The Art and Science of an Elevator Pitch

An elevator pitch is a short / precise overview of your business and its products and / or services, typically prepared as a sales tool. It’s imperative that you have a well-rehearsed elevator pitch ready for when opportunity strikes. An elevator pitch can be one of most powerful weapons in your sales arsenal and it costs you virtually nothing to prepare one.

An elevator pitch is meant to be short. As the name implies, it should be possible to deliver your elevator pitch in the time it takes to complete your average elevator ride. Let’s paint the scenario. You step into an elevator and are, serendipitously, joined by the prospect of your dreams. Your luck continues unabated, and you get chatting. Mr Ultimate Prospect asks what you do for a living and you know that you have the opportunity of a lifetime in play. There are a thousand things that you want to say … but which of them are the ones that will get you the deal? Where do you start? How do you draw “next steps” into your pitch? What are your next steps? If you don’t have a clear and concise response to an opportunity of this nature, one thing is for certain … you have a more than even chance of blowing it. I am sure that you get the picture.

The lengths of elevator pitches vary, but you typically want to be able to present it at a leisurely pace in less than two minutes, with one minute being the ideal position. Your goal length should be somewhere between 150 - 250 words, with a “straight forward” business being closer to the 150 word mark and more complex business’ pitch being at the 250 word end of the spectrum. 

Tips and tricks for drafting a great pitch

When drafting your elevator pitch, there are a few things worth keeping in mind. Give them a walk through before you start.

1. Keep it short and sweet

It's called an elevator pitch for a reason. You have a limited time frame in which to make a great first impression. The golden rule … The shorter the pitch, the better.

2. Edit ruthlessly

Draft your elevator pitch, and then set about reviewing and editing it until it’s perfect. Rome wasn’t built in a day. Draft your elevator pitch and then set time aside every morning for the next week to review and refine it. Each revision is bound to be an improvement. Quite literally, sleep on it!

Ask your colleagues, friends and family to critique your elevator pitch and accommodate their feedback as far as possible.

3. Evolve it

An elevator pitch is a living document! As you get more and more experience in delivering it, you will find there are things that are missing, things that work well and things that don’t. Make a mental note of the questions that your prospects ask when you deliver your elevator pitch. Do these questions point to refinements that need to be made to your pitch? Do your prospects understand your pitch? Is it clear? Could it be simplified? Could it be shorter? Is there any irrelevant content?

Make it a personal discipline to periodically revise your elevator pitch to take learnings into account, and to make sure that it remains “fresh” in your mind.

4. What about your team?

It’s imperative that your colleagues participate in the drafting of your elevator pitch. After all, the more input received, the better the elevator pitch is likely to be. Even more important is that your colleagues should also have an elevator pitch handy so that they too are well armed when opportunity strikes. Selling is everyone’s accountability … not just yours.

5. Sharing is caring!

Nothing puts a prospect off faster than getting inconsistent messages from a prospective supplier. For this reason, it is imperative that you and your team share the same elevator pitch. Your colleagues may want to make small changes to the pitch to make it more comfortable for them to deliver, but the basic structure and key points should be consistent.

6. Keep it straight and simple

Keep the language that you use simple, plain and jargon free.

Assume your audience has no understanding of your industry, products and / or services. You want to be able to use your elevator pitch in front of anyone and know that they will understand what you do by the time you're finished.

7. The bigger picture

Hopefully, your elevator pitch goes well and you now have the opportunity to meet with your prospect on a subsequent occasion and continue the sales process at a more leisurely pace. What now?

As previously mentioned, nothing puts a prospect off faster than the scent of inconsistency. Make sure that your full sales presentation is consistent with the contents of your elevator pitch. All that should change is the degree of detail. Logically, the same holds for your social media, the advert that you put in the local “rag mag”, your radio spot, your press releases or even that billboard that you have in mind.

8. Say it in front of a mirror

An elevator pitch on a sheet of paper is a very different animal to the one delivered live to a prospect. Read your elevator pitch in your head, read it out loud and then recite it in front of a mirror. Make sure that it flows and sounds conversational. Do dummy runs for your colleagues, friends and family.

