Saturday, October 19, 2019

Company Health Check

As is the case with the human body, it pays to give your company frequent health checks, to see how it stacks up against the criteria below. If you believe you have mastered a significant number of the criteria listed below, your company’s performance should mirror your positive assessment. We have found that most companies master at best only a few of the following. So, as in golf, there’s almost always room for improvement if you want your company to be among the elite.

Ten key criterion follow. As you objectively assess each of these in the context of your company, grade each one on a scale of 1 to 10, with 1 being very poor and 10 being excellent. If you reach a score of:

Less than 50, your company is below average and help is definitely needed,

Around 50, your company is average at best and there is room for lots of improvement,

Between 50 and 80, you’re getting it figured out and need help with only two or three criteria, and

Above 80, your company is among the elite in your industry segment and that should be reflected in the quality of the company’s Balance Sheet and P&L.

 

  • Both good strategy and good execution are mandatory.
  • Positive, ethical leadership and a winning culture are essential.
  • A Board of Directors with outside (non management) members is an enabler.
  • A point of differentiation that is understandable and sustainable is crucial to separate the company from its competition.
  • Attention to detail is much maligned (as not being “big picture”, or being “caught up in minutia”), but those companies that are ferocious in their attention to detail are generally more successful than those companies who have a culture of “leaving the details to others.”
  • Companies that operate in a true team environment perform better than those companies that operate in a politicized, “us vs. them” environment.
  • Companies that achieve a level of “brand franchise” will generally outperform their competitors. (Note that a brand does not necessarily refer to a specific product, but can be the personality of the company.)
  • Companies that have a greater purpose (greater even than “corporate citizenship”) seem to perform better than those companies that are focused only on financial metrics.
  • Strong companies recognize that lack of capital is always a symptom, not a root cause of trouble.
  • Good companies recognize that the bell-shaped curve applies universally; and in every situation in which there are a reasonable number of participants (vendors, customers, employees, etc.), the five to ten percent at the left side of the curve generally need to be culled out.

If you would like an experienced, objective diagnosis, or if you would like help in implementing one or more of the criteria listed above, BDA is well positioned to provide that service for you, just Contact Us.

More information on these and other topics can be found on BDA’s blog.