Wednesday, July 20, 2016

Calculate your “R.O.W." (Return on Work) to maximize impact!

Over the 30+ years of my career, I have had the chance to be part of, and at times lead, some significant projects.  Ranging from the launch of Breyers Light Ice Cream early in my career, to the launch of Coke Zero now more than ten years ago, and more recently the North American expansion of the Bolthouse Farms line of Juices and smoothies, I have had the chance to be part of a number of initiatives that now account for well over $1 billion in annual retail sales.  While the absolute scale is not that important, I have had the chance to learn some vital lessons on the concept of  “R.O.W.” (Return on Work.)

The “R.O.W.” Model:  this concept links directly to the financial concept of “R.O.I.”

ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit / Cost of Investment) x 100.

In the same vein, I have realized that the MOST precious resource for a business leader is time, or more specifically how she/he CHOOSES to use her/his time.  Over the years I started realizing that the impact of my work, or in other words the “Return On my Work” varied greatly across projects/initiatives.  It dawned on me years ago, and it continues as a work in progress today, that if I could deploy my time to the highest “returning” projects/assignments, I could work on improving my impact in the role assigned.

The “KMX/Coke Zero case”:  While this idea/concept of “R.O.W.” had been “kicking around” in the back of my head for a number of years, it came into clear focus a little more that ten years ago.  I had a senior sales/marketing role at Coke at the time; we were launching a number of new products into the market.  Two of new products from that period that I worked on personally were the now defunct energy drink, “KMX”, and the hugely successful diet soft drink, “Coke Zero.”  It was eye-opening to realize that while it took almost the same amount of time for me and my team to develop and implement the launches of these two projects, the “return” on the work varied greatly.  I remember specifically trying to calculate the number of hours it took us to “sell-in” both items into Walmart.  While not exact, I remember that it took about about 25% more time to “sell-in” “Coke Zero” than it did for the team to “sell-in” “KMX.”  The size and scale of “Coke Zero” was so big, that while it took 25% more time, the “return” on the work was 12.5 TIMES bigger….. a huge “R.O.W.” difference!

Don’t let your calendar be King/Queen:  This idea of being intentional on your personal deployment, and hopefully that of your team as well is powerful if and only if YOU take control of your personal deployment.  Too often I have seen talented leaders fall prey to their own calendar being filled up by others and other people’s meetings/priorities/projects.  You are in control of YOU, and I encourage you strongly to take action against that idea!  Even today as I lead my consulting business, I take time out weekly (if not more often) and “work the calendar” with my trusted work partner and friend Cathy.  We typically work 30-45 days out, looking at upcoming client meetings and travel needs always with an eye to maximize the impact or “R.O.W.” over that period of time. 

Remember the lesson of “Important and Urgent”:  I refer back often to an early essay on this blog titled “Tyranny of the Urgent…5% for #2.”
Its one of the most read essays (top 5 out of the 151 I have posted as of today) and it centers on the point of balancing The “Important” and “Urgent” priorities on your plate.  Be careful not to let the “urgent” issues take over your life!  Be careful with technology that over emphasizes the most “urgent” issues/priorities and work to insure that you are taking a balanced view of your landscape allowing you to focus on the issues at hand that are both “Important” and “Urgent.”  Only with the balanced view will you have a chance to improve your “R.O.W.” over time!

Try to apply the “R.O.W.” lens to your work landscape today.  Ask yourself whether you are really spending your time on the issues/projects/initiatives with the highest “return.”  While I think it’s always a work in progress, strive to improve the impact/”return” of your work over time!

Wednesday, July 6, 2016

Net Revenue Growth… the lifeblood of a thriving business

In a conversation earlier today with a long-term friend and colleague, we talked about the growth challenges of his business and the need for growth over the next few years.  While our focus was on the “net income” line of his company’s p&l, I blurted out (as I am known to do) that “net revenue growth is the lifeblood of a thriving business.”  Not only is that true related to my friends company / industry, it happens to be deeply true in EVERY business I have had the chance to work on over the past 30+ years!  Whether on Kleenex tissue, Breyers Ice Cream, Coca-Cola, Bolthouse Farms or across the varied businesses that I am consulting on today, the importance of healthy top-line growth has been a central and common theme across my career.

This idea of the importance and power of “growth” spans business and culture.  A great quote from our history sums it up well: 

"Without continual growth and progress, such words as improvement, achievement, and success have no meaning. "

Benjamin Franklin

While Franklin was not talking specifically about today’s corporate reality, this truth that there is no “success” or “achievement” without “growth and progress” is deeply true from my experience and important to remember.  If the ultimate indicator of a business’s health is “demand” as I have written in a previous essay (“Demand Drives Price”), then to have a thriving enterprise one needs to have a thriving revenue line on your p&l.

While so simple to discuss and comment on, this dynamic is no small feat across business realities.  I have worked in businesses without a thriving topline and you end up looking to cost reduction plans, “doing more with less” and organization restructurings to achieve quarterly and annual profit targets.  While effective in the short run, a business runs out of “cost centric” actions over time and ultimately does not thrive and succeed without solid revenue growth.

On the opposite dimension, I have recently worked in a high growth business environment, which also had its challenges.  In that situation, we have a tough time “keeping up” with the growth opportunities and more importantly “fulfilling” the growing demand of the business.  It was an eye-opener a few years ago to realize that our business had “outgrown” the actual number of warehouse doors of our primary production facility and that during the peak demand weeks between Thanksgiving and Superbowl, we didn't have enough “doors” to handle all the trucks picking up customer’s orders.  Yes, our demand growth was strong but if we couldn't “handle” the growth, then it would have been nothing more that temporary phenomenon!  (We did work our way to “handle the growth”, fodder for a future essay!!)

This idea of finding the right balance between a no growth environment (where you’re trying to “save your way to success”), and a high growth environment (where you can’t keep-up with the demand that you have created) is key to a business “thriving” over time.  Work hard to find that right balance year after year but never lose sight of the “G” word.  It’s all about “growth” and in my experience a healthy balanced growth of the revenue (demand) over time!

A quick comment on the use of the word “Net” in this essay’s title:  Recently I have worked with a number of consulting clients who are driving the heck out of their “Gross Revenue” line of their p&l with very little translating to the “Net Revenue” line.  They use discounts and allowances (“D&A”) to drive short-term growth which is OK if it translates to “Net Revenue Growth” over time.  I like to focus on the “Net Revenue” line of a business’s p&l and track it as THE key variable over time.