Fundamentals Matter

On December 13, 2016, Posted by , In Focus on Fundamentals, With Comments Off on Fundamentals Matter

 

Get the fundamentals down and the level of everything you do will rise – Michael Jordan

 It’s not necessarily who has the most talent but what team sticks together and executes their fundamentals the best. – Tony Dungy

 Learn the fundamentals of the game and stick to them. Band-Aid remedies never last. – Jack Nicholas

Blocking and tackling.  Fielding and batting.  Your swing…..the pieces that are in your control.  Sports emphasizes the fundamentals.  Your competition and conditions are not in your control but your discipline is.  Most who achieve great heights in athletics credit the fundamentals as a cornerstone of their success.   Is it the same in business?

Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals. – Jim Rohm

Fundamentals make the market. – T. Boone Pickens

If you can’t measure it, don’t do it. – Sam Walton

Based on these three successful people it seems it might.  But what do the fundamentals mean in business?  Dictionary.com defines a fundamental as “a basic principle, rule, law, or the like, that serves as the groundwork of a system; essential part”. I would interpret this to read as the disciplines that you do day in and day out, in good times and bad that make the backbone of your organization.  While this may seem like a simple concept, I have observed that many business owners can get off track from the disciplines that will sustain and grow a business by the distractions of day to day activities. We believe this was in part what Sam Walton meant when he said “If you can’t measure it, don’t do it.”  Tracking and measuring your business is a cornerstone of a successful enterprise, a fundamental.

We are convinced that small and midsized business owners will make better decisions with consistent, reliable data sets.  While this may be widely agreed upon, my observations over my career have been a different experience.  Tyranny of the urgent takes over.  Tracking the data takes extra time and effort and in some cases its gets swept aside for the push to complete orders or make sales.  In other cases it is discarded as an inefficient use of time.  Whatever the reason, it doesn’t get done.  It takes a back seat and is rarely revisited.

So what do you track?  It is a fair question.  Each department has its own pieces that they need to track.  For operations, tracking time, raw materials, turnaround time, waste, and other items may be critical.  For sales, it may be tracking activities, close rate, number of dollars in the pipeline, etc.  For the CFO, it could be tracking rolling average of invoices, cash flow, interest on the loan, and other financial decisions that keep the health of the company.  The truth of the matter is that what you measure may look slightly different for each organization but the core remains……you need to have consistent data to measure how your business is doing.  If you do not have an apples to apples comparison it can give an owner a distorted view of their business and ultimately lead to poor decisions.  I am convinced and have witnessed that consistent tracking the right data leads to increased business because the owner and management will recognize patterns and take steps to avoid missteps and ineffective efforts.

In this series, we will explore the fundamentals of business and explore the complexities of business and attempt to break them down into pieces.  This is not to say that business is not complex and complicated but rather, that there are actions by all successful companies that growing companies should emulate.  We invite you to not only follow the posts but also to comment and give your perspective.  We think it is safe to say that we are all interested in operating in a successful business.

In Fundamentals We Trust,

Larry – Commit2Grow

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