As your business grows, so the range of challenges you face as the business leader both broadens and deepens.
More sales mean more customer relationships to manage, a wider product offering means more complex operations, more staff means more people to find and look after; and don’t forget the need to manage more complex finance and cashflow issues. With only a finite number of working hours in the week, you can’t do everything. The advice often given is to find time to “work on the business rather than in the business”, but it isn’t always clear to see exactly what this means. So how do business leaders decide where to focus their efforts?
Military best practice applied to business
Having changed career from military service to business some ten years ago, I often find myself reaching back into that rich reserve of the highly respected doctrine behind our strong military capability. For years, the military world has been looking over the fence at the business world to see what best practice could be adopted in the pursuit of a more “business-like” approach. Less common, but equally effective, is the idea that military best practice can be applied in the business world. This isn’t just about leadership and motivation; some of the most powerful transferable concepts are in the areas of higher level planning and organisation.
One such idea is the concept of splitting the many things a leader has to worry about into the areas of Deep, Close and Rear: relating to the types of activity (or operations) to be carried out and their timing and relationships to each other. Military doctrine publications contain some very wordy definitions of the terms, but these can be summarised as:
Deep operations shape the environment to maximise the chances of future success.
Close operations are about winning the current battle.
Rear operations support and sustain both Close and Deep operations.
How does this idea translate to the business world?
When your business is growing rapidly, your heart probably says focus on strategy and where the business is heading (it can be the most stimulating area), but operations are becoming more demanding and background activities like finance and HR more complex. Your head often says get these bits sorted first, because if they go wrong it could make more work later. So the business leader gets pulled in two opposite directions and the temptation is to try and work harder to get everything done rather than choosing which way to go. This seldom works …
One of the guiding military principles I have always liked is that leaders should place themselves where they can have most influence on driving a positive outcome. This is easy to say, sometimes less easy to put into practice – just where is that sweet spot? To give some clarity, the concept of Deep/Close/Rear can help business leaders to decide where they can have the best effect.
First, let’s look at how these terms can be applied in a business context by paraphrasing the military definitions and suggesting which business functions might come under each heading:
Deep operations are those functions that drive the medium- to long-term direction of travel of a business. They are seated in a deep understanding of the competitive environment and aim to do two principal things:
- Point the business along the right path to create strategic opportunities and exploit its core strengths: formulating the business plan;
- Create the conditions for close operations to be successful in meeting defined objectives: providing the people, resources and support.
The business functions most likely to fall under the heading of Deep operations are:
- Leadership – providing the overall direction to the enterprise and its people, including planning and resourcing operations.
- Innovation – maintaining a competitive edge through developing new approaches, not just in products/services, but also in ways of working.
Close operations are those functions that make money in the short-term; they create the value at the centre of the business’ operating model and monetise that value to deliver revenue. They are based in the brutally real world of meeting customers’ needs and hitting targets.
The business functions most likely to fall under the heading of Close operations are:
- Operations – making the products or delivering the services at the core of the business’ offering to their chosen market.
- Marketing & Sales – from driving market demand for the products/services to closing deals.
- Supply Chain & Distribution – managing the control and movement/delivery of materials and services, both upstream and downstream.
Rear operations are those support functions that maintain a business’ ability to operate effectively; they don’t create value or earn revenue in their own right, but they are important in keeping the enterprise alive and functioning properly.
The business functions most likely to fall under the heading of Rear operations are:
- Finance – maintaining the financial integrity of the business: including budgeting, tax planning and cashflow.
- Infrastructure – from buildings and machinery to IT and communications.
- Security – ensuring the integrity of the business against external threats and risks.
- Human Resources – maintaining an effective and efficient workforce.
How does it help business leaders to focus their effort?
Just organising the core functions of a business under three headings doesn’t achieve anything in itself. But the next step is to consider how best to manage each of these categories of activity – and that’s where it really starts to focus the mind. For the leader of a growing business who is reverting to their home ground and focusing on sales or operations, or who is spending ever more time dealing with HR or finance issues, it can be an excellent way to draw their attention to where they really should be focusing to move the business forward.
If you make Close operations your main focus (because it’s important to make money), it can quickly become all you have time to do. What then suffer are Deep operations and longer term development; if you’re not thinking about it, who will?
Similarly, if you allow Rear operations to become your main focus (because the risk of getting HR or finance issues wrong is too painful to contemplate), you may soon find yourself in the even worse situation that even Close operations aren’t getting the attention they need.
There are no hard and fast rules, but it is often far more effective for business leaders to delegate as much as they can of Close operations, either delegate or outsource Rear operations and concentrate their own time on Deep operations. For many, this means a change to the organisation and processes within the business.
Most important is to design and build a management team to lead Close operations with minimal day-to-day oversight from the board. Recruit high quality managers for each of the functions, give them direction on goals to meet and the resources to meet them and then take a step back. Periodic monitoring of progress should be fine to decide whether board-level intervention is needed; otherwise, let them get on with what they’re good at.
Second, look at each of the supporting functions under Rear operations carefully and consider whether it can/should be outsourced. There is a host of supporting businesses out there who can run all or part of the finance, HR and IT functions (and others) – and do it quicker, better and cheaper than sub-scale internal departments, because it’s what they specialise in. Of course, there comes a point when the size of your business makes it sensible to start bringing some of these functions back in-house, but for most high-growth SMEs that’s some way off.
If you do those two things, you will free up your own and the board’s time from keeping the ship moving forward, so you can focus properly on deciding where to steer it. You will have the personal freedom of manoeuvre to think about Deep operations and apply your time and effort where you can have best effect on the strategic direction of the business.
So, get into the habit of “Deep Thinking” – no one else in the business can do this; so if you’re not, it’s probably not happening.
And it’s always easier to make it all come together with a little support, so if you want to find out more about how to put these ideas into practice, do let me know.