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

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

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

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

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

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

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

Ratios: firms need their own, and should find their competitor’s IPPA TARGET Operating Margin 15%+ Total Revenue/Total Expense 110%+ 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 0 Revenue Annual Growth Rate 10% + 5/21/2019 Henshaw Vierra Management Counsel llc

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

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

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

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

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

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

Henshaw Vierra Management Counsel llc Contact Guy R. Henshaw Henshaw Vierra Management Counsel llc guy@henshawvierra.com www.henshawvierra.com 5/21/2019 Henshaw Vierra Management Counsel llc