I wanted to post early in the blog about what I call “Internal Entrepreneurs.” Internal entrepreneurs are folks who use the same entrepreneurial skills as someone starting a business, but they do so within an existing business. This could be for many reasons. Say a business wants to launch a whole new line of business, maybe they want to expand into new markets, or maybe it is simply building a case for capital (equipment or people) investment. Pitching the idea for a new piece of equipment could be an employee saying to their boss, “I think we should buy this fancy new machine.” Alternatively, the same employee could go to their boss and say, “I think we should buy this new piece of machinery because it would lower the cost of goods sold, or allow us to build more widgets, which means we could improve profits by X and this machine will pay for itself in Y months.”
As a business leader, which pitch would you like? Usually, we all like more information and a plan, especially before laying out money. I have worked for my family’s businesses, my own business, and been an internal entrepreneur. In fact, I got to hone my skills building business cases in Excel while being an internal entrepreneur and working for a VP who wouldn’t even consider changes without a business case. The other nice thing about being an internal entrepreneur, and using entrepreneurial tools, you can highlight what programs or products you have launched, you can measure the success, and then show the ROI of your role or that of your team. Then when things get tight, if layoffs need to happen, you can highlight what you or your team cost, but then how much you’ve made the company. Even in tough times, no one wants to cut positive ROI.
We tend to think of entrepreneurs as starting their own company, and entrepreneurial tools for starting businesses. This is not always the case. Not all roles in existing companies can use internal entrepreneurs. Some roles need folks to concentrate on what they are doing or need folks who are not trying to do new things. Think of lawyers. We don’t usually want legal counsel trying to drive ROI. We need them to look over contracts and understand the law as it exists.
But there are still a lot of places where you can use the tools we’re learning here to expand your role, and your department, or make life easier. Something as simple as changing the UI for an existing internal tool can make peoples’ lives easier, help them be more efficient at their jobs, and record better data points for better analysis. Now a change like this might not have direct revenue. Making that change might not drive extra sales, so we can’t use the tools we’re learning here, right?
Wrong. There are basically two ways to drive greater profits, an increase in revenue, or a decrease in costs. If you can build a model that identifies the problem, then the plan to fix it, presents reasonable assumptions, and contains measurable goals, then it doesn’t matter if you’re driving revenue or reducing cost, you’re still driving value.
Let’s take a look at an internal IT tool. No customers use it. Let’s say no salespeople use it either. So it will not help salespeople be more efficient, thus making more sales. Let’s say this IT system tracks a lot of information about customers, including emails sent to people within the company. This is common, that many companies build a way to understand who at the company has received what email, usually around marketing email blasts if nothing else.
So let’s say you are working in the system and are looking around being nosey, seeing how things work because that’s what people with our brains often do. And you notice that while the system tracks 20 or so different aspects of a customer and the people within that customer, the most commonly used feature is email tracking.
This might be because support uses it to know what the person calling received as an email lately, which might help them narrow down what the customer is asking about faster. I know it seems like they could just ask the customer, but ask any support team, and while the customer thinks they are being clear as day when they ask about turning on a new feature, the customer is looking at the email so they know what feature they want to be turned on, but the support team supports hundreds of features and did not receive an email.
Professional services, those that install products for customers in B2B (Business to Business) might use it to see if the person they are meeting with that day has heard about what they are trying to install. Managers might use it to see if a client has escalated any issues recently. Marketing may use it to make sure they are not sending too many emails to any one contact.
Now you notice the email portion of the customer profile in whatever CRM (Customer relationship management) system you use is buried halfway down the page. Plus everyone who uses the system is most concerned with emails within the last 30 days, and the CRM system has a sort but doesn’t automatically sort. So you propose that IT should change the page profile to move emails higher, and provide a view of the last 30 days. Providing a default view of the last 30 days might be perfect because if the report is empty, you also immediately know that they have not received anything in the last 30 days, which means most users might be able to move on immediately. Nothing beats instant!
So you go talk to the IT department. Let me guess, they have a thousand things to do and time to do 15 of them, and they will put it on the list. I can guess this because this is what IT always says. There are reasons for this, and I’m happy to write a blog post about why this is and what an organization can do to help with this if there is interest, but for now, let me tell you as an internal entrepreneur, how you can work around this. In the end, you need to come up with something that is such a good idea, that someone with a high enough title will tell IT, this is what they are doing.
You don’t get that done by simply explaining what you found. If you go to your leadership and say, this is the feature they use the most and we should move it, you’ll tell your manager who will tell you to submit a ticket. You will do that. It will sit. Now maybe you’ve really got your manager onboard, so they reach out to their same-level counterpart within IT and ask. That same level IT person will say, “We’ll look into it.” They won’t.