The bottom line … when you deliver your elevator pitch, it must be delivered with enough confidence that it sounds conversational. Your prospects don’t want to hear you deliver what sounds like a scripted message.

9. Memorise and practise it

You won't have the benefit of a cheat sheet when you are delivering your elevator pitch in the real world. You will need to memorise your elevator pitch. Your challenge is to memorise your elevator pitch without losing the ability to deliver it in a conversational manner. One thing is for certain, the more you practise delivering your elevator pitch, the easier it will be to make it sound conversational and relaxed.

10. Show your passion

The best elevator pitches are those that are memorable, unique, engaging and lead to further conversation. One of the best ways to accomplish this is by showing the passion that you have for its contents.

11. Multiple flavours

If you follow the step-by-step elevator pitch formula provided by this article, it's easy to refine your pitch to fit any audience. Once you're comfortable editing, rearranging and substituting, you can create a few different versions ahead of time.

12. Tweaking on the fly

The chances are more than even that there will be some degree of “on the fly tweaking” required when you deliver your elevator pitch. The reality is that there no two prospects that are the same and the context in which you deliver your elevator pitches will always differ, hence the need for customisation.
 
It’s on the fly tweaking that will keep your pitch conversational and fresh for the recipient. Once again, “on the fly tweaking” will become easier if you are fluent with your “base elevator pitch” and have had lots of “tweaking on the fly” practice.

13. Next steps

Just as you do with all of your other marketing activities, include a call to action at the end of your elevator pitch.

Outline what you want to happen next, whether it's giving the other person a chance to ask you questions, introducing you to a colleague, or scheduling time for a more detailed conversation.

14. Taking turns

You've put a lot of time into your elevator pitch, so it will be a big relief to have successfully delivered it. However, it is imperative that you don't forget about the person who has been on the receiving end of your pitch. The best way to transition from a great elevator pitch to a successful conversation is by giving the other person a chance to wow you with his or her own elevator pitch.

15. Size doesn’t matter after all

Whether you are one man band or the CEO of a multinational corporate, you still need an elevator pitch. There is a common misconception that only “small business” needs an elevator pitch … which couldn’t be further from the truth.

16. Benefits, not features

Remember, people don't buy features ... they buy benefits. Make sure that your product and service descriptions are benefit centric ... not feature centric.

Drafting that winning elevator pitch

Here is a step-by-step process that will help you create that winning elevator pitch.

Step 1: Define who you are

Write one sentence about who you are.

Example:

We specialise in developing and implementing Business Process Management (BPM) solutions.

Step 2: Describe what you do.

Use your mission statement and product / service listing as a guide, and write a few sentences about what you do every day in your business. Remember to keep your content benefit centric.

Example:

We have developed, and continue to refine, our own BPM application which we use to assist our Clients to optimally manage tasks and queries.

We have developed a number of flavours of our product to allow us to rapidly deploy BPM solutions. For example, the Therefore Quantum™ flavour is typically used by Call Centres to manage tasks and queries. Therefore StratIQ™ has been developed to optimise the management of strategy execution. Our technology is easily configured, which allows us to create BPM solutions for virtually any process need that a Client may have.

Step 3: Identify your ideal clients/customers.

Use your target audience description as a guide, and write a few sentences about who your ideal clients are.

Example:

Our ideal Clients are medium to large enterprises; operate in a business to business environment and process large volumes of Customer initiated tasks and queries. Our typical Client often has a large Customer base with whom they do a large number of low ticket value transactions and can therefore benefit by reducing the cost of Customer ownership.

Step 4: Explain what's unique and different about you and your business.

Use your Unique Selling Proposition (USP) as a guide, and write a few sentences about what sets you apart from every other business owner who does what you do.

Example:

We are in a unique position to assist our Clients to more effectively manage Customer initiated Tasks and Queries without having to make an extensive up-front investment in technology.

We offer a full outsource solution, which allows Clients to benefit from our offering without having to set aside capacity / resource to perform hosting and administration.

We are in a position to rapidly deploy our BPM solutions.

Step 5: State what you want to happen next.

