Per earlier posts (here and here), I’ve been thinking about what goes into taking over a new organization. In my last post on this topic, I may have given the impression that costs and prices should be one’s main focus.
To that end, this area is one that I’ve neglected — the HBR New Leader article wisely emphasizes looking at customers up front. In a past role, I spent too much time working cost, price, and process issues. When I finally got to the customers I realized that I had left considerable revenues and profits on the table.
- Which are the biggest, fastest-growing, and most profitable customer segments? This should tell you whether you’re in the right segments.
- How well do you meet customer needs relative to competitors and substitutes?
- What proportion of customers are you retaining?
- How does your Net Promoter Score track against competitors? There are a number of doubts about this specific methodology, but a systematic look at loyalty scores — and the reasons behind loyalty or switching behaviors — is essential.
- How much of the profit pool do you have today? How is the pool likely to change in the future? Again, the authors are from Bain and are referencing a Bain-aligned approach. On the same topic, I recommend this book on Strategic Cost Management by a business school professor of mine. Shank and Govindarajan introduce some great tools for looking at the value chain.
- What are the opportunities and threats? Opportunities and threats to WHAT? Use the preceding questions to focus the SWOT analysis.
Filed under: Leadership, Strategy Management, Turnarounds | Tagged: customer loyalty, Harvard Business Review, Hernan Saenz, John Shank, Mark Gottfredson, Market Analysis, Net Promoter Score, New Leaders, profit pools, Profitability Analysis, Steve Schaubert, Succession, SWOT, Vijay Govindarajan | Leave a Comment »