STORY INLINE POST
A few days ago, I was sitting in a bar in Seattle enjoying a conversation with my friends, all of whom work at Amazon and Facebook. Inevitably, when I am chatting with someone who works at one of the world's leading companies, I can't help but wonder what they have done to get to where they are today. I also look for ways to replicate the steps to success among those around me. My approach is particularly tech-oriented and, therefore, my response is clearly in that direction. But it's no coincidence that nowadays, the entire social structure, and more specifically the business structure, leans toward technology as well.
Thus, it has become a matter not of subjectivity but rather an objective perception of the need for technology to increase the life span of businesses.
In Mexico, according to figures from the National Institute of Statistics and Geography of Mexico (INEGI), the life span of a business is 7.8 years. At the same time, 33 percent of businesses perish during their first year, 65 percent during their first five years, and 76 percent within their first 10 years. Businesses in Mexico, therefore, face great difficulty surviving and even keeping up during their first few years of operation. There are different underlying causes for the struggle to survive in an environment like this, which you could possibly consider hostile. However, Mexico's ITESM Tec de Monterrey Entrepreneurship Institute conducted fact-finding research that led them to identify five key factors behind these challenges:
- Insufficient income (65 percent)
- Lack of metrics (48 percent)
- Absence of analytical procedures (44 percent)
- Poor planning (44 percent)
- Implementation issues (43 percent)
Considering the circumstances, led me to wonder what are the key technology solutions (and maybe also other not so techie ones) that can help overcome the issues that were mentioned above, and which I share with you below:
● Define the Mission Statement appropriately and communicate it effectively across the team
Not a tech tool, indeed, so why am I raising this as a key element? All technology solutions and, in general, all the activities undertaken by a company shall be geared toward a specific goal. Otherwise, no solution would be effective enough, or could even be used for the wrong end. Amazon, for example, considers the customer as the main element in its company's mission and, as a result of this, every step is taken around the customer, with all decisions being focused on customer satisfaction. In our conversation, for example, my friends from Amazon told me that even decisions about projects to be carried out, technology to be used, automation, and so on, are prioritized according to the impact they generate upon customer satisfaction. For this reason, beyond the actual technological solutions that can be implemented, having a well-defined mission and communicating it effectively across team members becomes the core element on which the rest of the steps and activities should be built upon.
● Have the right metrics for decision-making
Based on the above analysis of the solutions to the main factors behind the challenges faced by businesses in Mexico, it becomes clear that most can be attributed to a lack of metrics, no analysis, and poor planning. It all goes very much in tandem: if you lack metrics, you can' t analyze any data and, therefore, you can' t plan or make decisions. Therefore, for a company to survive, a key element is to know where the company is going and where it currently stands.
The first step in developing metrics and indicators is to have all transactions registered. Ideally, all records must be entered in an ERP system, an enterprise resource planning software system that registers all transactions affecting the organization, such as cash flow, inventory flows, services delivered to customers, purchases made from suppliers, debts, and so forth. I have always said that the most important factor is for such a system to mirror reality and to record everything a business or company does. There are different kinds of software available in the market for every level of a company’s evolution, from startups to large corporations. Therefore, there is no reason why it should not be possible to have the right system in place and to implement a tool like this as a first key element.
Once transactions have been recorded in the system, you can obtain reports to help you in your decision-making process. At this time, it will be important to define which indicators are required in order to ascertain the company's state of health, so that if at any given time such indicators fall below the minimum acceptable threshold, appropriate action can be taken. In other words, to be pre-emptive, rather than reactive. There are systems that, once they have the correct records, can send emails with smart reports and automated notifications if a critical threshold is reached. There are also mobile apps that help you get information 24/7, and even dashboards displayed on mobile phones that allow you to know the current state of the organization, at a single glance. All this enables agile decision-making and helps you avoid sudden critical situations in which there is no room for maneuver.
- Enhance interaction among people and processes in the organization
Another key element described among the five causes of business demise in Mexico has to do with implementation issues. This is relatively easy to solve if you have robust processes in place. The best way to do this is to coordinate and automate processes using technology solutions. An ERP system can help with this, since it can define the processes, users who interact with each other, communication permissions, restrictions, and structures through the transactional documents it generates. Each person in the organization has a tool in which they must only enter the information required and, depending on how advanced the tool is, may even have the role of an auditor only, since the system can operate and take actions almost automatically. For example, there are some systems that, when a product is below the minimum inventory threshold, automatically generate a purchase order and, also automatically, send that purchase order to the supplier, estimating its delivery time and anticipating the risk of the product being out of stock. In this way, users did not even have to intervene in the procurement process and the risk of stock-outs was mitigated automatically. There are countless automation possibilities like the one above. However, regardless of whether the transaction is recorded automatically or manually, most importantly, it is that robust processes and communication between the different units can be structured in a simple manner, thus solving the predicament previously described.
Derived from the foregoing analysis, it can be determined that if there is a clear mission in the organization, well-defined indicators, and an administrative software system such as UXBI ERP that supports the management, automation, processing of transactions, and generates timely information for decision-making, a company can thrive in Mexico. It would only then need to offer a product or service that meets the needs of prospective customers to break into the market, and thus substantially increase the likelihood of the company’s survival and success.