What You Can Measure, You Can Manage
Background
Bill was a painting contractor. Most of his contracts were with repeat customers, some of whom had done business with his father. The business had thrived under Bill, enabling him to invest in a motel, a restaurant, real estate and other businesses.
The Problembr
Suddenly, Bill encountered a big problem. He signed a contract to repaint a large motel. The foreman was a steady fellow who’d been with Bills firm for 20 years, but the job was falling behind schedule. As the weeks progressed, other problems arose that put the job even further behind. Now Bill was facing penalties for not finishing on time. He was watching his profits tick away on the clock..
The Solutionbr
Bill, his foreman and I met for breakfast to review the situation. I suggested a contest, with incentives where needed, and advised them to split the crew into two teams. We divided the remaining work in two equal lists of areas to paint and things to do. We calculated the time it would take to complete a quality job on budget and with a profit. Bill announced to the two crews that the goal was to finish their respective tasks in the allotted time, adding that any time saved under the allotted time would be a bonus-paid time off. As a kicker, the team finishing first would get a case of beer.
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Know and Exploit Your Niche
Background
Jim and Cheryl owned a retail store that sold high-end hi-fi sound systems. It started out as a hobby - they were real audiophiles. They sold sophisticated equipment in the higher price range to knowledgeable buyers, like themselves, who understood the basics. They had a good corner location on a main thoroughfare.
The Problem
A competitor set up a store diagonally across the street with an advertising slogan that scared my clients to the bone - “we will not be undersold.” Jim and Cheryl’s initial impulse to this challenge was to fight fire with fire by dropping their prices. They feared that their established store would be driven out of business by a low priced competitor.
The Solution
My counsel was quite the opposite. Rather than using pricing to compete, why not keep prices high and compete on the knowledge that they acquired over the years, the service they provided from that knowledge and the high quality of their product lines. They agreed and held the higher price line. Together we developed a “compelling value proposition” that included an after-sale guarantee on service as well as an equipment trade-in feature.
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