Now let’s say you are charming and can sell ice in winter. So you get your boss’ boss to agree this needs to be done. Your boss’ boss will call their counterpart. Their counterpart will say, “I’ll look into it.” The IT counterpart may even send an email or Slack chat and ask about it. To which their subordinates will reply, “It’s a good idea, it is on the list, we’ll get it done as soon as possible.” The IT counterpart will consider it closed and move on. Their team is working on it. They have a good team. They know they have a good team, they built the team, and of course they are good.
Now let’s change it up a bit. Say you notice what you saw. You reach out to a few co-workers and ask them if they feel this pain and how much time they spend per customer looking for this information, then how many times a day they do this. Then you review your org chart to approximate the number of people in that role. Then touch base with the other roles, and do the same. Then find a posting for each role online to get an approximate salary.
So let’s say, each role spends three minutes looking for the information. It isn’t risking upsetting the system for three minutes. Especially since with the enhancement, you can drop that time, but not eliminate it, so it takes three minutes down to one minute. There doesn’t seem like there is much meat on that bone, so your project will get put in backlog and sit. But wait, we aren’t done.
[1] If you save each look up two minutes. Now let’s say support has 20 people, each of which does this look-up 10 times a day. That is 200 minutes saved each day. In a week, that is 1000 minutes. That’s the better part of 17 hours a week. Now let’s say the average support worker makes $60k a year. $60k divided by 52 weeks is about $1,154 a week. Divide that by 40 hours a week and you get an hourly wage of $28.85. So let’s multiply that 17 hours by $28.85 and you get $490.45. That’s nearly a $500 savings each week. Take $490.45 out to 52 weeks in a year and you get about $25k. Now that was just for support. Let’s say three other roles have similar math. Now four roles are saving $25k which means the savings is $100k.
If IT can put a person on it, and that person makes say $75k, and they will need a week to make the changes, test it, and roll it out, then we can calculate the cost of the change. $75k divided by 52 is about $1,442 a week. So if you take a week of one person’s job, it means you are spending $1,442, one time, for $100k in savings for years to come. But let’s take a single year, the ROI will be $100k divided by $1,442 which gives you an ROI of over 69 times. So the company is spending one amount and getting 69 times that back.
Now if you build a business case that shows if your company moves your IT case to the top of the list, they can save $100k and, in the first year, have a 69-time ROI, and you take that to your boss, guess who is going to be more excited by it. Your boss can say, “We came up with an idea that saved the company $100k and provided an ROI of 1:69.” For most of us $100k is someone’s job at least. Plus the added benefit is, IT, which is always seen as a cost center, they too can claim, “We instituted a change that had a 1:69 ROI and saved the company $100k.” [2] In many companies that won’t carry the same weight, because IT (See above, IT is special), but it’s still better than them saying, “We did stuff.” Now who’s idea is moving to the top?
OK, so let’s bring this whole thing home. Why do you, reading this blog, care? Well, I think folks who are not in a position to be an entrepreneur, but want to practice their skills so if an opportunity arises they are already used to the model. I think anyone who never wants to be an entrepreneur but wants to set themselves apart from the crowd can use these tools to stand out and help them advance their careers within an existing company. Finally, most entrepreneurs I meet are working jobs as they try and get their businesses off the ground. You need these tools for building your business, why not practice them while you’re working, getting your company off the ground? On a side note, I do not, for the life of me, understand why more companies don’t require this kind of plan before making changes, but that’s a different rant.
OK, so now we understand how to use the entrepreneurial tools I’m teaching in an established business, but there is one more comment I need to make before getting to this week’s tool. It is this: if these entrepreneurial tools can be used in existing multi-billion dollar companies, do you think, if you are starting your own company, you should apply these models and tools to your company once and never use them again? I’ll go ahead and answer that, no, continuously reapply these models and tools to keep you on course.
So now on to the tool. OK, it’s not a tool, but what to look for in a couple of tools. The idea is we talked about how to model and measure being more efficient in business, let’s talk about being more efficient in ratcheting wrenches and ratchets. One of the easiest ways to measure that is tooth count. No, teeth are not the number of angles, thus sides a wrench or ratchet has, which would be what most of us initially thought. Teeth are actually within the handle and refers to the number points where a gear and latch can connect.
You can learn more about the physics of this in autoweek.com talking about or see a video here. Basically the higher the teeth count, the less distance needed to move the handle for the latch to stick into a gear, which means you’ll get the most movement per swing.
clarity needed
clarity needed