Write a few sentences that identify what you want your audience to do next.

Example:

It would be great to schedule some time to walk you and your team through our service offering and explore how we can unlock value for your business.

Step 6: Create an attention-getting hook.

Write a few sentences that pulls in your audience and gets them engaged in what you're about to say.

Example:

Does it ever feel like your ability to resolve Customer tasks and queries within a reasonable time frame is a weak point when viewed from a Customer service standpoint?

Does your Customer Care function feel like it’s out of control and not delivering the sort of value that you expect, given what you spend on it?

Step 7: Put it all together.

Combine the statements you drafted in the previous steps, putting Step 6 first.

Example:

Does it ever feel like your ability to resolve Customer tasks and queries within a reasonable time frame is a weak point when viewed from a Customer service standpoint?

Does your Customer Care function feel like it’s out of control and not delivering the sort of value that you expect, given what you spend on it? 

We specialise in developing and implementing Business Process Management (BPM) solutions. 

We have developed, and continue to refine, our own BPM application which we use to assist our Clients to optimally manage tasks and queries. 

We have developed a number of flavours of our product to allow us to rapidly deploy BPM solutions. For example, the Therefore Quantum™ flavour is typically used by Call Centres to manage tasks and queries. Therefore StratIQ™ has been developed to optimise the management of strategy execution. Our technology is easily configured, which allows us to create BPM solutions for virtually any process need that a Client may have. 

Our ideal Clients are medium to large enterprises; operate in a business to business environment and process large volumes of Customer initiated tasks and queries. Our typical Client often has a large Customer base with whom they do a large number of low ticket value transactions and can therefore benefit by reducing the cost of Customer ownership. 

We are in a unique position to assist our Clients to more effectively manage Customer initiated Tasks and Queries without having to make an extensive up-front investment in technology. 

We offer a full outsource solution, which allows Clients to benefit from our offering without having to set aside capacity / resource to perform hosting and administration. 

We are in a position to rapidly deploy our BPM solutions.

It would be great to schedule some time to walk you and your team through our service offering and explore how we can unlock value for your business.

Step 8: Transitions, edit and flow

As invariably happens, the word count of the text pulled together in “Step 7” above (312 words in the case of the example provided) exceeds the targeted word count of between 150 and 250 words, so it is going to be necessary to perform some degree of summarisation.

When editing, you need to pay attention to adding transitions, reducing the word count, removing duplications, keeping sentences short, ensuring that the text flows conversationally and ensuring that your pitch contains all the necessary key information.

Example:

For many businesses, managing Customer tasks and queries is a weak service delivery point. Customer Care Departments often exist in a continual state of chaos and are unable to break out of a “poor service” cycle, irrespective of the amount of resource committed.

Therefore specialises in developing and implementing Business Process Management solutions. We have developed our own BPM technology, which we use to assist Clients to optimally manage tasks and queries.

We have a number of product flavours which allows us to rapidly deploy solutions. Therefore Quantum™, for example, deals with tasks and queries. Therefore StratIQ™ drives strategy execution. Our technology is easily configured, which allows us to rapidly create Client centric solutions.

Our ideal Clients are medium to large B2B enterprises with high volumes of Customer initiated tasks and queries. Our Clients often have big Customer bases, are concerned about the high cost of customer ownership and want to improve service levels.

We are in a unique position to assist our Clients to more effectively manage Tasks and Queries without having to make an extensive investment in technology, given that we bill on a rental basis. Further, we can offer Clients a fully outsourced solution, allowing them to stick with what they do best. Our technology has been developed to allow for rapid deployment, which means that we add value sooner.

It would be great to schedule some time to walk you and your team through our service offering and explore how we can unlock value for your business.

If the above elevator pitch is of interest to you, give Peter Lever a call on +27 83 447 4883 or email him on peter@therefore.co.za. 

Avoiding the bloatware trap

Bloatware is a phrase used to describe software that has lots of superfluous features and, as a consequence, requires a considerable amount of disk space and RAM to install and run. As the cost of RAM and disk storage decreased, there has been a growing trend among software developers to disregard application size, which tends to result in the development of bloated software.

