1. Thinking About Optimizing Value
2019
5/21/2019
Henshaw Vierra Management Counsel llc

2. Let’s Get on the Same Page Best Practices
Best Practices are a set of guidelines, ethics, or ideas that represent the most efficient or prudent course of action for a business
Practices shown by research and experience to provide optimal results
Developing Best Practice
Must be proven across a range of circumstances
Must be simple
Must be shareable – and shared
5/21/2019
Henshaw Vierra Management Counsel llc

3. Let’s Get on the Same Page Linear Programming
Maximizing or minimizing some linear objective function, subject to one or more linear constraints
A product of linear programming is a PERT chart (Project Evaluation and Review Technique). It is a flowchart which diagrammatically depicts the flow of work.
The PERT chart is used to optimize that flow in what is called a Critical Path.
The Critical Path shows you how to shorten time, reduce costs, and shift resources from noncritical activities to critical activities.
5/21/2019
Henshaw Vierra Management Counsel llc

4. Let’s Get on the Same Page Lean Thinking
Principals of Lean Thinking
Precisely specify values by specific product
Identify the value stream for each product
Make value flow without interruptions
Let the customer pull value from the Company
Pursue perfection
KPI (Key Performance Indicators) assigning values to construct critical paths.
5/21/2019
Henshaw Vierra Management Counsel llc

5. Henshaw Vierra Management Counsel llc
To Review
Best Practice
Proven, simple, shared
Linear Programing
Critical Path
Lean Thinking
Value flow through the entire company
5/21/2019
Henshaw Vierra Management Counsel llc

6. Where do you get the data?
Define what you need to measure
The Elements Which Drive Customer Service Value
The Elements Which Drive Your Business
Create Company Teams and Create a Process Matrix
Data Analysis
Linear Programming
Lean Thinking
Key Performance Indicators
Business Plan (3 to 5 years) and Budget (annual)
Make the Change Happen
5/21/2019
Henshaw Vierra Management Counsel llc

7. Metrics: most firms have them Evaluate Success of An Organization
Financial
Key Financial Ratios
Balance Sheet
Revenue
Cash Flow
Budget and Budget Variance Analysis
Operational
Staff: hiring, training (continuous), growth path, retention
Infrastructure
Reconciliations and Audits
Marketing
Staff
Market Segmentation
Diversification of Revenue
Promotions and Sales
5/21/2019
Henshaw Vierra Management Counsel llc

8. Ratios: firms need their own, and should find their competitor’s
IPPA TARGET
Operating Margin %+
Total Revenue/Total Expense %+
Direct Operating Expense/ Total Revenue 22%
Customer Service Exp/Total Revenue 22%
Sales & Marketing Exp/Total Revenue 14%
General & Admin Exp/Total Revenue 27%
R&D
Revenue Annual Growth Rate 10% +
5/21/2019
Henshaw Vierra Management Counsel llc

9. All ready using Best Practices?
Quiz Time – take out your iPhone and use Notes, or a sheet of paper
How long have you managed your company?
What’s your annual compounded growth rate for last year, last 3 years?
What are the 3 most important functions of your customer service department?
What is your employee annual retention rate?
How long have the following leaders worked for you: head of operations, customer service, IT, security, finance?
Do you manage your company to a budget?
Is your budget based on last year’s performance or your independent forecast?
Who sees your monthly Budget results?
5/21/2019
Henshaw Vierra Management Counsel llc

10. Strategic Pillars for Developing Best Practices What to Count
Status of Your Company Employees
Client Service: work loads, customer contacts, customer interaction topics
Your Company Growth Rates: Revenue, New sales, New Services in the next 12 months
Your Financial Goals: Operating Margin, Pre-tax net margin, Cash Flow
Annual Client Survey Scoring
Annual Employee Survey Scoring
5/21/2019
Henshaw Vierra Management Counsel llc

11. So, How Do You Improve Your Outcomes?
Understand how you make money
Your Balance Sheet and Income Statements tell me about your values, ethics
Your margin tells me how focused and efficient you are
Your growth rates tell me what capital decisions you make, who you are as a manager, how effectively you show value to your customers and prospects
Your employee retention rate tells me about you as a manager and employee motivation and satisfaction level
Your involvement of your employees in working together to develop best practices and KPI’s tells me about your understanding of continuous improvement
5/21/2019
Henshaw Vierra Management Counsel llc

12. Best Practices and KPI’s
KPI’s are part of understanding process, flow, and improvement.
KPI’s come from a very close examination for every process, in every department, by every process for every function within your Company---recorded, documented, tested, and shared in detail throughout your Company—all the time, forever
Very hard to do
Value of doing it
Become more competitive
Increase sales and development of new markets
Reduce costs and become more efficient
Improve the skills of your work force
Respond more quickly to innovation in your market
5/21/2019
Henshaw Vierra Management Counsel llc

13. Creating The Environment Where Best Practice and KPI’s Mean Something
Define your vision and values, simply
Use your employees working together to developing process matrices and metrics
Your Customers will define their perception of your value to them, you need to learn how to deliver that value as a Company Team from the highest to the lowest level, in detail
Accurate, reliable, fast, competitive price for service
Customer focused customer service
Safe, secure
Trust
5/21/2019
Henshaw Vierra Management Counsel llc

14. Henshaw Vierra Management Counsel llc
References
Linear Programing
Operations Research for Management Decisions Samuel B. Richmond
Lean Thinking
Lean Thinking James P. Womack & Daniel T. Jones
Performance Data public companies
Company filings
5/21/2019
Henshaw Vierra Management Counsel llc

15. Henshaw Vierra Management Counsel llc
Contact
Guy R. Henshaw
Henshaw Vierra Management Counsel llc
5/21/2019
Henshaw Vierra Management Counsel llc