By Paul Latham
Are your business owner clients (and their teams) thinking about the “rubber bands” inside their business?
We have highlighted in a previous blog how the concept of “elephant sandwiches” can be used to help educate your business owner client and team and drive their implementation of long-term strategic change. However, your clients will not thrive and survive on “elephant sandwiches” alone! The team need to be pointed in the right direction – and to do so, the client must ensure they have established the appropriate “rubber bands” inside their business!
If you are wondering, “rubber bands” relate to the key processes established inside a business that will drive consistent team behavior.
An important component of those “rubber bands” are the business Key Performance Indicators (KPIs). These are the measurements used by a business to ensure that a particular process has been followed / is working properly. Ultimately those measurements should help your client to evaluate business (or individual) performance. What are your client business definitions of success – and what behavioral “rubber bands” have they created? Remember – “what you can measure you can manage”.
Most businesses measure things (often for long forgotten historical reasons). What is often not understood is that whatever you measure will influence team behavior (both for good or bad). This “bad” (unintended) behavior is the potential flip side of “what you can measure you can manage” – and your business owner client will need help.
In the example illustrated (above) the business is measuring “X” and “Y”. Everybody on the team knows these are measured (by their boss) – so X and Y “must be ‘important” and as such they strongly influence team behavior. They create a “line of behavioral tension” (just like a rubber band).
Now let’s imagine the boss also decides they want the team to concentrate on new activity “Z” (in the illustration). However whilst “X” and “Y” continue to be measured, “Z” is not measured properly – maybe it’s something considered “difficult to measure” (e.g. “always establish customer needs first”).
What typically will happen is that while the boss is watching that team member – they will carry out activity “Z”. They stretch the line of tension to “Z” (see red dotted line in illustration).
However, sooner or later the boss looks away (their attention is diverted elsewhere). Unless “Z” is measured (as a KPI) the team behavior will revert to the norm (the X-Y line of tension) and Z will not happen (consistently or properly).
To overcome this inevitability, business owners must decide what matters inside their business (establish definitions of success), and think about what team members should be doing – and then measure them properly (establish KPI’s) to drive the behavior they want. Even if at first sight a task is difficult to measure, the business must find a way (there is ALWAYS a way to measure what matters).
The client business maybe needs to create totally new (more appropriate) “rubber bands”. Perhaps X and Y are no longer relevant to the way the client does business today? Perhaps they should be measuring something completely different, for example, they may want to drive behavior “A” – “G” (shown in the illustration below).
In this example the key desired behaviors are:
– Follow the A-G process
– Generate revenues (by following A-G process)
– Delight the customer (by following A-G process)
CPAs should be encouraging their best clients to determine their definitions of success and establish appropriate KPI’s. Having done so, they can begin to point their team in the right direction – and drive accountability and the behavior the client wants.
By helping your client in this way, it also represents the perfect opportunity for the CPA to position themself with their client as their “Most Relevant Advisor” – and in so doing build and lock-in long-term value-added revenue streams.
If you are a 21st Century CPA you have a fiduciary duty to help your business owner clients to Maximize Business Potential. You should be encouraging your best clients to think about their “rubber bands” – and we can show you HOW.