The Concept of “Organizational Clarity”

Preamble and History

Over the past 17+ years, in cooperation with the Wharton School of Business at the University of Pennsylvania, and noted Lauder Professor Emeritus, Dr. Jerry Wind and Ephor Group Inc., and its Managing Partner, Garry E. Meier; has developed, refined, and implemented in over 20 successful service organizations the Concept of “Organizational Clarity”. This Concept is missioned to develop highly scalable and capable service business models that potentially have sector and societal transformational impact.

At a micro level, just within Ephor’s limited “book of business”, over the past 12 years the “Organizational Clarity” concept as yielded ~$1.6B of shareholder wealth being distributed to stakeholders, and institutional investors in just 12 business services organizations.

What is more important is that of the 55 service businesses that Ephor follows or have been involve in over the years, and/or we have deployed leadership concepts of this nature; we know they not only survived “disruptive year 2020” but no doubt will thrive and prosper in 2021 and beyond.

Therefore, below we have outlined the “Organizational Clarity Concept” in executive summary format. 

Components of Organizational Clarity

Organizational Clarity has 4 components that must work conterminously and are mutually dependent upon each other for transformational, sector leadership performance, which has proven to create exponential shareholder wealth. Therefor the concept is a “holistic approach” versus a functional approach to business model development.

1.    Strategic Clarity 

2.    Operational Clarity 

3.    Tactical Clarity

4.    Financial Clarity

The Outcomes of Organizational Clarity Include:

Organizational Clarity, is a holistic approach versus a functional approach to service business model development, as such it has proven to create an impressive list of potential outcomes which include: 

  • A Sector-Impact Organization Resulting from a Transformational Business Model

  • Exponential Institutional Shareholder and Individual Wealth Creation

  • Significant Economic and Societal Success and Outcomes: It “Changes Daily Lives”

  • Over the Past 15 Years has created over 6500 jobs in 19 Countries

  • Has created Legislative Influence at the Sector Level

  • Consolidates Large, Fragmented, and Addressable Market Opportunities

Strategic Clarity

The Concept of Strategic Clarity Includes:

  • A clear, concise Mission Statement that describes the company’s mission and purpose, and for whom it provides the value to.

  • A Differentiated Value Proposition

  • A stated and adhered to Core Set of Values and Principals

  • A well-defined Strategy inclusive of Corporate Development and Structured Governance Functions

  • A defined set of Goals, generally <5 in number

  • A pragmatic set of Objectives, generally <6 in number

  • A well-defined, scalable, technology-enabled and differentiated Business Process and Model; that differentiates the company from mediocre and competitive sector participants

  • Creates a Business Process and Model that is not "People Skill" dependent, it is Process and Technology Dependent.

  • A highly skilled Leadership Team that utilizes “Outside Expertise” and that is empowered within the organization

 Strategic Clarity Outcomes Include:

  • A Branded and Differentiated Organization that is known and accepted as a significant sector-impact Influencer

  • An “easy buy” Decision for the Customers and Clients. It attracts Customers, Channel Distribution Partners, Technology Partners, and engages Sector Leadership

  • A noted Best Place to Work, which attracts and retains the best Employees, the most talented Sector Executives and Advisors

  • Creates Significant Wealth Creation both internally and externally

  • A well-documented and adhered to “Yellow Brick Road” to achieve the stated Organizational Objectives

  • Leadership that is focused on the Success of the Customers, the Employees, and all Stakeholders: Illustrates Stakeholder Balance

  • Leaders who have and know how to “Surrendered the Sovereignty,” and have empowered proven professionals and outsiders to maximize the potential of the business model, and the market opportunity presented.

Operational Clarity

Operational Clarity Includes:

  • Market Knowledge & Awareness: A precise understanding of the Target Market(s): sector dynamics, opportunities, competition, shareholder value “drivers,” leadership capabilities, thought and knowledge leaders, and expert knowledge in the governance process and expert knowledgeable advisors.   

