Accelerate 2017 growth with mindful A-D-E: automation, diversification and expansion
Like any athlete knows, it’s not just about working until you drop, it’s about taking on a sustainable, mindful practice that prepares you for the longterm goals and stops you from getting injured in the meantime.
Following the A-D-E, also known as automate, diversify, and expand mantra in a managed and mindful way, will help you to really make a difference this year. With 2017 off to a productive start, many franchisors are looking for the edge to get them to peak performance.
Whether you are trying to build a franchise empire or just want to make enough to pay yourself a decent wage and set yourself up for a comfortable future, the same principle applies: you must understand exactly where you are. Accepting the lifecycle of your operation and building up is the prudent approach. Automation, diversification, and expansion are talked about a lot these days, so let’s understand how these can apply in a bid to scale up your franchise in 2017.
According to business expert Ron Carucci in a recent Harvard Business Review article, the stall point for many mid-size businesses is when they find themselves a $100 million organisation trapped in the body of a $3 million company. It is important you have the right infrastructure in place before you expand. We all know you can’t build on poor foundations and the same applies to business growth.
Enter the automation engine
Before we jump into automating everything that moves, we need to firstly deconstruct what you are trying to achieve from a particular role or process.
There is a lot of hype around automation however franchise owners need to really consider the types of technologies that will work in their businesses.
Optimising the automation process starts with seeing the tasks of a job as independent and fungible components. Experts believe deconstructing and then reconfiguring the components within jobs reveals humanautomation combinations that are more efficient, effective, and impactful.
With Artificial Intelligence, or AI, routinely taking out blue and white collar jobs, the challenge is to know what you want to remain as ‘human work.’ How happy will your customers be if they were to be greeted by a robot on the shop floor or on the phone? Adopting an automation strategy, that realises its benefits, avoids needless costs and rests on a balanced understanding of work and its role in the profitability of the operation. Can you risk it for the biscuit?
Before you take yourself on the automation journey, you need to stop and think
With automation the flavour of the month, it is important to understand the repeatable tasks in your business. Make a list of what you and your staff do each day and the time it is taking you. Whether it’s the stock ordering, managing the customer experience, staff rostering, serving customers, invoice creation or chasing overdue payments. You need to know what you and your staff are doing for all the hours they are spending in the business.
There are literally a million apps out there, you need to ensure the apps you select are integrated and rewarding you for the discipline of recording lots of pieces of data. Most of all, make sure value is not lost in the automation.
Understand the difference between diversification and expansion
Diversification and expansion are different. While they can co-exist in most business empires, they are distinct operations.
Diversification involves the addition of new products to existing products, either being manufactured or being marketed.
Expansion, on the other hand, involves the existing product line.
Both give you the opportunity to target more customers that have not been explored. Identifying these markets and customers is one of the methods of growth that a franchisor can consider. This approach may require some funds to execute successfully especially for new regions.
The concept was created by the father of strategic management Igor Ansoff, the Product Market Expansion Grid is known to be used by many Fortune 500 companies such as Philips, IBM and General Electric. The matrix is designed so that as a company plots its new and existing products and markets, the amount of risk associated with that strategy corresponds with its position on the grid. Developing a strategy with existing products and markets is low in risk, but with new products and markets risk increases.
Scaling a business
There is an art to scaling a business – a point not lost on Sherry Coutu’s influential Scale-Up Report (2015) which touts the expansion process in a predictive fashion. Adopting the same approach will also help to create the platform for successful growth. In her view, building collaborations was key to success. Many smaller companies are fortunate to find a market niche for a service or product that grows rapidly. When this happens, they simply ‘rinse and repeat’.
This approach, while attractive, ignores the reality that one day the conditions change and there is no safety net – in this case revenue that could be generated from another market. Think of those companies that gave 100 per cent of themselves to the mining boom.
Being able to quickly multiply successes is not the same as building for sustainable growth. Taking the time to design an organisation that can sustain growth is what distinguishes great franchises from those that eventually get swept away.
Scaling up to manage growth involves constantly questioning how your organisation should look — in advance of intensified growth. Start asking your business the hard questions – what would happen if our biggest customer no longer existed? Are we a one trick pony? Are we only targeting a small segment? This process can be powerful and slightly terrifying.
Creating a rule book for growth requires a simple list of things you will and won’t do. These may include – the amount of profit you can invest back in the business, the time predicted the change will actually reap the rewards and the target number for growth.
It is often the safest option to work within a time and dollar budget. Often the expansion and diversification we seek is not realistic given time and money constraints. Setting yourself goals over a 6-month period, then 18-months and then 3-5 years will help to set you up for success.
Being agile is a key ingredient to modern success
Most of all don’t be afraid to explore. It is a great time to be a franchisee with so many sensible and scalable solutions you can take advantage of, the world is your oyster. Following the automate, diversify and expand mantra in a mindful manner will really help you to make a difference in 2017.
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