Some people refer to this trend as “creeping featurism”. Creeping featurism is a term used to describe a tendency for systems to become more complex over time as more features are added. In software development, these added features often come at the expense of simplicity of use. Superfluous functionality increases the complexity of the user interface … and simply put, it makes off the shelf software applications less intuitive and more difficult to use and learn.

One sure way to develop bloatware is to leave product design decisions up to the developers of the software. If left unchecked, developers have a natural tendency to add in functionality that they think is neat, without asking the product’s user base. Best practice is to develop new functionality only where market feedback indicates that it adds value.

As a cautionary note, be aware that no two Clients have the same needs. Functionality that is an “absolute non-negotiable” for Client A could well be a “rather not have” for Client B … and it’s entirely conceivable that the reverse scenario exists too. It is for this reason that companies that develop off the shelf software often declare that their Clients should carry a part of the accountability for their application having become bloated.

Sidestepping the bloatware problem

So, how does one side step the risk of inadvertently developing a bloatware application? Some principles that we have followed when developing the Therefore BPMS, which forms the basis for the Therefore StratIQ™ and Therefore Quantum™ products, are detailed below.

Stick with your knitting

If your application is a Task Management application and your Client is looking for a Customer Relationship Management (CRM) application, stick with your knitting. Do you really want to develop CRM capabilities within your Task Management application? If you did, would it take your eye off the ball? Would it see your hereto contained Task Management application becoming bloatware? Wouldn’t it be better to recommend an existing CRM application to your Client and stick with doing what you do best?

It is imperative that you remain clear on the niche that your software is designed to service. Entertain any move outside of your core area of strength only after having given it some very careful thought.

Simply put, you need to accept that you can’t be everything to everyone. Trying to please everyone is a slippery slope that often leads to pleasing no one … and the eventual development of bloatware.

Always ask the market

New functionality should be the consequence of market feedback. Continually speak to your Clients / prospects, show them your software and take note of their questions and suggestions. When it becomes clear that their questions and suggestions are pointing to functionality that your system is missing … go to it!

When you do decide to develop new functionality, remember to run your wire-frames, and eventually prototypes, past your Clients. Asking your Clients what they want invariably unlocks huge value.

Keep an eye on usability

As you increase the number of features available within an application it becomes increasingly important to make sure that your application’s usability does not suffer.

Money spent on improving the usability of an application is always well spent. Again … there is no substitute for taking steer from actual users of the application when it comes to driving usability enhancements.

Benefits Vs Features

You don’t take a product to market because of its “features” … it’s actually the “benefits” that sell a product. Developers often have a feature centric view on the world, whereas Clients are typically looking to the benefits associated with using your application.

Make sure that all of the features that you add into your application play either a direct or indirect supporting role for a product benefit. If your proposed feature does not add direct or indirect value to a benefit, the chances are that you should probably not be going there.

Functionality on demand

As already mentioned, no two Clients have the same set of needs, given that they are generally operating in different markets with their own / unique contexts and working towards achieving different strategies. Naturally, this introduces the potential for some degree of application bloat.

Off the shelf software should be developed in such a way that features can be turned on or off, as dictated by the needs of the Client. We call this design principle “Functionality on Demand”. The Functionality on Demand design methodology allows your Clients to turn off functionality that they believe doesn’t add value, given their context. Simply put, it allows them to turn off the “bloat”.

We always encourage our Clients to turn off as much as possible, because the less superfluous functionality, the less cluttered the user interface and ultimately the better the application’s usability. Besides, your Client can always turn on previously deactivated functionality as their needs change or their experience in using your application deepens.

It’s more than just a software problem

The bloatware pheromone is more than just a software problem.

There are many examples or products and services that have become bloated by superfluous features and / or options. In the product and service space, bloat tends to unnecessarily increase your costs and work against your levels of customer satisfaction.

Should you be in the game of selling products or services, you will probably find that the above bloatware avoidance tips still add some degree of value in your environment. You may also find that a previously written blog article that talks to implementing Strategic Flexibility would be of interest to you.