  • Ability to choose, profile, and identify the “Near Perfect Ideal Targeted Customer” at the product or services level.

  • The ability to manage and influence the “Customer Maturation Lifecycle”

  • Marketing Assets and Capabilities that include at a minimum:

    • Brand Equity & Brand Awareness Programs

      • Effective Brand Awareness

        • Established Brand Promise & Brand Equites

        • Effective Market Messaging

      • Technology-Driven Marketing Assets

      • A Lead Generation Process that provides 12x the Amount of Revenue needed to meet the Growth Objectives of the Company

      • Professional Marketing Expertise (either outsourced or internal staff)

  • Process & Technology centric Client Relationship Management and Client Account Management

  • “Best of Breed” Service Delivery or Product Quality/Performance function that is the organization’s most noted “Brand Equity”.

    • Is Process-Centric; not People-Centric

    • Enabled & Enhanced by the Application of Technology

    • The Technology Enables the company to recruit “C” level skills who perform at “A” levels.

  • Has a well-defined and proven Revenue Generating scalable business process that is “Portfolio-Driven” & illustrates a Go-To-Market Franchise Effect, which includes:

    • Direct Sales: Talented, Proven, Results-Oriented

    • Inside Sales and Business Development Activities

    • Channel & Alternative Distribution that provides a”portfolio” of Distribution Partners

    • Strategic Partnerships and/or Joint Ventures: minimum of two highly productive partnerships are required to be transformational

    • Other Distribution Venues

Has Defined and Implemented a Structured Management & Communications Process & Rhythms. Leadership that is Management Science-centric, that enables Leaders to be “effective” through management science and process, not position power or narcissistic control behaviors.

  • 8-10 high defined and monitored Measurements and Metrics at an organizational level, which measure the business model effectiveness.

  • 5-7 Key Operational Measurements and Metrics within each Function

  • The Definition of Success, Mediocrity, and Failure: each of these is highly defined and understood, not subject to management opinion or “how management feels”

Customer and Employee Satisfaction are priorities of Leadership, not the leader’s feelings or careers or narcissistic needs.

  • Processes and Programs are in place to effectively measure and manage change and outcomes

Has formal “Cultural Development” programs and processes to develop Informal Leaders and the Culture as part of Leadership Effectiveness.

 Operational Clarity Outcomes Include:

  • Organic Revenue Growth of >20% Year-over-Year becomes a “built-in” capability of the business

  • Significant New Clients result from referrals, not just direct sales, channel or partnerships

  • Significant Client Retention & Recurring Revenue capability is part of the core competency of the company

  • Employee recruiting is dominated by employee referrals, not “outbound” overt recruiting activities

  • Effective Internal Informal Leadership Programs

 

Tactical Clarity

Tactical Clarity Includes:

  • Sales Plan by Geography, Product, Lead Source, Sales Source or Service

  • Cost of New Customer Acquisition is Sector “Best of Breed”

  • Structured Potential Client Maturation Processes (Proposals, SOW, RFP's, Competitive Intelligence, etc.)

  • Customer Retention and Customer Lifecycle Plan, including Product Maturation

  • Client Internal Management Documentation & Measurement and Metrics

  • Client External Documentation Programs, very effective client review processes (i.e. QBR’s)

  • Customer and Employees are “Tied” with technology/IT and analytics, to the company

  • Measurement and Metrics are prevalent at the department, function, team and individual levels

  • Individual Contributors’ compensation is dependent upon their success, the team and the company

  • Compensation & Rewards are realized close in time to the activity completed

  • The “Employee Lifecycle” is managed and measured

  • Low to Zero Turnover in the supervisory and executive levels

  • Structured and Measured Workforce Management Programs are a priority of supervisory and executive leadership

    • Training curriculums

    • Certification programs

  • Process and Improvement Committees are a formal function and part of the Culture of the organization

  • Technology Enablement Plans and Roadmaps to create customer dependency and scalability of business processes are always in the Top 5 Business priorities and investments

Tactical Clarity Outcomes Include:

  • A “Franchise Effect” for the business is developed. A definable and a predictable company is prevalent. The Business Process and Perform Culture is more important than any “single contributor”.

