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Invest in the un-sexy back-end systems

I was listening to Brent Hoberman from lastminute.com fame on Radio 4 the other day when he gave some very good advice. He advised businesses not to forget to invest in the “un-sexy” back-end systems. I wouldn’t couch it in the same terms but his advice is very good.

Get the basics right!

When Brent was working at lastminute.com a lot of the investment and focus was aimed at the areas of the business that were customer facing, such as the branding, the marketing and the user interface on the front end of the website. In other words, what is often seen as the “sexy” parts of the business. However the growth of the business was painful for him because of “the lack of putting the best people on the back-end” and not investing in the “un-sexy” back-end systems such as the financial systems and other business processing systems.

It is really about getting the basics right, so that when you are busy your procedures just work; bit like Martin Johnson would say about the English RFU team at the moment.  If you don’t get these right, you are likely to end up with an undisciplined team …

The Pirelli myth

Pirelli calendarI wouldn’t call business sexy unless you are selling products or otherwise engaged with services pertaining to adult entertainment. But, I do get where he is getting from. All too often businesses are overly focused on the aspects relating to their brand and how people perceive and interact with their brand.

Although there are some great examples of this " the Pirelli Calendars been a great example " businesses cannot rely on smoke and mirrors, there needs to be substance.  In fact we would argue for transparency and do away with the smoke and mirrors all together!

Whilst this is an important part of a companies business strategy, brand is more than just what people see (corporate logos, slogans, visuals and " god forbid " mission statements etc.,) Brand is about the experience a customer goes through when interacting with your business; it is also their perception of your business through a multitude of channels (many of which you cannot control) that include social media, gossip and attitude. If you don’t deliver on your promises, then all the hard work you have put into building your brand is in jeopardy and could be worth nowt. This is why it is important to invest  in the back end systems because it is these systems that will help enable you to deliver in-line with the expectations set by your brand. The early investment, is also recommended by Brent, as such things are harder to retrofit into a constantly evolving business (during growth).

Opportunity only knocks once

During starting up, not all companies either have the foresight or indeed the resources to be able to invest in the appropriate systems to help their business grow. They are too busy trying to get their new business off the ground creating products or services, establishing a customer base and their brand. This also means having to make sacrifices that are usually cost based forcing the owner / manager to fill in the gaps. We often hear businesses say that they go from “time rich / cash poor” to “cash rich / time poor” very quickly and if you don’t have the systems in place " and these don’t have to be computer based either " you end up fire fighting and are unable to focus on your clients and take advantage of opportunities you have created.  Our Managing Director has said that a number of business he has spoken to over the years have missed out because they were unable to react and missed time critical opportunities to take their business to the next level.  One of the best examples was a company that described what is now Facebook (but for businesses) " similar to Linkedin at the time Facebook was written; if they had been able to invest in their vision of the future they could well have been one of the big social media sites.  As the old saying goes opportunity only knocks once.

Put another way, businesses grow and get to a stage that it hits a glass ceiling " in terms of the growth " because they are unable to increase their capacity. This is where the lack of initial investment really hits hard.

  • The owner / manager is too exhausted to keep going at a thousand miles an hour!
  • Constantly fire-fighting.
  • Failure to delivery.
  • No planning (strategic growth).
  • Over trading (again, lack of strategic growth planning).

This second stage of growth is where we often engage with companies looking to invest either in new systems to help them work more efficiently or systems that will join together the existing random, unconnected business systems to make it easier for them to grow and stay in control, enabling them to focus on their clients.

Conclusion

At whatever stage a business is at, our advice would be to make sure the systems you invest in are chosen to fit the businesses growth plans.  Systems do not have to be computer based; one of our clients invested in manufacturing procedures that got them through the initial stages of growth and meant that when they did invest in computer based systems their internal procedures were we defined and proven, making it easy to deliver a solution that fitted within their environment.  They have just hit £ 30 million and have increased their market share by 200% in the last two years!

If you don’t have the resources to invest in the all singing, all dancing system your business will need, make sure the  system is flexible and can adapt to your businesses needs as you grow.

Resources

http://www.bbc.co.uk/news/business-15017616

The Pirelli myth

Date: 30/09/2011

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