The goal of this final column in a series on management buzzwords is to help senior managers find tools for improving their companies' performance.
In earlier columns I have described the meaning and potential of a dozen current buzzwords.
One note needs to be added: Timing is everything.
Certain approaches, such as benchmarking and reengineering, offer excellent insights. However, these approaches may be a waste of time or even or even dangerous for companies in certain stages of their life cycles.
All too often managers announce to employees that "total quality" or "reengineering" or some other one-dimensional approach will solve the problems of their business.
Not surprisingly, these solutions lead to disappointment - and typically, to subpar performance.
A management team seeking to improve any aspect of company performance first needs to create an internal checklist of priorities for action.
The starting point should be an understanding of current performance, that is, an evaluation of your own and your competitors' activities. Key productivity and profit criteria should also be on this list.
Managers need to know how they are generating their current results from the total profit performance to the returns of specific products, geographies, and customers.
The more segmented and the more specific this information is, the more useful it will be. Segmented profit analysis can lead to clear, high-priority action steps.
Again, however, segmentation is insufficient in itself. It is only one piece of the performance improvement puzzle.
If this information does not exist to the extent required, one buzzword to consider is de-averaged profitability.
The profit analysis it offers can generate the specific financial input required.
Once an understanding of segmented profitability is in place, other tools can be considered.
For example, evaluating benchmarking and best practices may be valuable for companies with multistate and multi-team operations.
Banks, like many other companies, too often fail to take advantage of the knowledge and experience that resides in their own in-house operations. Internal benchmarking of performance can highlight those tactics within your organization that have led to demonstrably better results.
This practice may be of particular value as financial service organizations focus on maximizing growth in the currently stagnant economy.
One area that benchmarking can address is why some of your people or groups perform better that others year in and year out. For example:
* Which relationship managers are particularly good at selling additional products to their customers?
* Which branches have had the best retention records?
* Which salespeople sell more mutual funds or other products?
Teaming may also offer some real benefits for increasing growth.
The Team Approach
Since cross-selling is now a necessity rather than a luxury in corporate banking, introducing a team approach to corporate relationship management can reinvigorate an organization.
Similarly, for an efficient approach to small business, branch managers often need to "team up" with small-business officers to close a sale.
Throughout an organization, the culture must shift from "my customer" to "our customer." Furthermore, for teaming to work, team goals and team-based compensation also must exist.
Again, management must go beyond the buzzword to develop specific implementation steps.
That is, beware the use of teams for teams' sake, or because creating them has become "the thing to do" in many companies. Teams are not always an appropriate for getting things done.
Teaming requires a leader who is eager to cooperate with others but who also possesses the strength to say "the buck stops here."
Banks often find that some of their businesses have arrived at a crossroads: An evaluation of profitability may show that a business is subscale and requires investment if it is to succeed.
Before making that investment, however, management should consider shareholder value analysis as part of assessing whether additional investment is justified.
All too often, banks still want to be all things to all people. This goal flies directly in the face of the very successful approach used by many nonbanks.
What the best nonbanks have done is to focus on one or two product areas and then become very strong in them - American Telephone and Telegraph Co. in credit cards, for example, Money Store in small-business lending, and GFC Financial in commercial finance.
In a slow economy, growing the bottom line often results from selling more to current customers while squeezing costs down by avoiding duplication of effort or freeing high-cost employees from having to do low-value tasks.
Managers need to create detailed data bases that describe and quantify the cost of the activities being performed.
When customized to your organization, activity value analysis can fit that need. It will allow management to focus on areas that offer the greatest opportunity for cost reduction or productivity improvement.
Another of those buzzwords that has become all too popular is reengineering.
(Recently, a member of a client team working with me on a study with some reengineering elements commented, "You'd better finish your reengineering study quickly, before the fad ends.")
Reengineering should be attempted only sparingly, despite its popularity in the business press.
It is very hard to do well. The explicit support of senior managers is a must; a time commitment of at least 12 months is necessary for many areas.
Typically, reengineering is accepted by employees only when they perceive a crisis in a key operational area, such as credit, product development, or customer service.
The tools described in this series can often be used together, either concurrently or consecutively, to create change.
That is the case because a company is dynamic; its needs change, and it often needs more than one thing at the same time.
The concept behind reengineering and looking at opportunities to create a virtual corporation focuses on the need for effective change.
Changing a company is particularly difficult. If a company is performing well, few see the need to change, even though clouds may be on the horizon.
Like Deer in the Headlights
Poorly performing companies often seem like deer transfixed by headlights, unable to move, without control over their own fates.
The companies that need the most help are often simply over-whelmed by circumstances.
The tools discussed in this series can help shake a company loose from paralysis and indecision.
But no tool, whether based on economics (de-averaged profitability) or organization (the virtual corporation), will have lasting impact without the firm leadership and focus of s managers.
Buzzwords WIll Proliferate
As consultants and professors try to put unique spins on their work, buzzwords will continue to be introduced.
Even in the few weeks since this series began, several buzzwords have increased in prominence or have been revived from the past.
"Stewardship," "corporate venturing," and "segment of one," for example, have started to appear regularly.
Some managers use buzzwords to stimulate thought and raise provocative issues. But the people who generate buzzwords tend to prescribe them as curealls, playing to the many managers keep looking for one approach to solve their multiple problems.
So the caveat should be: Beware the provider of a neatly packaged solution to all your business problems.