  • If an “event” or “activity” of transactional nature occurs, it is treated as a process failure, and/or a leadership failure

  • Process and Technology become people enablers, and therefore an investment

  • A “Perform & Knowledge-Based Culture” is established and rewarded versus a “serve the executive management mentality”. There is no need or place for “nannies” in the services business world!

  • High employee retention and lower recruiting costs are reflected in financial performance through operating leverage and increases in productivity, that are “best in sector class”

Financial Clarity

Financial Clarity Includes:

  • A 3- to 5-year Financial Plan/Wealth Creation Plan that reflects the market/sector opportunity, the measurement and metric capability and performance of the company. This is not just a mathematical exercise: i.e. 20% YOY growth

  • The Measurement and Metric System should be the “Forecasting Tool” for the future financial performance of the company.

  • Financial Reporting and Forecasting Systems that are highly automated, accurate, timely, and enable the business to accurately budget and forecast itself

  • Current and subsequent year detailed annual Budgets are based on the company's key measure and metric performance, not math!

  • Budget Performance to Actual Performance reviews: Quarterly at a minimum: Governance commands adherence and when performance gaps occur, assertive executive/governance action is taken

  • Measurement and Metric detailed analysis and review at the function level is prevalent: Quarterly at a minimum. Deficiency action plans and corrective actions plans to be monitored and reported on by management.

  • Formalized and Adhered to Accounting Policies and Procedures

    • 13- & 26-Week Cash Forecasting that is accurate.

    • Accruals are part of an automated systems process

    • Expense Reporting

    • Timely Billing

    • Accounts Receivables

    • Accounts Payable

    • Payment Authorizations

    • Spending Commitments

    • Disbursement Controls

    • Business Controls

    • CAPEX Approval Process

  • The Financial Executive has an “external” confidant who serves as a resource: i.e. a BOD member, Executive Chairman, Audit Firm, or trusted advisor/"Board of One".

  • Internal and External Risk Management reviews annually

  • External Accounting and Financial Review or Audit Annually

Financial Clarity Outcomes Include:

  • The Amount of Wealth that can be created by the “Franchise” and market opportunity is identified

  • Definable, predictable and repeatable financial outcomes are known. If management cannot provide this, new executive management/leadership should be pursued

  • Pragmatic relationships with all stakeholders are established, not based on “Biased Feelings”

  • Execution and Investment Risk are understood and minimized

  • Exit Optionality Alternatives are ongoing, known, and evaluated by governance or outsiders

 

The Organizational Clarity Concept Summary

Since our inception in early 2001, nearly 20 years ago, and during this wonderful and rewarding journey with small and emerging businesses, we have learned a lot, done a lot, and as a result have invested, advised, stewarded, and existed some 25 companies to date.

Those experiences have taught us that service businesses, that desire to be transformational, create material disruption and shareholder wealth, must be built and managed within a holistic approach versus a functional approach. A holistic approach like Organizational Clarity requires a significant and rare skill set in the C-suite to implement and manage effectively.

At Ephor Group we have proven in numerous situations that the implementation & management of the holistic Organizational Clarity concept can be learned & adopted by most ambitious and educated Founders & Entrepreneurs, via concepts such as Mentoring, The Board of One Concept, the Executive Chairman Concept, and other Leadership Development venues.

As such, experience tells us it is a worthwhile exercise for a Leader to just “inventory” or evaluate your organization against these Clarity attributes, and see what that inventory suggest. .

Then should you be committed to the concept and the noted outcomes it creates, simply reach out to noted and proven professionals that can initiate & guide your journey to Organizational Clarity!