The task faced by an executive in a company is in many ways similar to the task of a consulting team when it arrives to an organization. A comparative analysis of these two tasks allows us to reach a series of reflections that, when implemented, increase the chance of success in the task of the executive.

This article is divided into two sections. The first section covers the 5 steps of the value generation cycle. It explores key concepts to increase the probability of value generation in the company. The second and last section comments on some final reflections that the executive may use in his daily actions.

THE VALUE OF A CONSULTATIVE APPROACH IN THE MANAGERIAL DECISION-MAKING

Figure 1 shows each of the 5 stages of the Generation of Value (methodology used by Sintec to approach its consulting projects). These stages are: 1) having clear goals 2) understanding the environment and the company 3) identifying value / designing value 4) testing value / generating value 5) maintaining value.

Likewise, figure 1 shows the relationship between a Consultative Approach and an Executive Approach, concluding that there are relevant parallels between the two of them. This allows us to infer that the lessons from one approach are relevant to the other.

Figure 2 shows how there are a series of key elements in each of the stages of the Generation of Value cycle, which we believe that increase the chance of generating value in the company.  For that purpose, we describe each of the key elements with examples of actual business scenarios that we have witnessed.

1. HAVING CLEAR GOALS

This stage is about clarifying the problems that need to be solved, and thus, knowing clearly what you have been hired for.

In this stage, some of the key concepts are:

• Maintain the focus of the team:  Clarifying which are the critical things that need to be requested and encouraged to achieve the strategic and common goal of the organization. Saying this implies that there are things that are going to be left in standby, and some people will disagree with any actions taken.

Example:Implementing a new compensation system for company executives to allow the company to focus its efforts to a new strategic thinking despite the adverse reactions that may exist within the organization.

• Periodical Communication and Validation: Establishing periodical meetings with project sponsors / executives to validate path being taken and to make them co-owners of the decisions made.

Example: Having meetings with advisors / mentors to keep them informed of the course of action of the company and to avoid surprises.

• Having Flexibility and Responsiveness: Having clear goals does not imply being unable to make adjustments. Flexibility and responsiveness are vital for the success of the assignment and the final generation of value, the challenge is to reduce the time for the entire company to respond to changes.

Example: Adjusting the product portfolio of the company, offering products with lower grammage before the fiscal and legal changes of the country.

• Focusing energy not only in the what but also in the how: Focusing the energy of the human resources, the physical and economic capital of the organization in specific goals. For that purpose, it isn’t sufficient to know what the goal is, but also which are the steps to get there.

Example: Entering a new category of products without clearly understanding the complexity it will generate for the organization in terms of manufacturing machines, storage space, changes to the distribution routes, the training of the sales force, among others that may end up taking away value.

2. UNDERSTANDING THE ENVIRONMENT AND THE COMPANY

This stage is about clarifying the environment in which the company operates. Competition, economic environment, clients, type of market in which the company competes, political, social and legal aspects. And also to know where the organization stands in terms of: processes, structure, culture, tools.

In this stage, some of the key concepts are:

• Visiting and Monitoring the Market: Being aware of the environment to identify opportunities or threats for the business, and to avoid making decisions with an internal perspective.

Example: Implementing the practice of visiting the market and conduction customer surveys is a first step in this sense, an example of a blunder that we witnessed was a company that decided to raise the prices in an environment of recession in a market of perfect competition.

• Understanding the Complexity that the Company is able to Support: This is a task that requires humility and dedication from the executive to have an in-depth view of the company as a whole.

Example: Not creating a national distribution network (opening distribution centers) without having the processes to support its launch (distribution center re-supply processes, differentiated inventory policy, order to collection process, etc.)

• Understanding the Organizational DNA: Understanding the organizational culture, informal networks and temperature of the organization will allow us to identify the stakeholders that will bring about change in the future.

Example: Identifying the person that will bring about change is not necessarily done through the company structure (a senior with no formal position but who is sought by everyone for advice).

3. IDENTIFYING VALUE AND DESIGNING VALUE

Stage during which the gaps of the current status vs. best practices are detected, the course of action to be followed in the design is defined, the solution is designed and put in a realistic perspective, and the implementation plan and the business case are prepared.

Key concepts of this stage are:

• Implementing Quick Wins that Generate Value and Credibility: Before deploying the entire solution, seek to achieve Quick Wins. This is something that executives need to attempt in every project to generate confidence and credibility in the organization.

Example: Stop serving negative profitability clients. Another example is for a business director to make a major sale for a client of his trust who wasn’t a client of the company he is joining.