Therefore BPMS … Building Bridges, Supercharging Delivery

The Therefore BPMS application drives the efficient execution of tasks and resolution of queries. It does this by giving your team a common platform that allows them to work together to deliver value.

The most powerful metaphor that we could think of when developing the marketing content for the Therefore BPMS was that of the bridge.

Bridges link locations, reduce transit times, unlock opportunities for trade, and often allow for a greater degree of social interaction between communities. In essence, bridges are “enablers” that release value that would have otherwise remained unrealised. Similarly, the Therefore BPMS builds bridges between your staff with a view to optimising the ease with which they are able to perform tasks and resolve queries, the ultimate objective being to add customer value.
 
During the course of our research into the bridge metaphor, we came across some pretty remarkable bridges. This article has been written to share our journey with you.

Tower Bridge

Tower Bridge, built between 1886 and 1894, is a combined bascule and suspension bridge in London which crosses the River Thames. It is close to the Tower of London, from which it takes its name, and has become an iconic symbol of London.

The bridge consists of two towers tied together at the upper level by means of two horizontal walkways, designed to withstand the horizontal forces exerted by the suspended sections of the bridge on the landward sides of the towers. The vertical component of the forces in the suspended sections and the vertical reactions of the two walkways are carried by the two robust towers.

The bascule pivots and operating machinery are housed in the base of each tower. The bridge's present colour scheme dates from 1977, when it was painted red, white and blue for Queen Elizabeth II's silver jubilee.

Sydney Harbour Bridge

The Sydney Harbour Bridge is a “steel through arch” bridge across Sydney Harbour that carries rail, vehicular, bicycle and pedestrian traffic between the Sydney CBD and the North Shore. The dramatic view of the bridge, the harbour, and the nearby Sydney Opera House is an iconic image of both Sydney and Australia. The bridge is nicknamed "the coat hanger" because of its arch-based design.

The bridge was designed and built by British firm Dorman Long and Co Ltd of Middlesbrough and opened in 1932.

The bridge's design was influenced by the Hell Gate Bridge in New York City. It is the sixth longest spanning-arch bridge in the world. The Sydney Harbour Bridge is the tallest steel arch bridge in the world, measuring some 134m (440ft) from its top to water level.

Nelson Mandela Bridge

The Nelson Mandela Bridge, completed in 2003, is a bridge in Johannesburg, South Africa. It was built to link the Braamfontein and Newtown business areas as well as to rejuvenate and modernise the Johannesburg inner city. The bridge was constructed over 42 railway lines, without disturbing railway traffic. It is 284m in length.

The bridge’s two pylons, North and South, are 42m and 27m high respectively. To reduce the weight of the bridge, it was built using a steel structure with a concrete composite deck. The bridge consists of two lanes and has pedestrian walk-ways on either side to accommodate foot traffic.

The bridge's lighting was upgraded for the 2010 FIFA World Cup. The new LED lighting technology allows for the changing of the colour of the light, thereby creating a light show at night.

A bridge linking Braamfontein to the Newtown precinct was first mooted by Steve Thorne and Gordon Gibson in 1993 in their urban design study of the Johannesburg Inner City. Their study suggested that the bridge be called the Nelson Mandela Bridge in recognition of the role that he played in bridging the various peoples of South Africa and thereby uniting South African society.

Millau Viaduct Bridge

The Millau Viaduct Bridge is a cable-stayed bridge that spans the valley of the River Tarn near Millau in southern France.

Designed by the French structural engineer Michel Virlogeux and British architect Norman Foster, it is the tallest bridge in the world with one mast's summit at 343m (1,125ft) above the base of the structure. It is the 12th highest bridge deck in the world, being 270m (890ft) between the road deck and the ground below. The Millau Viaduct Bridge is part of the A75-A71 autoroute axis from Paris to Béziers and Montpellier. Construction cost was approximately €400 million. It was formally inaugurated on 14 December 2004, and opened to traffic on 16 December. The bridge has been consistently ranked as one of the great engineering achievements of all time. The bridge received the 2006 International Association for Bridge and Structural Engineering Outstanding Structure Award.

