Operating Disciplines and Levers for Growing Consumer Brands and whats next.
Operating Disciplines and Levers for Growing Consumer Brands.
When an Operator is building a new growth consumer products business or making radical changes to an existing stagnant business, there is a proven path a company must travel.
The path starts with a handful of Operating Disciplines that every great company has mastered.
Operators master these disciplines through a clear understanding of their strategic importance and how they interact with each other. These Operating Disciplines are the Language of the company. It’s the language the leadership speaks daily and flows throughout every employee. These Operating Disciplines are the areas a company measures, sets clear targets and builds clear action registers. They are cadence of the business. It is the value of the business.
Ultimately for fast moving companies, each of these Disciplines have associated Levers. Levers are subcategories of the Operating Disciplines. A Lever is a definable action. For example, one of the Operating Disciplines is Gross Margin Mastery. Under Gross Margin there are numerous Levers a company must master. For example, for the Gross Margin Discipline, you need to master all the Average Selling Price (ASP) Levers. An example of one of the Average Selling Price Lever is "Sales Leader Discounting" or "Sales Leader Product mix difference".
Throwing a Lever means measuring something and actually making a change to a process or a behavior. It’s moving the business forward.
In the above example, with Average Selling Price (ASP), do you know, by sales person, by customer, by SKU, the difference in Sales Price? The information will be mind-blowing. Do you know why there are differences? Discounting? Channel difference? Differences in pricing by Customer? Difference by month? Are different Sales leaders selling the same SKU at a different price? Are Sales leaders selling different products? Have you looked? If you are small, fast growing business, I bet you haven’t.
So, throw the Lever. Stop discounting. Clarify pricing tables. Narrow allowed discounting and require Senior approval for deals outside the pricing tables. Understand the season pattern to discounting by time. Show the Sales team the top 10 selling Skus; Sales leaders may simply not know what is selling the best. Share the Skus with the highest Gross Margin. Etc.
Now measure Average Selling Price (ASP). Did it improve? If it did, then your Gross Margin improved. Got to the next Lever.
Measure an Operating Discipline, measure their Levers, throw a Lever and watch it. This is what Great companies do.
Large, old, boring businesses (i.e. Walmart) excel at the Mastery of the Operating Disciplines and their Levers. Small companies suck at it. Don’t suck.
Your business must master the Operating Disciplines:
Revenue
Gross Margin
Cash
EBIT
Culture
Brand
Product
Customer
Throughout my career I have mastered the Operating Disciplines. I have defined each of the Operating Disciplines and why they matter. I understand how they interact and at times conflict with each other. I have created a master list of all the Levers a Consumer Brand must master (So far there are well over 100 Levers). I understand how to measure them in a way that will allow you to throw Levers, drive change and drive to great.
I understand which Levers are needed for specific life-cycles of a business; some Levers are more important for very small company’s while other Levers are needed for maturing businesses. I know how to use them to get ready for an IPO. I have numerous real-world examples on how these Operating Disciplines and their Levers drive a business.
Watch for more articles to come. I will write specifically on why each Operating Disciplines matters. I will discuss the basics of Operating Discipline measurement & action. Finally, I will document the Levers.
Beyond articles, I am still figuring out what to do with all of this. Consult, teach, podcast, blog, website, nothing?
OK, got to go. I get to get one of my daughters from school. ut.
