Optimization Methodology

Four levers to optimize any business

What do you manage? *note any conflicts/ synergies between each

Revenue: Nearly all entrepreneurs started with revenue and continue to focus on revenue. They are the rainmaker and have a passion for the business that generated initial success. They can sell the business differentiators like no one else. This may or may not be optimizing behavior. 

Expense: Most entrepreneurs (revenue focused or not) are expense conscious. They had to watch expenses closely when they founded the business and developed extreme, expense management habits as with revenue behaviors. This may or may not be optimizing behavior. 

Human Resources: Very few entrepreneurs effectively focus on human capital. They do not hire well, fire well, or develop healthy corporate culture. As a result, they experience below optimal rates of productivity and greater inefficiencies and resource drain (loops in time, re- training, coddling, work- arounds, culture initiatives, etc. become the norm). 

Process Management: Rarely do entrepreneurs prioritize process, which ultimately optimizes all other levers. They rely on self- deceptive stories and assumptions rather than data. They communicate in concepts rather than with specific instructions. They expect employees to manage to a result when the result should be the natural product of the process followed by the employee. Process optimization is a continuous feedback loop that requires great effort.

Efforts and Insights Beyond the Four Levers

Theory of Constraints: Constantly and vigilantly identify business constraints and apply corporate resources in priority to the release of the biggest current optimization constraint. This effort blankets each lever with appropriate prioritization to deliver optimal sales, an optimal expense profile, optimal productivity of human resources, and optimal business processes. 

© 2020 by Crown Capital Investments. 

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