Great Belt Bridge

The Great Belt Bridge runs between the Danish islands of Zealand (Copenhagen is partly on its eastern shore) and Funen (Odense is the main city). It consists of three structures: a road suspension bridge and a railway tunnel between Zealand and the small island Sprogø located in the middle of the Great Belt and a box girder bridge for both road and rail traffic between Sprogø and Funen. The "Great Belt Bridge" commonly refers to the suspension bridge, although it may also be used to mean the box-girder bridge or the link in its entirety. The suspension bridge, officially known as the East Bridge, has the world's third longest main span (1.6km), the longest outside of Asia. It was designed by the Danish engineering firm COWI.

The link replaced the ferry service that had been the primary means of crossing the Great Belt. After more than five decades of speculation and debate, the decision to construct the link was made in 1986; the original intent was to complete the railway link three years before opening the road connection, but the link opened to rail traffic in 1997 and road traffic in 1998. At an estimated cost of DKK 21.4 billion (1988 prices), the link is the largest construction project in Danish history.

The link has reduced travel times significantly; previously taking about an hour by ferry, the Great Belt can now be crossed in about ten minutes. The construction of the link and the Øresund Bridge has enabled driving from mainland Europe to Sweden and the rest of Scandinavia through Denmark.

Golden Gate Bridge

The Golden Gate Bridge is a suspension bridge spanning the Golden Gate strait, the mile-wide, three-mile-long channel between San Francisco Bay and the Pacific Ocean. The structure links the U.S. city of San Francisco, on the northern tip of the San Francisco Peninsula, to Marin County, bridging both U.S. Route 101 and California State Route 1 across the strait. The bridge is one of the most internationally recognized symbols of San Francisco, California, and the United States. It has been declared one of the Wonders of the Modern World by the American Society of Civil Engineers.

The Frommers travel guide considers the Golden Gate Bridge "possibly the most beautiful, certainly the most photographed bridge in the world". It opened in 1937 and was, until 1964, the longest suspension bridge main span in the world at 1,300m (4,200ft).

Charles Bridge

The Charles Bridge is a famous historic bridge that crosses the Vltava River in Prague, Czech Republic. Its construction started in 1357 under the auspices of King Charles IV, and finished in the beginning of the 15th century. The bridge replaced the old Judith Bridge (built 1158 – 1172) that had been badly damaged by a flood in 1342. This new bridge was originally called the Stone Bridge (Kamenný most) or the Prague Bridge (Pražský most) but has been the "Charles Bridge" since 1870. As the only means of crossing the river Vltava (Moldau) until 1841, the Charles Bridge was the most important connection between Prague Castle and the city's Old Town and adjacent areas. This "solid-land" connection made Prague important as a trade route between Eastern and Western Europe.

The bridge is 621 m long and nearly 10 m wide, resting on 16 arches shielded by ice guards. It is protected by three bridge towers, two of them on the Lesser Quarter side and the third one on the Old Town side. The Old Town bridge tower is often considered to be one of the most astonishing civil gothic-style buildings in the world. The bridge is decorated by a continuous alley of 30 statues and statuaries, most of them baroque-style, originally erected around 1700 but now all replaced by replicas.

Brooklyn Bridge

The Brooklyn Bridge is a hybrid cable-stayed / suspension bridge in New York City and is one of the oldest bridges of either type in the United States. Completed in 1883, it connects the boroughs of Manhattan and Brooklyn by spanning the East River. It has a main span of 486m (1,595ft) and was the first steel-wire suspension bridge constructed. It was originally referred to as the New York and Brooklyn Bridge and as the East River Bridge, but it was later dubbed the Brooklyn Bridge and formally so named by the city government in 1915. Since its opening, it has become an icon of New York City. It was designated a National Historic Landmark in 1964 and a National Historic Civil Engineering Landmark in 1972.

Akashi Kaikyō Bridge

The Akashi Kaikyō Bridge, also known as the Pearl Bridge, links the city of Kobe on the mainland of Honshu to Iwaya on Awaji Island, in Japan. Completed in 1998, it crosses the busy Akashi Strait and carries part of the Honshu-Shikoku Highway.

