I had the great fortune the other day of taking one of our really good fun customers through a visioning exercise for their business.  The business is already terrific but it has been needing a bit of a “gee up” to enable it to realise the potential that exists within it.

The process was very challenging and confronting for the Directors, but it delivered a result that was really exciting.

As part of the process, we questioned the Directors individually on where they thought the business could get to, what is required to get there and some other issues that need to be assessed (this is actually a lengthy process but highly focussed).  We then collated all their answers and took them through the exercise together.  It was great fun for all concerned but the amazing thing was that when they all got together and we facilitated the process, the goals they were shooting for became more clear and, not surprisingly, more ambitious.  The process allowed them all to actually see and think about what they COULD do rather than what they might do. 

We’re finalising the process with detailed plans and activities for achievement of the goals they have set early in the new year.  My prediction – they’ll shoot the lights out as the process has allowed them to see what’s possible and their whole thinking about the business and the opportunities that present themselves, analysis of issues and development of systems and resources is now focussed on achievement of the vision – a collective vision which they all share and have bought in to.

The end result for them will be an increase in net profit (after everything) of some $1m+ each per year.  A worthwhile exercise!  You just need the vision…

“Here are your figures” – and with that a large, nicely bound wad of paper is passed reverently to you in your meeting. 

Heavy? Yes.

Cover everything? Bloody well hope so!

Is it right?  Bloody well hope so!

Is it useful?  Well………

OK, so we all understand that we need to do financials and tax returns at the end of each financial year – we need to as the Tax Office needs us to lodge our tax returns.  Your bank will also want them.  But do YOU, as the person who owns the business that needs these reports actually understand what’s in them?

Over time, people will develop an understanding as to what’s in the reports and become able to use them to varying degrees of sophistication.  The real issue is that a lot of the reports that are done are historical and don’t actually help much in the planning for the business going forward.

For this reason, we’ve been working with a number of our customers on establishing new protocols and reporting structures that revolve around useful information and budgeting that bears some direct relevance to the business.  We’ve developed our own product that provides not only budgeted profit and loss statements, but also budgeted balance sheets (monthly) and, critically, a budgeted cashflow.  This enables us to monitor the performance of the business as it trades through the year and also allows us to make better decisions about resource allocation, staffing and capacity constraints and opportunities and investment decisions.

Many businesses try to make “as much money as possible”.  With respect, this is crap.  How will they ever know how they’re going against this target?  How will they ever know when they’ve got there?  By going through a deliberate, process driven exercise, it is possible to design a meaningful set of goals for the business.  From there, it’s all about planning and doing – you’ll be surprised just how far this will get you if you do it.  BUT you need the right reporting mechanisms to enable you to determine how you’re going against those goals.

In the end it’s all about getting and using reports that are meaningful and useful.  Much of what is required to be prepared to keep the ATO happy isn’t much use for the business owner/manager in planning ahead.  You need other tools which are specifically designed for that task – not designed for the task of hsitorical reporting.

In the October 2010 edition of Harvard Business Review, they report on a study done by Jonathan Levav of Columbia University and Rui Zhu of the University of British Columbia (p 32).

In their study they found that where people are deliberately cramped for space, they will choose to adopt “risk asserting” behaviour.  This is evidenced by the fact that where less space is provided, people will make more varied choices than where they have more space.  This is known as reactance.

The findings where replicated in grocery stores by the researchers who found that where the shoppers were more crowded in their “shopping room”/personal space, the purchase variety by those shoppers increased in more than 70% of product categories.

What are the implications for this with regard to not only retailers, but for those employing people and giving them discretion?  Does this mean that when people are more crowded in their environment, they will react by imposing more of their own will?

For retailers, it might mean that where you crowd shoppers in a smaller space, you will be able to move more of your slower lines as you put them in a more confined area – the people will, according to this study, have a broader variety of purchase choices than when they aren’t pressed for room.

So may be there is an inverse relationship between space and exercise of free will???