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Ken Keller: Applying the 3-percent edge

Brain food for business owners

Posted: October 5, 2010 7:47 p.m.
Updated: October 6, 2010 4:55 a.m.
 

One of the most interesting behavior concepts discovered is the winning edge. This principle states that small differences in key action areas can translate into enormous differences in results.

The video “212: The Extra Degree” from the company Simple Truths illustrates several examples that provide insight into this. The name of the video comes from the difference between 211 degrees and 212 degrees.

That single-degree increase turns what was simply hot water into steam. The creation and use of steam to power engines first in ships, and later in trains, was the first significant leap in transportation since the discovery of the wheel.

Another example of the winning edge is in horse racing. If a horse comes in first place by a nose, it wins ten times the prize money of the horse that comes in second, even though the difference is only a nose, or perhaps a couple of inches, in a photo finish.

A third winning edge example is in golf. The player who wins a tournament by a single stroke will win many times more than the player who comes in second, even though that second-place player played very competitively.

And so it is in business. If a business can simply improve how it operates and what it does by a mere 1 percent, positive things can result.

A one-percent improvement might not mean too much and perhaps might be too little to even to set as a goal. It’s hard to get anyone excited about a single percent. But what about a 3-percent improvement; what would that mean?

What if it were possible to increase the number of “A” clients by 3 percent, and stop doing business with 3 percent of “C” clients? What would it mean to the future of the company?

What if the sales force were to increase the amount of time spent prospecting by 3 percent a week? How many more new potential clients could they see over the course of a year?

What if salespeople could close just 3 percent more of the proposals they submit? What would that mean to commissions and commitment levels?

What if those in sales spent just 3 percent of their time each week learning to become better at sales? What if the sales manager becomes 3 percent better in providing advice and coaching to subordinates?

What if prices were raised 3 percent on noncompetitive products or services? Restaurants do this on a la carte items, beverages and desserts. 

What if the slowest moving 3 percent of items on the price list were to be eliminated? What if inventory were reduced by 3 percent? What would that do to inventory turns?

What if better deals were negotiated with key vendors that resulted in a 3 percent price reduction or rebate to customers?
What would that mean to gross profit margins?

What if all employees reduced the amount of chitchat by 3 percent? What would that do to productivity and efficiency?

What if utility costs, office supply costs, copying and printing costs, postage costs, insurance premiums, gasoline, telephone and transportation costs were reduced by 3 percent? Would anyone in the company be negatively impacted by such a small reduction? What impact would that have on profitability?

What would a 3 percent of salary quarterly bonus program mean for an employee who has had their pay frozen or reduced? Would that increase their commitment and enthusiasm?

Every organization can be a mere 3 percent better, if the will is there. Whether or not it happens starts and ends with the person at the top.

Ken Keller is president of Renaissance Executive Forums, helping top executives make better decisions through informed peer perspective, resulting in better top and bottom-line results. He can be reached at (661) 295-6892 or  KKeller@ExecutiveForums.com. Mr. Keller’s column reflects his own views and not necessarily those of The Signal.

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