We see rapid changes taking place globally and technology disruptions forcing companies to tweak and make relevant changes to their business to adapt to these external realities. Though this article aims at help all sizes of companies, research indicates that 96% of small businesses fail in the first 10 years.
I have come across businesses who are doing well on paper, but face serious cash flow problems. The reason is, directors and executives don’t take enough time to evaluate the critical triggers which drain company value.
Before we go into the question, I often get asked as to why I refer to both directors and executives. After all, the duties of directors are different and segregated from what management does. Directors must not entangle themselves into micromanaging and not all executives are on the board.
The following are some of the reasons why directors and executives need to work together in certain circumstances:
1) Holistic and vertical: Directors must know the business well. Being at 50,000 feet is no longer enough. In my opinion, planning key priorities, directors and executives should go on a company retreat. This will enable directors to understand the business mechanics more deeply. It will give them varied levels of perspectives which they have not experienced as a board.
2) Talent know-how: Directors will be able to build a healthy relation with the executive team as well as have a better know how of their skill set and competencies. This is instrumental for succession planning purposes as well as having clear communication streams.
3) Bridging the gap: Involvement of executives would further empower and motivate them. I recall speaking to a few executives in a manufacturing company who felt isolated which led to lesser levels of contribution towards the growth of their organisation. Executives need to be recognised as important contributors to the organisation’s value pipeline. Being part of key discussions with a unified purpose to build the company, gives them a stronger sense of belonging and recognition.
4) Aligning the core: Another key factor which I believe to be crucial is the value alignment. I have noted that in some organisations, values are not given enough importance which leads to short termism. In many instances, all focus is on building profits and not on building a sustainable company. By sharing insights, directors and executives will be able to have a better balance resulting in better choices.
I have seen a notable positive impact in many organisations who have brainstormed and implemented a couple of take home points from this one question. The dominant key question to answer is:
What are three ideas and specific action steps we can take now to maximise overall value?
Simple as it may sound, it unleashes a new level of internal company appraisal enabling all directors and executives to think strategically at different levels. I have seen transformational shifts which have increased growth in various industries simply answering this one question.
In my opinion, you need to execute the two or three ideas which stand out with timely discipline. Being specific and clear are key. I am aware that there are many other questions which would add value. However, if reflected with immersion, the answers to this question would elevate your company growth.
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