The Leverage Test - ALASTAIR DRYBURGH

It’s not enough to be able to solve problems and produce change. In a fast-moving world where resources are always scarce, you need to be able to solve problems and produce change in the way that produces the maximum impact with the from the minimum amount of effort in the shortest time. That’s leverage.

This test will tell you how effectively you use leverage. At the end, I will offer you a chapter from my book, Business Remastered, which will give you a systematic way of increasing your leverage.

Sales are falling across the board. What would you do first:

Look at job roles and responsibilities in sales and marketing;

Look again at the saleforce’s bonus and commission structure;

Consider whether your product range is still relevant, whether it compares as well as it did to the competitiion;

Look for additional training for the sales force, or organise a motivational event for them;

You have a problem in accounts receivable; increasing amounts are overdue. What would you consider first:

Wonder whether you have the right people in the credit control department; are they sufficiently assertive, are they making enough calls

Ask whether the problem exists across all markets and all customer types, or just some;

Make incentives for the salesforce dependent on cash collected, not sales made;

Check whether the staff trying to collect cash are getting the support they need from other parts of the organisation;

You have an increasing problem with rush orders – promises of rapid delivery made by the salesforce which cause problems in the factory. Would you first;

Redesign the salesforce’s incentive scheme so that there is some “cost” to them in agreeing to rush orders;

Consider whether you need to offer rush orders to be competitive, or could charge more for them, or refuse to do them without significant adverse consequences;

Look at the organisation in the factory to see how it could deal more efficiently with rush orders;

Margins and sales volumes are declining on major customers. Would you first:

Investigate whether it is a problem with all large customers, or just some;

Reconsider whether the major customers are as strategically attractive as they were;

Look at creating a “major accounts” team within the sales department;

Organise “selling to big customers” training for the salesforce;

Typically, how many priorities do managers in your organisation have?

No more than three;

Not clear, or everything is a priority;

More than seven;

Between four and seven;

Defect rates are rising. To solve the problem, do you first:

Seek out the root causes;

Seek out the biggest single root cause;

Introduce a stronger quality control and inspection system;

Investigate to find out whether the problem is general, or concentrated in some areas, some products or with some people;

Conflicts seem to be increasing. It is harder and harder to get people in different functions to collaborate. What would you do first:

Communicate to make sure that everyone understands the organisation’s objectives, and how their own work contributes to them;

Consider whether individual incentive schemes encourage or discourage collaboration between functions;

Consider whether you need changes to the organisation;

Bring in a consultant or trainer to improve people’s skills in collaborative working;

You are finding it more difficult to come up with new product ideas. Would you first:

Create a new product development team, taking some of the more innovative people out of their regular jobs;

Look for innovative products you could acquire, rather than trying to create them yourself;

Consider whether your key performance indicators and the incentives based on them are discouraging innovation and risk-taking;

Bring in a consultancy to run some innovation and creativity workshops;