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STRATEGIES ARTICLES |
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Construction Magazine: November 2004 Issue |
Innovation: The Path to Greater Profits - Part 5
By Ted Garrison |
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The
first four parts of this series, the author explained
why innovation is so important to a company’s
success, and also the first six of the 12 critical traits
were explored. This part will explore the seventh
and eighth traits of the successful innovative company.
7) Make
planning an exercise in creativity rather than simple
forecasting
This
suggestion may seem like common sense and it should
be. However, too many companies merely sit down
and project some percentage of increase in business
every year for a certain period. This is a dream, not
a plan. If you intend to increase business other than
by luck, you need a plan.
Without a plan too many contractors merely react to
the business environment. They aren’t running
their business – the environment is running their
business. Instead they should start their planning
process by asking the following four questions:
- What services could be eliminated?
- What services could be reduced?
- What services could be raised?
- What services could be implemented?
The
first two questions can reduce your costs. By
eliminating or reducing services that your customer
places little or no value on, you can increase the value
of the services you do provide. Also, since you
are already providing these services they are easier
to identify. Therefore this is a good first step to
increasing value.
However,
questions #3 and #4 offer the greatest potential. These
questions provide opportunities for your company to
differentiate itself from the competition and at the
same time provide added value to your customers while
also increasing profit margins. This is the perfect
win-win situation.
These
increased services don’t have to be overly complex.
For example, a tenant fit-out contractor met with building
managers throughout his city and asked, “What
is your biggest problem in dealing with your current
contractors?” They all basically responded
with “cleanliness.” Their current
contractor’s workers wore dirty clothes and boots,
they made a mess of the elevators and the building’s
lobby and they parked their beat up pickup trucks in
front of the building. This innovative contractor
approached the process differently. He placed
his workers in clean uniforms, provided them with vacuum
cleaners so they could clean up any mess immediately,
and hid his pickup trucks.
This approached worked because it solved the major problem
facing the building managers. While other contractors
were focusing on schedule, cost and construction quality,
this contractor focused on a higher value – namely
tenant complaints. This doesn’t suggest you can
ignore schedule, cost, and quality – but they
are only the starting points. To help jump-start this
process, get out and talk to your customers and prospects
to find out what higher value services you can offer
or expand.
8) Don’t wait for
the perfect opportunity. Try things:
No one knows with certainty what
new ideas will bear fruit – so everyone one must
learn to try things. The idea is to keep the experiments
small and see what happens. If they don’t work
out, the cost is small. However, if they work out then
they can be implemented across the entire company.
The constant improvement with little
initiatives that was discussed earlier is a key to this
trait. Little initiatives create small risks –
so they don’t have to be perfect and they can
be modified as you go along.
Keep in mind that not all of your
customers will have same problems. However, when
you discover a benefit for one type of customer, you
certainly can approach similar types of customers with
that innovation. And this certainly doesn’t
preclude you from mentioning the innovation to other
types of clients unless you know that it would have
no impact.
But if you never try anything, nothing
will change. So establish the goal that everyone
must try something new every week. Before long
those 1 percent improvements will add up to real dollars. |
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THE END *
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Ted
Garrison, the author ofStrategic Planning
for Contractors, works with businesses
in the construction industry. He can be reached
at
Growing@TedGarrison.com
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