The Akashi Kaikyō Bridge has the longest central span of any suspension bridge in the world, at 1,991m (6,532ft).

It is one of the key links of the Honshū-Shikoku Bridge Project, which created three routes across the Inland Sea.

Storms River Bridge

The Paul Sauer Bridge, also known as the Storms River Bridge, is a concrete arch bridge over the Storms River in the Eastern Cape of South Africa. It carries road traffic for the N2 national highway. The Paul Sauer or Storms River Bridge was built between 1953 and 1956. It was designed by Italian engineer Riccardo Morandi. The bridge spans 100m (328ft) and sits 120m (394ft) above the river.

The main arch structure was constructed in a unique fashion. The halves of the arch were built with climbing formworks in an essentially vertical position on opposite sides of the river canyon. They were then rotated and lowered into position to meet at the centre, thus forming the completed arch structure.

Located on the beautiful Garden Route N2, between Cape Town and Port Elizabeth (160km in length), it was initially the highest concrete arch in Africa. It lost this record in 1984 to the Bloukrans Bridge.

Revised: 15 November 2018

The Capacity Crunch … Things we learn from Eskom

Of late, there has been a lot of candle lit dinner table conversation about “capacity management”, largely driven by Eskom’s imposition of load shedding. Eskom's current predicament is very clearly the consequence of them having performed capacity management rather poorly for an extended period of time. Talk has it that we are on the brink of experiencing similar problems with water provision. The sobering thought is that it’s not just governments and parastatals that struggle to manage capacity … the private sector routinely gets it wrong too.

Capacity is typically seen as a strategic enabler. You develop a strategy, the strategy has growth targets and you develop enough capacity to be in a position to support the strategy with a view to realising its growth targets. Sounds simple, doesn’t it?

The reality is that the management of capacity is typically hard work. There are two aspects to the exercise – maintain your existing capacity and develop new capacity.

Maintaining existing capacity

To return to the Eskom example, it is very clear that they have failed spectacularly to maintain their existing fleet of power stations. Lately, the portion of their fleet that is offline due to unscheduled maintenance exceeds the portion that is offline for scheduled maintenance, by a factor or two or three … a sure sign that they are losing the maintenance war. Eskom have recently admitted that they have neglected the performance of routine maintenance since 2010, apparently as a consequence of the 2010 Soccer World Cup. What can we learn from the Eskom debacle regarding the management of existing capacity? Some ideas follow:

1. The management of existing capacity is a long term commitment. 
2. You can’t afford to take a breather when it comes to managing existing capacity. There is no such a thing as a “cost holiday”. 
3. If you have taken a “cost holiday”, my deepest condolences. You will pay for it dearly at a later stage. 
4. The management of exiting capacity requires discipline, skill and needs to be driven from the top. If you don’t have the appropriate human asset, set about growing it or employing it. 
5. The management of existing capacity requires financial resource. Cutting back on routine maintenance because you “can’t afford it” is not smart poker, as the good folks at Eskom have found. 
6. The management of existing capacity requires a continued and disciplined focus on quality and root cause analysis. 
7. If you have neglected routine maintenance for a long time, it is going to take you a long time to turn the ship around. In short, if it took you five years to break it, you can expect to take five years to fix it. 
8. Don’t neglect to perform routine maintenance on your existing capacity because you have been seduced by the excitement of new capacity build initiatives. 
9. If you can’t afford to maintain your existing capacity, you can’t afford to pay big bonuses.

Developing new capacity

Talk has it that Eskom had presented demand projections and plans for the development of new capacity to the Government in good time. Unfortunately, the Government hadn’t settled their policy framework for power, and as a consequence were unable to provide Eskom with the requisite go ahead until it was too late. What can we learn from Eskom’s new capacity build efforts? Some ideas follow:

