding who to deal with. The more compelling factor is what I call the Total Cost.

For example, I want to get my car repaired, do I go to the person with the lowest quotation if they are located in a city four hours away; of course not. Do I go to someone locally just because they have the lowest cost; probably not.

So what is causing my concern? I know from experience that I need to check the total cost, will the unknown supplier use quality parts, will they do it when I want, do they take my preferred credit card, and can I trust them to do the repair well? I cannot always put a financial price on each of these factors but they do impact on my perception of the total price. The bottom line is that not always is the lowest unit price the lowest total cost.

This concept works in any sales situation. A lot of manufactures were tempted to source their components from emerging nations such as China and India, only to find that there was a sting in the tail of the total cost. In this case factors such as communication, quality, on time delivery, minimum order quantities, and freight, added to the unit price. Many have subsequently brought their business back on-shore because of these extra costs.

Think about your own business, what are the unit costs and what extra costs can you manage for your customer.

You should be able to work on making the total cost of buying from you lower than the total cost of buying from your competitor even when your unit cost is higher. If you find you really cannot create a lower total cost perhaps you need to change the way you price and pull waste out of your processes.

The worst case scenario is that you withdraw from that market, but the need to do that is rare. Start with the price that you need to be competitive and work backwards to determine your target material, labour, and overhead costs. When talking to your customers, talk total cost rather than unit price and you are less likely to have to compete poor quality and unreliable competitors.”

As always, if you have any comments or questions on the above blog post, contact jim(at)accountsplus(dot)ie.

AccountsPLUS now on Enterprise Ireland’s Lean Consultants Directory

AccountsPLUS are pleased to have been approved by Enterprise Ireland for Inclusion on their Lean Consultants Directory. The Lean Consultants Directory as been put in place to support Enterprise Ireland’s Lean Business Offer, details below.

Lean Business Offer

Enterprise Ireland has developed a Lean Business Offer which is designed to encourage clients to adopt Lean business principles in their organisation to increase performance and competitiveness.

Lean tools and techniques are helping companies across the globe to address competitiveness issues within their businesses by building the capability of their people to identify problems and improve operations.

The Lean Business Offer is made up of three levels of support:

  • LeanStart
  • LeanPlus
  • LeanTransform

Each level of support is characterised by increasing levels of capability in implementing Lean business principles and other best practice approaches to drive company awareness, adoption and integration of Lean tools and techniques.

LeanStart

LeanStart provides an introduction to Lean concepts and allows you to gain an understanding of what the tools and techniques can do for your company in a short, focused engagement. Companies can apply for grant support towards the cost of hiring a Lean consultant/trainer to undertake a short in-company assignment which will;

  • introduce Lean principles and Agile processes,
  • achieve immediate cost reduction targets, and
  • lay a foundation for future Lean or productivity improvement projects.

Assignments will typically be carried out over eight to ten weeks. Companies will be eligible to receive support for a maximum of seven consultancy days. Maximum funding is €5,000. For more detailed information or to apply.

LeanPlus

Companies looking to undertake a Lean project over a medium-term period can apply for LeanPlus grant support from Enterprise Ireland. A LeanPlus assignment is a medium-term business process improvement project which will result in sustained use of Lean techniques and related methodologies by the company, and will achieve significant measurable gains in capabilities and competitiveness. The LeanPlus assignment should;

  • deliver significant productivity improvement and cost reductions,
  • embed a culture of business improvement and lean techniques to a cohort of trained staff, and
  • introduce a programme to pursue company-wide improvement.

Assignments may vary in size and scope but will typically be completed within six months and will not exceed a total project cost of €75,000. For more detailed information or to apply.

LeanTransform

LeanTransform is a large scale, extensive and holistic company transformation programme delivered by an external consultancy team of international reputation. Lean Transform projects should:

  • deliver company-wide transformation in culture and productivity performance,
  • embed the competences necessary for on-going competitiveness gains in the company, and
  • result in sustainable improvement in the business and across its supply chain.

The LeanTransform initiative is primarily designed for larger companies with significant operations who can demonstrate to Enterprise Ireland that they have existing capability and resources to implement a programme of this scale.

Assignments will typically run for at least one year. The assignment is preceded by a scoping exercise. For more detailed information or to apply, go to LeanTransform.

