“When we are in the middle of a paradigm, it is hard to imagine any other paradigm.”
– Adam Smith
To maximize the net take-home value of a business, Transition Planning should start at least 3 years before the owner wants to leave the business, because potential buyers want a track record of growth and profitability of at least that long. Five years is better.
Unless a company has strung together 5 years of increasing growth and profitability, a financial gap is usually found between what the owner thinks the business is worth and what the market thinks it is. The gap is magnified once taxes and fees are taken into account. Once a current business valuation is performed, together with a personal asset analysis, it often becomes necessary to fill this financial gap. The only viable option, at that point, is to grow the company’s value in the marketplace prior to a transition of control.
At Blue Sea Advisors, we believe the fastest way to grow a company’s value is to blend the incredible power of Theory of Constraints Management (“TOC”) with the best tools and components of other improvement methodologies, whether it’s Lean, Six Sigma, Entrepreneurial Operating System (“EOS”), or Industry 4.0 Automation. Each methodology can fill in the gaps of the other, as long as bridges of understanding are formed as to where, when, and how these methodologies are applied most effectively in relation to the goal of the organization and its owners.
Together, these continuous improvement concepts form an unassailable thesis for business success. We highly recommend that our clients urge their entire management team to read both “The Goal” by Eli Goldratt”, and “Traction” by Gino Wickman for starters. It will become immediately clear to the discerning reader how the tools of Traction could be effectively implemented, and supplemented by the key metrics and thinking processes outlined in “The Goal”. In the book “Epiphanized“, TOC authors Sproull and Nelson conclude that TOC can be unified with Lean and Six Sigma, as well, for achieving superior on-time delivery and unprecedented levels of profitability. The key is knowing which methodology best addresses the key constraint of the entire business at the time of engagement, and how these tools can be applied with laser focus for maximum market niche dominance. As the constraint changes, the tools employed may have to change as well to fit the circumstances and ensure maximum responsiveness to changing market demands. Is that not the point of continuous improvement in the first place?
Industry 4.0–short for the Fourth Industrial Revolution–is still in its infancy stages, but the swift pace of change toward a responsive, demand-driven economy, and consequent disruption of former methods of mass production, is forcing companies to rethink their vision, purpose, and objectives in the coming age. Globalization, mass customization, remote connectedness, time to market from “concept to customer”, and sustainability are the key drivers of the new demand-driven economy. Designing manufacturing operations for maximum flexibility, effectiveness, and efficiency will be the key to a company’s longevity and prosperity going forward. Manufacturing strategy can no longer be just about eliminating waste, keeping things moving, and producing reliable quality. It now must encompass innovation and design that delights the customer, provides convenience of use or application, and responds rapidly to changes in market preferences.
Below are some video tutorial summaries of the EOS Operating System, the Constraints Management Tools and the TOC Thinking Processes. Both authors of these systems urged open-mindedness in exploring further applications and development of the processes described in their seminal works. Blue Sea Advisors welcomes this challenge by demonstrating the major benefits of each methodology, based on real world business experience, and how each toolset could supplement the other to accomplish both profitable and purposeful organizations.
Below are just a few overviews of these management philosophies and toolsets for maximizing the transferable value of organizations and ensuring their longevity in a rapidly changing business environment.
Goldratt’s Response to the 2008 Crisis & Thinking Globally
This next two videos highlight Eli Goldratt’s remarkable reaction to the devastating Great Financial Panic of 2008. Who else, in November of 2008 and January of 2009, was talking like this and showing such incredible wisdom?
Effective Meetings: Level 10 Meeting for Entrepreneurial Leadership Teams
Gino Wickman, author of Traction, gives a good overview on how to conduct effective Leadership Team Meetings that will be so effective that they merit a “Level 10” rating, and will become the lifeblood of communication within your organization.