Archive for Jim Harper

A System Approach to Business Strategy – “Our Outcome Is Winning” or Business Lessons from the Court

Organizations can achieve routine success by defining and employing the right process or system – which can be a true competitive differentiator – and having the discipline to stick with it. This post gives an example of a successful system from college basketball…and reflects how systems can work for your organization or division.

It is safe to describe the University of Connecticut Women’s Basketball Program as legendary. The program has been led by Coach Geno Auriemma since 1985 and over that time has won eight NCAA Division I championships, advanced to 14 Final Fours and won over 30 Big East regular season and tournament championships. The UConn Women’s basketball program also has the longest winning streak, for women’s or men’s basketball, in the history of the game.

Why are they so good?

I attended a Middlesex Chamber of Commerce meeting where Coach Auriemma was the guest speaker. As expected, he gave his appreciation to the Chamber leadership, people in the community, the UConn athletic program and the people who were and are influential to the program. He then spoke about the current season, the upcoming NCAA tournament and his thoughts on winning. He wasn’t concerned about UConn’s placement in the tournament brackets. He also wasn’t terribly concerned about the competition. Why was that?

When he scouts for talent, Coach Auriemma travels throughout the country and it is an understatement to say that he watches a lot of high school basketball games. In his address to the chamber audience, he said he just returned that day at one in the morning from a scouting trip. Someone in the audience asked: What kind of player do you look for?

One may conclude that he must stack his team with the best talent in the land to win so consistently. But that assumption is simply not true. Sure, he does find very talented players–but he answered the question admitting that there is a threshold for talent. So, beyond the obvious talent and physical attributes necessary to be able to play college basketball (height, speed, court sense), what does Coach Auriemma look for that is perhaps different from other coaches?

“All of the players I consider are good enough to play competitive basketball at this level”, Coach Geno answered. “What I look for is someone who is unselfish. What do I mean by unselfish? A player that passes the ball to another teammate on a chance to score, one who doesn’t complain and doesn’t argue with a ref over a call, one who doesn’t have to play 40 minutes of every game. Our players usually are not in the top national ranks for individual scoring. They are team players. Our outcome is winning.”

Jim Collins in his wonderful book “Good to Great: Why Some Companies Make the Leap…and Others Don’t” writes about the critical importance of having the right people on the bus–staffing your team with the right people, letting go of the wrong people and getting people in their proper seats. The approach to employing the right people, however, is only one part of a larger system. Not a complicated system, just a system that includes, as a component to it, a distinct method of considering talent. The system includes rules that, when followed with discipline, ensures the accomplishment of a desired outcome.

Coach Geno is not concerned about competition. Other great teams recruit star players–players who feel they need the 40 minutes on the court. Those star players undoubtedly help their teams win some games. That kind of player does not fit the criteria of Coach Geno’s system. His desired outcome is the win, every time. His system dictates a certain kind of input (player) and it is this system that creates UConn’s competitive advantage. Coach Geno is highly disciplined in working his system–which is clearly defined and aligns with his desired outcome–and his system rewards him.

Do you have defined systems of success in place? Here are some introspective questions to ask yourself about your organization, company or division:

• Have you clearly defined your desired outcomes? Are they communicated? Do they align to the company’s vision and strategy?
• Do you have systems (people, processes, procedures and technology) in place and are they aligned to accomplish those outcomes? How do you know? Are they documented, have you measured them, are they working, are they effective, are they efficient?
• Are you disciplined in working your system? Is your system rewarding you–by resulting in your desired outcome? Have you set yourself up to win–consistently, every time?

Jim Harper is a director in BlumShapiro’s consulting group, Jim specializes in middle-market/large client offerings including CFO solutions, shared services, process re-engineering and business process outsourcing (including control and internal audit) for the firm’s business solutions and technology consulting practices.  He has diverse experience in finance, finance transformation, accounting, reporting, controls and operational management.

The “Newness” of Practicing Fundamentals

My clients often ask me, “What’s new Jim? Show me something new.”  They are looking for a guide through the Cloud or a new way to manage a process.  Perhaps a “new” competitive advantage you could give your company is mastering the “old” fundamentals in every process, with every employee.

In other words: Get great at the basics first.  Basics can be fun, basics can be “new” to some (or many) of your processes, basics can be your competitive differentiator!

Here’s a great example…I don’t play basketball, but I respect the value of a good coach.  John Wooden, one of the most winningest coaches in college basketball (winning 10 national championships), is a stalwart example of the power of fundamentals.  Coach Wooden was famous for taking the best players in the country and making them practice 500 layups or 500 free throws over and over – the basic fundamentals.  Why?  So they would, unequivocally, make those shots in the clutch moments of the game.

Is winning 10 national championships a differentiator? You bet!  Is winning 10 national championships dependent on being the best at the fundamentals?  Of course! Ergo, being the best at the fundamentals is a competitive differentiator!

Working Capital Turns (WCT)

So, let’s get back to differentiating your business by practicing fundamentals relative to Working Capital. Working Capital Turns (“WCT”) is a fundamental metric…one many companies do a poor job of managing.  It takes understanding the levers that move WCT and employing a systematic, consistent approach to managing those levers.  Systematic consistency are fundamentals and it takes a focused, disciplined approach to ensure they are embedded in the processes and culture of your organization.

Let’s do some simple math to illustrate the point.  Let’s say you are now an owner of a manufacturing company (congratulations!) with working capital turns of 4.  This means that given the efficiency, or lack thereof, of the current state of your processes, you convert your Receivables, Payables and Inventory into Cash four times per year. So, every 90 days or so, your net working capital is deposited into your bank account to be used for strategic acquisitions, re-investment or whopping bonuses.

This also means that a full quarter of your sales are hung up on your balance sheet…It makes for a stronger looking balance sheet, but that cash is not working for you like it should!

What if you practiced some fundamentals…and focused on increasing those turns?

Extending the illustration, if your manufacturing company generated $200M of sales, a one-turn increase of working capital would free up $10M in cold, hard Cash from your balance sheet.  What could you do with an extra $10M right now?  Use it to buy out a competitor?  Merge with a supplier – become more vertically integrated? How about invest in new technology? How would you use extra capital to deliver more certainty of success to your business?

Practicing the fundamentals is often passed over in favor of something “shiny and new” – but when it comes down to getting results – it is often consistently practicing fundamentals that makes all the difference.

Let me leave you with a timely example of the importance of consistency and practice: Steven Holcomb is considered the best bobsledder in the world.  In the 2014 Winter Olympics, why did his team only take the Bronze, while the Russian team took Gold?  Answer: the Russian team practiced more.  Being from the area, the Russian team was able to practice the run many, many more times than any other team, so they knew the nuances of the track in all kinds of weather.  That’s what gave them the advantage.  Take a hard look at your processes…is your company set up for Gold?

Jim Harper is a director in BlumShapiro’s consulting group, specializing in middle-market/large client offerings including CFO solutions, shared services, process reengineering and business process outsourcing (including control and internal audit) for the firm’s business solutions and technology consulting practices.  He has diverse experience in finance, finance transformation, accounting, reporting, controls and operational management.