Can Big Ideas Help Small Businesses?

Last month, Inc had an article on Reichheld’s Net Promoter Score (NPS) system that was implemented in a $25 million business. I know a lot of people who wouldn’t consider this business small, but the article got me to thinking about how small and medium sized businesses (SMBs) evaluate and implement new management concepts.

It seems to me that SMBs are at an obvious disadvantage when applying new methodologies. As the “chief bottle-washer and cook”, does the typical small business owner or manager have time to evaluate the latest management thinking, or the resources to learn, adapt and apply esoteric or theoretical concepts? And if they have the knowledge, skills and time, I suspect that other financial priorities such as rent, payroll and profit will likely take precedence over a risky experiment. There is no hiding from the bottom line in a small business – cash flow is king. In order to justify parting with hard-earned potential profit, small business owners need pragmatic, accessible and actionable advice that will result in a demonstrable return on investment.

I know many small businesses owners and managers who intuitively understand the concept of customer satisfaction and loyalty – if you treat a customer right, they will come back, if you treat them wrong, they won’t. The challenge is to integrate this ethos into the business processes in an unobtrusive way. The thing that I like about Reichheld’s Ultimate Question concept is the simplicity and the ease integrating it into the business. What I don’t like is the open ended, follow-up question. This leaves a lot of information to analyze. iPower said it was hiring three people to analyze the results; money probably well spent for a $25 million business going to $40 million. However, this level of resources is a luxury for smaller firms.

With the Principles of Profit Maximization, data collection may limit some discovery, but corrective action can be narrowly focused on high-impact areas. This approach is probably more beneficial to resource constrained organizations.