Gazing out my window at fluffy white clouds floating in an azure blue sky above a blanket of velvety green grass, I wondered what topic my readers might find interesting. Then it came to me; when it comes to sizzle, green is red hot. Not red hot as in global warming, electric cars, solar panels, and wind turbines. Just stop and think, a well run business uses a green philosophy.
Setting aside any personal opinions on controversial topics such as global warming and whether or not America should proceed with offshore drilling, a green business is a well run business. When it comes to business, it doesn’t have to be the environmentalists versus the capitalists. A good capitalist subscribes to the same basic principles as a good environmentalist.
Green goes much deeper than environmentally-friendly business practices like proper disposal of hazardous waste and going paperless. Although “green” transcends business practices to touch virtually every aspect of our lives, I will limit my treatment of the topic to four deadly sins of business waste.
First of all, green business practices such as avoiding business waste are not new. Henry Ford tested the use of soy-based materials and ethanol around the time of the Model T. He shipped the Model A truck in crates which were used later as the vehicle’s floorboard. Ford Motor is even more green using seat fabrics made from 100% renewable soy foam.
In the broadest sense of the term, green business practices eliminate waste, harmful impact, and depletion of internal and external resources. However, I must warn you, these practices require a much longer view and a broader set of goals than next quarter’s cash-flow. For this reason, implementation, and results will invariably take more time.
Although green business practices have been driven to a large extent by government and regulatory efforts, astute businesses recognize they are essential elements in a prosperous and enduring enterprise. This is especially true for small businesses. If you are vigilant in not committing the four deadly sins of business waste outlined below, it will have a profoundly positive impact on your profits, employees, stakeholders, customers, and community.
1. Time
Business owners and managers waste an enormous amount of time due to lack of clear direction, failure to make it clear to employees, or constant changes in direction. One highly creative small business owner I know used to add a new offering every time he found one that captured his attention. With each new offering his staff had to spend time integrating it into the company’s product catalogs, websites, conferences, and sales processes. Then, if the product did not perform well, he would jerk it from his list of offerings.
He put his staff through this time-wasting cycle so often that it began to erode the trust and confidence his staff had in him and the company. This, in turn, negatively impacted morale and productivity. His behavior finally culminated in a virtual mutiny among the sales people when he tired introducing a product that actually would have given the company a much stronger position in the marketplace and tripled its revenues.
2. Talent
If you are a small business owner you probably do a lot of things in your business that you could have paid someone else to do but you wanted to save money. This seems logical. However, the most value you can receive is what you would have had to pay someone else to do it. A good example is an owner of a retail business who washes their own windows to save a couple hundred dollars. If they had paid someone else to do it, they could have used that time to do something that matches their talents, such as selling which would have produced a lot more value than a couple hundred dollars.
There are countless ways businesses waste talent. A well known problem in larger organizations is The Peter Principle, meaning that “In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence”. Dr. Laurence J. Peter and Raymond Hull in their 1969 book The Peter Principle assert that “in time, every post tends to be occupied by an employee who is incompetent to carry out his duties” adding that “work is accomplished by those employees who have not yet reached their level of incompetence”.
We all have known someone, heard about someone, or were that someone who was promoted because of seniority, political capital, or serendipity (being in the right place at the right time). Therefore it is reasonable to assume that a certain percentage of people in management are incompetent and that the talent of more competent people is wasted.
Another group of notorious talent wasters are sales managers who demand that top producing salespeople spend countless hours performing routine administrative tasks. Now, I ask you, does it make any sense for a sales person generating millions of dollars annually to spend their time on tasks that could easily be completed (usually in less time with fewer mistakes) by an employee with administrative talent who cost the company a fraction of what salespeople are paid?
Of course, I would be remiss if I did not mention the problem of family owned businesses where relatives are given positions of power and authority by virtue of their blood line sans qualifications and experience. And, what do you think happens to the people who report to all those incompetent people who have been promoted? Alas, this is just a blog post and we don’t have near enough space to go into depth on this thorny subject. But, I would love to read your comments on the subject!
3. Effort
Have you ever known anyone who was more interested in the process than outcomes or results? One of the recipients of the prestigious Malcolm Baldridge Award, a rigorous, organization-wide focus on quality processes, discovered that they had so lost sight of their key business objectives that they needed to restructure (downsize) afterwards.
Please don’t misunderstand my message. I am not suggesting that focusing on quality is wrong. The issue I am raising is there is a danger in tracking, measuring and managing processes rather than results.
A dramatic example of wasted effort was demonstrated to me by a wonderful company that my wife worked for as a sales consultant. Over a period of years, this company had carefully studied the sales process and discovered what they believed to be the formula for sales success. The formula was based on an absolute correlation between the number of sales and the number of sales calls and proposals that salespeople made. It was simple; if you made a certain number of calls and proposals you would get sales. Consequently, they built their entire sales recruiting, training, measurement, and management policies around these correlations.
Not long ago, when a series of events, including the biggest recession since the depression, coalesced to form what can only be described as the perfect storm, the formula this company had trusted for so many years ceased to work. Management’s initial reaction was to blame the salespeople for the lack of results and shame them for not working harder making more calls and proposals. The impact on sales was minimal. But, the impact on morale, the company’s prospects and it’s reputation was significant. The company suffered one of the biggest losses in it’s history.
4. Resources
I won’t address the obvious waste when business squanders resources like energy, paper, and water. Instead, I want to focus on resources that are often overlooked by small businesses.
Your suppliers have a vested interest in your success. Therefore, they may be willing to do things for you that will save you time, talent, effort, and money. Some suppliers may be willing to extend their normal payable policy to help you with cash flow. Others may be willing to act in the role of your business partner when you bid on large contracts.
If your workflow has peaks and valleys you can obtain a “just in time” workforce from temporary help firms. Some firms offer specialized services for certain job categories such as administrative, accounting, or IT. The beauty of this resource is that the temporary help firm assumes legal responsibility for the workers including payroll, taxes, and insurance. Then, if your workflow declines and you no longer need the extra workers, you simply call the Temporary help firm. You have no unemployment or exit interviews worries.
Don’t forget to seek out and form strategic alliances with select companies that do not compete with you but who share a similar target market. You can negotiate agreements where the cost of marketing initiatives and services are shared.
Look for opportunities to join buying pools where you can take advantage of the purchasing power of a large group.
So, no matter what color your business is now, there is no question in my mind that green business practices will pay dividends for you. Business and Sustainable Development Global sited a study by economics professors Stephen Erfle and Michael Fratantuono at Pennsylvania’s Dickinson College which identified a correlation between a social consciousness and profitability. The researchers measured five green criterion: environmental performance, advancement of women, advancement of minorities, charitable giving, and community action.
If you would like to contact me, you can do so by visiting my LinkedIn page or emailing me at mike.clough@bestbizpractices.org.
Posted by: Mike Clough
