The challenge for new companies is to maintain their initial level of excitement and innovation as they mature. They should be focused on "growth, but doing it profitably," says Pierroutsakos. Inevitably, systems that were sufficient to fuel a start-up will no longer work. Companies need applications that allow them to scale, and support the kind of processes that are common to more mature organizations.
A strong sales and operations planning (S&OP) process is key. It can help organizations to maintain high levels of innovation while meeting revenue targets and controlling operational costs. "They must be in sync," says Pierroutsakos. "You have to build a cross-functional system and process."
The effort should target forecast accuracy, as well as ensure that the right product is getting to the customer. At the same time, companies need to balance the need for product availability with the desire to be “as lean and mean as possible.”
The mere size of a growing company can pose problems, in the form of additional levels of bureaucracy and difficulties in communicating with all employees. “The challenge is how to build a performance-management system that allows for cross-functional accountability,” Pierroutsakos says. Sales should be responsible for profit as well as growth. Operations should encompass both customer service and inventory management.
“People will not change unless they’re measured and have an understanding of how they’re being managed,” he says, urging the adoption of flexible systems that are “structured but not over-burdening.”
“Good performance management is about measuring the organization, with cross-functionality, reporting capabilities and the right structure that drives that behavior,” Pierroutsakos says.
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