A manager’s first 100 days in a new position is one of the most critical periods in his or her career, and this is especially important for top managers (e.g. C-Suite managers and SBU heads). In this short, intense period, effective managers accomplish three crucial goals:
- Form productive working relationships with counterpart and subordinate managers
- Create a sound plan for profitable growth and gain the organization’s understanding and support
- Develop leadership credibility and allegiance throughout the organization
This process has three phases. The first 30 days are an orientation period, in which the manager meets key people, develops essential information and evaluates core processes. The second 30 days focus on planning, key organizational changes and early showcase projects. In the final 40 days, the manager initiates rollout of the needed changes. The change process can be clustered into three tracks: people, information and processes.
The first 30 days
People. In this early period, the manager should engage with his or her key counterpart managers and subordinates, as well as with a small sample of customers, ex-customers and suppliers. Effective managers ask open-ended questions seeking to understand how their managers think about issues, how processes are structured, what works and what needs improvement. This enables a new manager both to assess the processes and to evaluate the those involved (e.g. probing whether a manager is oriented toward the technical aspects of a process or focuses on how the process fits the company’s evolving needs, or both).
Information. In this early period, the manager needs to identify the metrics the various processes are using—for customer targeting, pricing or other needs. The most effective managers in this era of digital competitors and diverse markets utilize Enterprise Profit Management (EPM) to develop a full, granular understanding of their company’s profit landscape. EPM creates a full, all-in P&L for every transaction (every invoice line) in a few weeks. In our experience, this is the profit segmentation that almost always emerges:
- Profit Peak customers—typically about 20% of the customers generate 150% of a company’s profits;
- Profit Drain customers—typically about 30% of the customers erode about 50% of these profits; and
- Profit Desert customers—typically the remainder of the customers produce minimal profit but consume about 50% of a company’s resources.
We have seen this profit segmentation in all aspects (e.g. products, suppliers) of virtually every company across most industries.
This EPM information enables the new manager’s financial team to assess the effectiveness of the company’s current processes. In addition, the new manager can use this information to gauge the company’s profit robustness based on factors like the concentration of profits in the Profit Peak segment, the number of customers in this segment, their tenure as customers and the diversity of products that they order. (For a more detailed explanation, see “Create a Profit Early Warning System.”
Because Enterprise Profit Management is a SaaS system, the manager can generate this accurate information in parallel with the key manager interviews in the first 30 days. At the end of the period, the manager will be able to develop preliminary priorities and projections.
Processes. In this brief orientation period, the new manager can develop an overview of the business’s critical systems and processes, and draw preliminary conclusions about process, and process manager, effectiveness.
The second 30 days
People. In this intermediate period, the new manager should continue to engage his or her counterpart and subordinate managers in order to discuss, in an open-minded way, the emerging preliminary priorities and projections. This allows the new manager to bring other key managers into the planning process in order to incorporate their views and build their commitment. The process also enables the new manager to judge the other managers’ readiness and willingness to change. In parallel, the manager should continue to meet with a broader sample of customers, ex-customers and suppliers.
At this stage, it is very important to distill the plans into a very small set of priorities—some of which may be near term, others requiring two or three years to complete. Typically a manager will have three or four bullets on his or her resume to describe his or her accomplishments; these priorities are a first approximation at these bullets.
Information. The manager’s financial team can use Enterprise Profit Management to model the results that potential changes would produce. These changes must position the company to succeed both in the present and in its future industry as the markets and competitive dynamics change and evolve. The EPM system will enable the new manager to assess and manage the company’s most important risk—a potential reduction of its Profit Peak customers, or a possible increase in Profit Drain accounts. (For more on this, see “How to Manage Your Most Important Risk.”
Processes. In this period, the new manager needs to create a Managing Profitable Growth (MPG) Committee which will be responsible for profitability management. This group should be comprised of the most capable upper-middle managers—largely directors and some vice presidents. The group must be the locus for profit-generating planning and coordination, including creating and analyzing Enterprise Profit Management information, and overseeing and tracking profit acceleration initiatives.
It is particularly important to identify how EPM profit segment information can be integrated into the company’s key processes. For example, several companies have integrated a profit segment designation into SalesForce for each customer so sales reps would be able to immediately see whether the customer is a Profit Peak, Profit Drain or Profit Desert—along with a concise profile of the customer’s profit history. As another example, some companies have used EPM information to differentiate and focus their customer service policies (e.g. prioritizing product allocations when products are in short supply).
The most important priority for every company is preserving and growing its Profit Peak customers. Even in this early period, the new manager should identify the company’s Profit Peak customers that are beginning to diminish their purchases, and deploy a pilot multi-capability team to coordinate with these customers in order to develop plans to reverse the losses and grow these crucial accounts.
The final 40 days
People. In this final period, the new manager should engage his or her subordinate managers in detailed planning based on the broader plans created in the prior period. Through this process, the new manager will be able to finalize his or her evaluation of each manager’s capability, and decide whether any managers should be replaced.
In the prior 60 days, the new manager will have had an opportunity to form productive working relationships with his or her counterpart and subordinate managers. By being both systematic and open-minded, the new manager can quickly gain leadership credibility. If organizational or leadership changes are needed, it is very important to be decisive and act in a timely manner. This is the critical point at which your managers and workers will determine whether to follow and support you, or try to “wait it out” until you fail or move on.
Information. At this stage, you should be assembling multicapability teams to work with your Profit Peak and Profit Drain customers. These teams need customer-specific information covering a customer’s detailed P&L, product mix and selected other information like ordering frequency and returns. Enterprise Profit Management easily provides this information.
EPM also enables you to rank your sales reps by profit production (i.e. Profit Peak reps vs Profit Drain reps vs Profit Desert reps). The most effective change management programs start by engaging the Profit Peak “top gun” sales reps on critical showcase projects. These reps usually are willing to try new ways to be productive, and once they produce results, the other reps will be eager to follow them.
Process. In this period, the MPG Committee should be fully constituted. Its members should develop their analytical processes, their organizational ties, and an initial set of profit initiatives based on the emerging priorities and plans.
In the prior period, the new manager-initiated pilot multi-capability teams to begin working with their Profit Peak customers. In this period, the manager should expand this program and carefully monitor the results.
In parallel, the new manager should develop and pilot a set of multicapability teams to work with the Profit Drain customers. In our experience, most of these customers do not have below-market pricing. Instead, the most common problem is that they have excessive operating costs that make them unprofitable (e.g. overly frequent ordering, excessive unbilled expediting), or a product mix that is not compensatory. These multicapability teams should focus on turning around these large, unprofitable customers (functioning similar to a bank workout group).
Profit Desert customers are important because they are numerous, and their small orders consume a disproportionate portion of a company’s resources. The management objective is to reduce your cost to serve these customers through digital measures like portals and service menus. In this final period, the new manager should assemble a team to begin planning this program. Enterprise Profit Management will enable you to track your progress in improving the profitability of this broad, marginally profitable customer segment.
Energize your organization
This 100-day program is systematic and intense. It will enable you to engage your managers in evaluating their current situation, and charting an aggressive but realistic path forward. These two objectives are necessary but not sufficient for your success.
Most importantly, through this process you will be tacitly communicating to your organization that you are a thorough, grounded, visionary manager who will lead the organization to achieve far-reaching goals. This will charge your organization with energy, purpose and a strong belief that under your leadership they can achieve important objectives, enjoy the process and feel the strong sense of satisfaction that comes with accomplishing great things.
Ultimately, this is the key to your success as a leader, and to your organization’s success as well.