• Involving the Organization: Involving people from the start to avoid resistance to change at the time of implementing the strategy.

Example: Having a formal meeting to communicate the start of a specific project of the organization.

• Being Objective and having an Integral Overview in the decision-making: Making decisions that are supported by a integral analysis of the issues, and not on a subjective and partial view. Example: An executive action of a client that wasn’t correct at the time, was to eliminate marketing investment (promotion and merchandising), being that these two drivers are a major boost for sales in that category. That measure intended to improve the profitability of the company in the short term, but it resulted in a significant loss of market share.
• Defining Goals and Adequate Incentives: Establishing feasible (economic and performance) goals for the organization, derived from sensitivity analysis of the business case and/or the company plan.

Example: Establishing correct goals for the sales force to promote behaviors that are aligned with the organizational strategy.

• Having a clear action plan: The plan to be executed has to be sufficiently clear for the organization –with activities, responsible parties, deadlines and resources needed− because this will be an input for the management routines to be carried out later on.

Example: Building the action plan where the person in charge of an activity gives a first suggested timeline for his active participation and his sense of commitment and belonging.

4. TESTING VALUE AND GENERATING VALUE

This is the stage when things go from a PowerPoint to reality. That is to say, pilot tests are prepared and deployed to the market and/or company. The goal of this is to provide feedback on the design generated with the lessons and the adjustments before deploying it to the organization as a whole. Likewise, this is the stage where once the model is solid, it is deployed to the organization as a whole.

Key concepts of this stage are:

• Understanding that the took doesn’t arrange the process by itself: Clearly knowing the process that will be deployed, and having the person with the competencies required for the tasks before developing a complex tool to support the process.

Example: To avoid implementing software to optimize transportation costs without having properly negotiated the fees and having a robust management process in the transportation companies.

• Shielding an Emerging Initiative against Operational Problems: Devoting people and shielding them from the operation, but attaining synergies between the different areas.

Example: Establishing a project room with all the participant fronts to exchange ideas and to validate potential changes to a front and its impact on the rest.

• Identifying  Human  Resource Competencies: Recognizing that some persons have skills to manage something already created while others have skills to create, but not to manage. Likewise, detecting the training that must be provided to the organization to support the new processes.

Example: Evaluating with assessments the profile and technical skills of the human resources that will be required for the “new” functions.

• Having Change Management as a constant process: Continuing with the change management process. Measuring the temperature of the organization and the market and any potential resistance to change in the stakeholders.

Example: Generating a constant communication plan for the successes and the difficulties the project is facing.

5. MAINTAINING VALUE

The goal is to achieve the goals set, and to establish a management model that supports the sustainability of the solution posed, with constant improvement, once the consulting team has left the company.

Key concepts of this stage are:

• Implementing Management Routines: Management routines need to be implemented throughout the organization with the different approaches to enable the decision-making process. A financial approach for the managing team and a performance indicators and conformance to the process approach to cover the tactical / operational side of the organization.

Example: To conduct follow up meetings with the management team every Monday first thing in the morning to see the results of the company and the actions the company needs to focus on. Likewise, setting the meeting as the first thing in the morning sets a discipline standard with respect to the time of arrival.

• Focusing   on        Accountability and      Problem          Solving: Focusing        people on        their      tasks       and      prevent             them from        blaming            things   that      are       outside             their      control.

Example: Generating a standard to submit any problems and any proposed solutions at company meetings.

FINAL REFLECTIONS

Organizations live in a project environment. Whether it is to build an annual business plan, to deploy the long-term strategy, or for the specific improvement of a process in the organization.

Using a consultative approach in an organization has many advantages, such as:

• Having a methodology, or a “mental map” that has proven to be an effective problem solving method in business.
• Enabling the attainment of the goals by avoiding common mistakes.
• Approaching in an orderly fashion a problem that is complex, be it due to the nature of the issues covered, of the information that is available, the human resources of the technical skills required.

To the extent that executives are able to make their company generate this value cycle in a consistent and replicable manner in different fronts of the organization, the organization will have the flexibility and dynamism to respond to external impacts and/or to better seize opportunities.

This value cycle has to be developed not only in a consistent manner, but it also needs to be focused on the issues that generate value to the organization and which are a priority. In other words, the executive needs to maintain the focus of the organization by deciding what to do and what not to do.

In order to increase the chance of success of the executive in the achievement of his goals, he has to participate in every age of this value generation approach, walking a mile on the footsteps of the different stakeholders of each stage: to be a visionary, a planner, a coordinator, executor, and an administrator.