About a decade ago, I hired a very seasoned associate to join FranklinCovey. This person was heavily steeped in our content and functioned in a high-level performance improvement capacity for one of our clients. They integrated quickly into our culture and immediately proved to be a great fit for our organization. Several years into their tenure, we launched a new leadership offering, and they joined a large cadre of internal consultants who became certified to facilitate the solution with our clients.
After 25 years in the organization, I’ve had thousands of encounters with associates, clients, competitors, alliances, partners, thought leaders—the list is significant. But one of the most memorable involves this particular associate during a multi-day content certification. A robust part of this soon-to-be-launched solution involved creating a more in-depth and sophisticated understanding of the participants’ employer’s money-making model. Simply stated, FranklinCovey taught what the famed executive advisor and author Ram Charam terms “The 5 Parts of Business”: Cash, Margin, Velocity, Growth, and Customers. Further, in building the participants’ business acumen, the work session focused their learning on specifically understanding how they could better contribute to their own company’s business model, thus making them more relevant and valuable.
I recall as if it was yesterday, this internal consultant, who reported to me, came over to me during a break and began to talk about all the ways they now fully understood FranklinCovey’s business model and the epiphany they’d had on how their contribution could drive more profitable growth. This person’s insight was exactly correct, and I was both simultaneously inspired and mortified. Why, as their leader, had I not better explained our business model and illustrated the parts they, and each associate reporting to, could better impact through their daily contributions? Rest assured, the following week I set out on a division-wide education campaign to ensure every team member knew our money-making model and were aware of all the levers at their disposal to drive our business growth more profitably.
If you’re a people leader, you must ask yourself, minimally, the following questions:
- Do you and your associates understand and have transparency to your cash collection processes and understand your targeted DSO (Days Sales Outstanding), which is the number of days it takes your company to collect payment from clients—the lifeblood of cash?
- Are you and your associates clear on which products and services offer the highest profit margins to your company and does your team possess the skills to calculate and price deals that both benefit your clients and your organization?
- Have you studied and explained to your team how inventory turns and obsolesce impacts profitability?
- On that note, can each of your associates read a P&L and do they understand how they individually impact your own P&L?
- Is everyone in your organization clear on your annual and quarterly revenue and profit goals? Do they know when and if you’re hitting or missing them and why?
- Can your colleagues describe the types of clients that are ideal for your company and when an existing client might need to be released because their needs or demands no longer fit your model for future growth?
I could list dozens of questions like these, but every organization has a different model given their mission. Some are private, and the level of transparency may be less. Information may need to be on a need-to-know basis, but that shouldn’t prevent you or them from building their business acumen. Your charter may be non-profit or a government agency so different questions and skills need to be explored and developed.
Based on your employer’s status, draft a list of business model–related issues that everyone needs to know and get to work on an organization-wide education campaign. And while you’re building their skills, be sure you’re building your own as well.
As the leader, use your learning curve to make it safe for others to know it’s fine not to have all the answers, but that you’re on this journey together to understand and perhaps even refine your business model.
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