Tips for Managing Cash

In the past year, I have spoken to a number of different audiences on Managing cashflow. In the course of my work as a mentor on Bank of Ireland’s Enterprise Builder Programme, it is clear that managing cash remains an issue for many companies. So here are the key points from the presentations that I made.

  • Prepare Plans and Forecasts
    These help you to understand what is coming up. They identify early on any overall problems and any “lumpiness” in your cashflow. You should be clear about your key assumptions – these will include Activity levels/Collection and payment times/Once off investments etc. You should also determine how much to put aside for tax, annual payments such as insurance etc
  • Prepare a Rolling 6-week forecast.
    This will be similar to the annual forecast but will be working in smaller time intervals. Watch for weeks where you might be hitting up against your overdraft limits. This rolling 6-week forecast highlight possible breaches of your limits and gives you a chance to do something about it.
  • Choose your customers
    Remember that you don’t have to take everyone. A customer that does not pay or a customer that costs too much to services is not worth it. You should have some a process for evaluating prospective customers. This would consider factors such as their payment history, their profitability, the quality of interactions with them (do you like dealing with them?), are there ongoing issues (returns, hidden costs etc). Check their credit rating.
  • Be clear about your credit terms and stick to them.
    Your customers should know exactly when you expect payment and you should enforce your terms. Your terms with include the timing of payment and the maximum amount that you extend to any customer. It is much easier to set and enforce these from the start than it is to try to tighten up with an existing customer. Put on hold, those customers who are not compliant with your terms – whether this be relating to the time or the total amount. Consider asking for deposits or stage payments – this is more appropriate for some sectors than others.
  • Have a process for invoicingis
  • Invoice in a timely way. Know who/where to send invoice. Before invoicing, ring the customer to ask if everything is ok – they can’t come back with issues later. Consider if you will need Proof of Delivery – do you have it?
  • Have a reliable collection routine.
    Before payment is due, send out a reminder. Have a standard defined procedure for follow up or escalating overdue payments. Send out statements – Some customers only pay on statements.
  • Manage Cash Tied Up
    Many businesses overlook the amount of cash that can be tied up unnecessarily. Review your Stock Levels , your Debtors and your Prepayments. Are you paying too early with some of your suppliers? Do you have clear rules for purchasing stock – is there a logic to these? Do you take Credit where you can (and where it saves you)?
  • Control Your Expenditure
    Remember that you have most control at rhe start of the Purchase to Pay process. Do you have a Purchase Order (PO) authorisation process? Review all costs and consider whether they are really necessary and that you are getting best prices. Consider Asset Finance for computers, vehicles, plant & machinery
  • Working with the bank
    Keep your bank manager informed. This demonstrates that you are in control and devleops confidence in you and your business. Remember that when there are some signs of problems, lack of communication from you is the single thing that worries them most.
  • Managing Shortfalls
    Become aware of shortfalls as soon as possible. Understand whether they are temporary or longer. Look at all the options to overcome the difficulties. Talk to your bank. Talk to suppliers. Consider invoice factoring/discounting. Offer early payment incentives to customers. Careful payment of bills

So overall then the message can be summarised as follows. Understand and Plan – aim for early warning of issues. Be proactive – choose customers, set credit limits, have process. Review business for cash tied up. Manage your bank manager

As always, if you have any comments or questions please email me – jim (at) accountsplus (dot) ie.

Is Technology making accountants redundant?

A recent post on Accountingweb.co.uk pressed one of my buttons.

It was from a business owner who asked if technology was making his accountant redundant. He pointed out that much of what his accountant offered to do for him was now handled quite well by software. He finished up by asking does he need his accountant and does his accountant need him.

I have been thinking about this lately. A lot depends on what the client wants the accountant to do for him. There’s a range of activities that accountants offer from doing the whole book-keeping work to finalising annual accounts and providing business and taxation advice. In my view, the amount of clients who will want basic book-keeping, the number crunching work, will fall off and the accountants will find themselves providing analysis and advice.

It’s more than likely, that once the clients start to take control of their own accounting records, they will start to look for more help with analysis and advice. Their accounting systems will generate information that they simply didn’t have in the past. This information will prompt questions that they will want answers to. So I think that rather than make the accountant redundant, they will simply change the type of work accountants do.

And, I know which work I get most satisfaction from. It’s helping the business owner by providing analysis and advice.