1. The delay in initiating the build of new power stations was a consequence of the Government not having strategic clarity on how it wanted to handle power generation going forward. While the Government was squabbling about the “privatise vs continued State monopoly” issue, precious time was being lost. Strategic clarity and Board commitment to the management of capacity is a key success factor … and the Government failed on both counts. 
2. New capacity development takes time. If poor strategy and / or planning have put you in a position where you need to bring new capacity on-stream in a shorter period of time, you generally land up paying more or compromising on quality. Oddly enough, in the case of Eskom, it looks like they may well land up both paying more AND compromising on quality … which points to poor leadership. The bottom line is that it’s not smart to start late! Check out the “Good, Cheap and Fast” blog article for some background reading on this principle.
3. New capacity development planning and execution must continually be performed across the short, medium and long term planning horizons. 
4. Successful capacity development requires the delivery of capacity that is workable, on time and within budget. The Eskom new power plant builds are overrunning, both with respect to cost and time. Further, there has been some question about the quality of the new plants that are being built. It’s perhaps best not to reward performance of this nature with bonuses as it encourages the type of practices that you would rather do without. 
5. Once again, the development of new capacity requires depth of skill and effective management. If you don’t have the appropriate human asset … set about growing it or employing it. 
6. It’s not smart to finance the building of new capacity by cutting down maintenance spend on your existing capacity. 
7. Large projects such as power plant builds tend to be hotbeds for corruption. Professional procurement contextualised by a solid value system is essential, particularly when your shareholder is the taxpayer. For example, clean procurement practices would never have allowed the Chancellor House / Hitachi issue to have arisen. It seems somewhat perverse that the ANC should both be ultimately responsible for the power crisis and be profiting from it.

When it goes wrong

When it comes to capacity, it’s fair to say that it’s easy to sell into surplus capacity, but it’s pretty tough to sell into undeveloped capacity.

Surprisingly, the new democratic dispensation inherited an excess of power capacity when they came into power. They did the right thing … they rolled power out to the previously disenfranchised. In business speak; they sold into the surplus capacity and they did so for in excess of 10 years. The problem arose when they were called upon to lead the development of new capacity. Sadly, capacity development simply wasn’t centre stage on their strategy.

The consequence of the Eskom debacle has been massive for South Africa. Although it’s very difficult to quantify the impact of the power crisis, conservative estimates suggest that GDP growth has been held back by somewhere between 30 and 60 basis points per annum by Eskom’s inability to keep the lights on. South Africa’s GDP would have been somewhere between 2.1% and 4.2% bigger right now if we had not run into a capacity crunch back in 2008. That translates into a lot of lost jobs for people that desperately need them.

What do we learn?

Capacity is the life force behind any organization. It is capacity that allows for the provision of goods and services to market and its often capacity that stands against you meeting your growth targets. In short … it’s the engine room behind what your business does. Take it for granted to your own detriment. Capacity management must be a key accountability of your Operations Team and should be in direct line of sight for your CEO.

Making the wrong capacity decisions for the sake of your next set of results will come back to haunt you in the medium to long terms. It is NOT in the best interests of your shareholders and it’s NOT sustainable. Don’t do it! Trust me … it’s not a good idea.

Your capacity is as strong as its weakest link. You should be continually monitoring for areas where your capacity is failure prone, performing root cause analysis and implementing corrective action. Focus on ensuring that your capacity is as robust and efficient as possible. Performing routine preventative maintenance is a far better option than living in a world where you are continually chasing around after the next “out of the blue” breakdown.

Treat your capacity well … and it will reciprocate. The alternative also applies.

Great leadership quotations

Leaders establish the vision for the future and set the strategy for getting there. ~ John P. Kotter

Example is not the main thing in influencing others, it is the only thing. ~ Albert Schweitzer

Leadership is the capacity to translate vision into reality. ~ Warren Bennis

Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others. ~ Jack Welch 

The function of leadership is to produce more leaders, not more followers. ~ Ralph Nader 

As we look ahead into the next century, leaders will be those who empower others. ~ Bill Gates

The best CEOs I know are teachers, and at the core of what they teach is strategy. ~ Michael Porter

A leader focuses on shaping tomorrow. There is little or nothing you can do about yesterday. Learn from it but don’t waste a moment on it. Get on with tomorrow. ~ Jack Welch 

Servant leadership is the only leadership that ultimately works. ~ Dave Ramsey