What would you prefer? A predictable business or an unpredictable one? Would you prefer to be able to predict your profitability next month rather than get that nasty shock when you look at the general account?
I rely heavily on statistics and measurement for insight in to business. For example, when looking at your database growth, are you able to highly predict the number of new contacts that are going to be added every week? Are you able to predict how many phone calls your agents will make? If not, why not? The reason is nearly always poor process and structure that causes high levels of variation.
So the question is – why so much variation and what can be done about it? Well there are two main causes of variation. Common Causes and Special Causes.
Common Causes are causes that are directly traceable to the system or process. They are purely random and “built-in” to the system. People working within the system or process have little or no influence over these causes. Common Causes are predictable causes. Doesn’t mean that it’s a good process. You can produce predictably crappy results each week. For example, a business that has no process around data collection, quality and grooming can still have predictable results with a high level of variation over time.
Special Causes are traceable to a particular event or individual. They are causes over which the people working in the system have the most influence over. Special causes create unpredictable results. For example, if you don’t have a process that generates new contacts outside of your open home traffic, then your database growth will be influenced by either a downturn or upturn in buyer demand.
When building your database growth, quality and grooming processes, ensure that you try and identify the two different kinds of causes that may contribute to your variation. For example, if you allocated a single person in the office with the responsibility of entering data collected at open homes, do you think that; a) it would get done, and b) it would get done to a consistent standard? Or what if you just left it up to each individual salesperson? You might be able to predict that some will do it and some won’t, but that is not the prediction that most business owners are looking to see come true.
Every business is different. Your process needs to reflect your culture. But ideally, your processes should be working towards achieving your operational objectives with as little variation as possible. If you know that you need to add 50 new contacts per agent per week as an acceptable target, then you should have confidence in your business’s capability to produce those results. If it can’t, then look at the process.