As always, feel free to leave a comment and if you have any questions, email me at jim (at) accountsplus (dot) ie.

Are you slack about IT security

Yesterday www.boards.ie was hacked and the passwords of the users may be compromised. If users use the same username and passwords on multiple sites, then the hackers may now have access to those other sites. Could they have access to online banking passwords? Possibly.

A couple of months ago I was reading a blog, and the follow-on animated exchange, about the importance of security in accounting software. While I agree with the importance of security, I felt at the time, that the dev elopers had little understanding of how careless users actually are when it comes to security, passwords and backups.

I have often commented on the amount of companies with no password protection on their accounts software, or common words as passwords, or use the pc users name as password, or have the password visible on a post-it stuck up beside the screen.

Well, recent research has shown just how loose password security is.

It seems that in Dec 09, social networking services and customized widget company, Rockyou.com, suffered a data breach. The breach included millions of people’s email addresses and passwords for Rockyou.com (and in many cases passwords and login details for associated social networking sites). The hacker responsible for the attack subsequently posted the full list of passwords on the internet.

You will end up with a lot of passwords and you will need something to help you manage them. I use a piece of software to store all of my different passwords. It’s a password manager called eWallet. Another free package is keepass. And remember you need to be careful how you use these!

So now, what passwords are you using for the various software and websites you use. Are they secure enough? Do you need to change them. Go on – do it now!

The compromised password and login data was examined by US-based security company, Imperva Application Defense Center (ADC). The data provides valuable insights into the way that users select passwords and an opportunity to evaluate the true strength of these as a security mechanism. What’s good about this is the number of real-world passwords the analysts were able to examine .

There report is available here – http://www.imperva.com/ld/password_report.asp

A full analysis of the 32 million Rockyou.com passwords show the most commonly used passwords are:
1. 123456
2. 12345
3. 123456789
4. Password
5. iloveyou
6. princess
7. rockyou
8. 1234567
9. 12345678
10. abc123

Its amazing, isn’t it. And to think of all of the effort the IT developer puts in to improve security and then see users undermine all that by careless selection of passwords.

So what should you be doing? To keep your accounts safe, NASA recommends adhering to the following steps when creating a password:

1. It should contain at least eight characters.

Making your accounts work for you.

Are your accounts giving you information that helps you manage your business?

Most accounts don’t.

When I go into a new client, one of the first things I do is to review the existing accounts.

I am looking to see if they could get more information – additional analysis – from their accounts.

The Sales account is the first account I see. Most accounting systems have only one line for Sales. Yet, it is helpful for most businesses to analyse their Sales in more detail.

You can analyse by the type of work, the nature of the assignment, the type of customer, the geographical region or any other way that gives useful information.

For example a business consultant might have once off consultancy assignments, ongoing retainer assignments, training etc. I mentioned this to a client recently who has launched an initiative to win more retainer business. Analysing his sales in this way, will make it much easier to see if the initiative is achieving the results he wants.

An engineering business might work for industry or for building contractors or for farmers. When I worked for an engineering company some years ago, they realised that they were making a lot less profit on their farming customers. The accounts analysis prompted further investigation and they ended up pulling back from that sector with the result that they achieved better profits with lower sales.

A medical practice might have GMS, private patients, occupational health contracts or public body contracts.

Breaking down your sales can help you manage margins. It can help you understand if your marketing is working. It can show you which parts of your business are performing best for you.

Each business is different and each business owner should sit down and ask what information would be useful to him/her. And remember , this analysis can be applied to more than just sales. Any Cost of Sales or Overhead account has the potential to be analysed further. If you find it useful to analyse your sales one way, you will probably find it useful to analyse all of your costs the same way.

Ask yourself if any costs are giving you cause for concern. What additional information would help understand those costs better? Go into your accounts and set up accounts that will help you with this analysis.

Your accounts will still show the same overall result. You will be just making the numbers work for you instead of you working for the numbers.

Some of the biggest improvements I have helped make in businesses have come from using this type of analysis to understand what is happening in the business.

I have been able to show that a business is losing money to one set of customers and subsidising that loss from a different set of customers. The information was there but the system was just not set up to deliver it.

So have another look at your accounts. Is there some other way of analysing the information that would be helpful to you? Go ahead, then, and make the changes.

If you have any questions about this post, feel free to send me an email to jim@accountsplus.ie.