As your market changes, you should regularly take time out to identify your most profitable products and services. What are they today? What are they likely to be tomorrow? What could they be? What should they be? Of all the products and services that you offer, if you had to retreat to your citadel, what one or two products and services would you continue to produce and sell?
Who are your most important customers? Who are the people who buy from you the most readily, and from whom you earn the highest profits? Who are the 20 percent of your customers that account for 80 percent of your sales revenues? What is your plan to keep these customers and to create more of them?
Who are your most important people internally? Who are the people in your business whom you depend upon the most for the success of your enterprise? Who are the 20 percent of your staff, either internally or externally, who produce 80 percent of the results that your company depends on? Develop a plan to retain, appreciate, and reward your key people before someone comes along and hires them away. What are your most successful methods of marketing and sales? Which are the most effective? On a cost per sale basis, where do you get the biggest bang for your buck in sales and marketing expenditures? Based on this analysis, what should you be doing more of—or less of—in sales and marketing?
Many companies dramatically increase their revenues by reorienting their marketing efforts and focusing on a specific market segment to the exclusion of all others. Would this make sense for you?
Identify the key result areas of your business. What are the results that your company, and your products or services, absolutely have to get to satisfy your customers?
Identify the key result areas of each person on your staff, including yourself. What do you absolutely, positively have to do in an excellent fashion to get the results that are expected of you? Once you have identified your personal key result areas, you must then set standards of performance in each area. How do you measure those results?
A key result area has three qualities: First, it is clear, specific, and measurable. Second, it is the sole responsibility of a single person; if that person does not do it, it will not be done by someone else. Third, a key result is an output of the job that becomes an input for the job of someone else. A key result area may be closing a sale. This result is specific and measurable. It is the responsibility of a particular salesperson. The sales order then becomes an input to the people who have to process the sale, produce the product or service, deliver or install it, bill for it, and service it afterwards.
In management, the innovation and development of new products and services is a key result area. It is something that must be done. It is measurable. It is usually under the authority of, or the responsibility of, a single person. Once it is complete, it becomes an input to the manufacturing, marketing, sales, and delivery functions of the business.
These are called “key result areas” because, if they are not done, and done well, in a timely fashion, they can lead to failure in a job or even in an entire company.
For example, a key result area is leadership. If a company does not have competent and committed leaders who are capable of making the right decisions and getting the job done in a timely fashion, the company will eventually go out of business.
Because key result areas are measurable, you can attach a standard of performance to each one. Even better, you can attach a standard of excellent performance to each one. How a person accomplishes his key result areas and the standards of performance he reaches becomes the basis for all rewards and promotion within the organization.
With key result areas and standards of performance, people know exactly what they are expected to do, and to what standard, and what rewards or consequences go along with successful performance. Ideally, everyone should know the key result areas and standards of performance of each coworker, and even the boss. This is the key to effective teamwork and concentrated effort.
