The Disappearing Boss - Issue 18

You already know you want your employees to own your business.

How about getting them to run it too?

How about enabling them to do that before you hand it over?

Ask me how.

Now, down to business.

Capturing Process Feedback

An entire industry has grown out of working out what it costs a business to do the things it does. Along with a panoply of tools and techniques. When I was studying at London Business School, I loved it.

It turns out that there is a simple measure that’s good enough for most cases.

Time. Or more accurately, duration.

If you know how long it takes for a client to go through your Share and Keep Promise process, and what your total operating costs are over that time period, then you can work out what it costs you on average, to do what you do for each client you serve.

Of course, this works best when everything goes through the same process, so if you offer more than one kind of Package to clients, you will probably want to split things down by Package, to get a more accurate picture.

Cost per unit of work time = Total operating costs/no. of units of work time in the time period.

For example:

Cost per Operating Hour = Total Annual Operating Costs/(2,000 x no. of employees)

Where 2,000 hours = (365 days -113) [weekends and bank holidays] x (8) [hours per business day].

Average cost per client = Cost per unit of work time x no. units of work time it takes for a client to go through Share and Keep Promise.

So far, so not particularly interesting, except that it is useful to see which clients actually cost more or less than the average, and why that might be.

There is another kind of duration which is useful - elapsed time.

It may only take 24 hours of work to help a prospect move from Qualify through to Enrol, but the elapsed time is likely to be much longer.

Looking at elapsed time durations for Activities within the process can yield useful insights, even at a high level.

How long do clients stay in Share Promise? How long do they spend in Keep Promise? Why is that?

Then dig down further, e.g. for Share Promise:

How long do prospects spend in Qualify? How long in Demonstrate Value? How long in Enrol? Why is that?

Add this information to conversion rates between Activities and you will start to see where you need to Improve your Share Promise process:

If there isn't much coming through from Show Up to Qualify, are you reaching the right kind of people? If people are spending a lot of time in Qualify, is that because they aren't being followed up? If people are spending a long time in Demonstrate Value, is your sales team overloaded?

If you offer different Packages for clients, then you'll want to look at both elapsed time and work time on a per Package basis:

Does it cost more than average to Keep a particular Package Promise? Does that make it less profitable? Does it cost less than average? Does that make it more profitable? Does it take longer? Does that make a difference?

Once you have some measurements of elapsed times and work times for your processes, you can start to extrapolate even more useful information.

Say you employ 3 people full-time in your business, each working 8-hour days. You can easily calculate the total work time capacity in your business:

Total work time capacity = 2,000 x 3 = 6,000

Now say it takes 24 hours of work time to help a prospect move through from Qualify to Enrol, then 150 hours of work time to Keep Promise for them.

At that capacity, you can handle at most 34.5 clients. Actually less than that, because you have to deduct work time spent on Showing Up, to attract people into Qualify.

Now imagine you have 28 clients already working with you. You also have 100 prospects sitting in Qualify, and you know that 50% of them will move on to Demonstrate Value, and that 20% of them will complete Enrol and turn into clients. You also know that it takes 240 hours in elapsed time for a prospect to move through from Qualify to Enrol.

That means that in 30 business days time, your team will have 10 more clients to deal with, with capacity to deal with less than 6.5 of them.

You need to start recruiting for a new team member, or working out overtime arrangements.

So, how do you measure your durations?

Elapsed time for your processes is straightforward to collect, and ideally can 'fall out' of running the process.

One way is to log events that are of interest (e.g. when prospects switch from Share Promise to Keep Promise, or From Qualify to Demonstrate Value to Enrol to Keep Promise) and adding up the time that’s elapsed between them.

You almost certainly already note these events:

• when a prospect makes an enquiry
• when a prospect becomes a client
• when you welcome a client onboard
• when the particular promise you made to this client has been kept

You may even collect them automatically – in your CRM, or your accounting system, or your workflow management system.

Or you may mark them with emails sent and received - which are of course time-stamped.

You may also already capture work time, by getting your team to log time spent per prospect/client. You may just need to tweak how you do this so it corresponds to the activities that form your Share Promise and Keep Promise processes. Or you could ask people to record times for a week or so to get a baseline that's good enough to work from.

The important thing is that as far as possible, admin shoud be a side-effect of doing the job.

That may mean automating something. It may mean being creative about finding a proxy measurement. You want to avoid cerating work about work, that doesn't serve the client.

Hopefully this gives you a taste of how some very simple measures - elapsed time, work time and total operational costs can be used to generate powerful information to help you run your business efficiently and sustainably.

What do you think?

I already have a tool for capturing the processes (OurScoreTM ), I'm working on adding process measurement. If you'd be interested in helping me, do get in touch.

As always, thanks for reading,

Ready to leave your business as your legacy?

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