Multiplier effects
Several clients have asked me lately, “Can you see ways for us to dramatically improve profitability?”
They either want to return outsize profits to owners, or more commonly, reinvest such profits into the business, or for the benefit of their stakeholders.
And, the short answer is, “Yes”. Usually I can.
A consulting colleague, Evan Bulmer, shared a pearl of wisdom that I’ve subsequently shared with my clients: “People make margins”.
What he means is two things:
Salespeople fix the prices that customers will pay.
Operations people set the throughput you can achieve.
And, from small changes driven by these people, we get big impact. Tiny tweaks on just three variables (price, margin, and volume) will multiply to an outsized result. A steady 5% annual increase in each? Over 5 years, that compounds to a doubling of profit.
Don’t believe me?
Do even better, say, 10% and you’ll multiply fourfold in 5 years.
Question: What factors can you increase marginally year-by-year, to create outsize profits over time?
Attainable leads
Some of my clients tell me they’re tired of wasting time on tenders they have no chance of winning. They even sometimes feel like their bids are feeding someone else's success.
They're not alone.
Many are falling victim to the hidden world of "below-the-line" criteria – the unspoken factors that influence decisions long before you submit your proposal.
Here's the reality: just meeting published criteria (scope, quality, cost, etc.) isn't enough. You need the secret sauce, which has three ingredients:
1. Relationships: Do you have a personal connection with the decision-makers?
2. Referrals: Do persuasive industry peers vouch for your work, within earshot of your buyer?
3. Results: Do you have proprietary approaches that directly deliver value?
So, it certainly feels like a rigged game when you don’t have ‘below the line’ advantages. My advice to my clients is to NOT bid if you don’t have at least two of these.
And, this doesn’t reflect the fact that there are also ‘below the below the line’ criteria. This is when a tender issuer already has their mind made up about the successful bidder, and all you’re doing by bidding is fulfilling illusory compliance requirements. Or, worse, feeding your information to the tender issuer, or the successful bidder.
However, to pave the way to future winnable bids the path is clear:
Prioritise relationships: Build connections with key decision-makers, whether you’ve got their business or not.
Leverage referrals: Ask satisfied clients to sing your praises, widely. (I love Kevin Kelly’s “1000 True Fans” approach).
Showcase unique value: Disseminate case studies of how your proprietary approaches create value.
Question: How much time do you spend chasing unattainable vs attainable leads?
The power of 1%
Tonight I made a prawn pasta dish that my wife said was the best thing I’d ever cooked. I’m always happy with compliments, but honestly, I’m no Masterchef.
But, with this dish, I did something I’d never in my life done before.
I visit my elderly mother each week and take her food and check she’s OK. She said, months ago, “I feel like prawns. Can you cook some?” So, the next week, I did. And the one after. And the one after that. For 10 weeks, I made the same dish. Never very different, but never the same twice: I experimented with how much oil I used, how hot it was, frying the prawns in garlic first and removing them before adding them back, reducing the tomatoes to different degrees, adding smoked paprika.
And, tonight, it was superb.
So, in a world where we seem obsessed by disruptions and breakthroughs, I maintain that our best chance of improvement often comes from doing what we do well, but keep making it better. A 1% improvement daily, after all, will double performance in 70 days. Warren Buffett ascribes his success to the same principle, namely, getting average to good results repeatedly, over a long time, letting compounding do its work.
What’s most important, though, is not the repetition. It’s the insight that accompanies the repeated efforts. I can cook a dish a thousand times, but if I’m not paying attention, learning each time, I won’t improve. If every time I do it, I ask, “Why did that work? What can I change?” I’ll end up somewhere pretty good.
Question: What can you improve through repetition coupled with insight?
My 1% is knowing that you’ve enjoyed reading, so please do click the heart. This week, notice small ways in which you can multiply your successes, and those around you.
See you next Friday,
Andrew
Enjoyed this as ever thanks Andrew, especially the repetition lesson on prawn pasta from six months ago. If only I could cook that well. A great refresher!
Glad I found 5 minutes to read this week, and another few seconds to validate the membership thing to be able to comment- - loved it , thanks Andrew!