Jon: Goodday, everyone, my name is John Hollenberg. I’m the owner & founder here at Five By Five. We are a Gold Coast based website design and development agency. And on this call, we have got Adam Dierselhuis, do I say that correctly?
Adam: Close, close.
Jon: I am Dutch, I know you are Dutch. I probably should have had some more ‘GGGGHH’ in there.
We’ve got the the amazing Carla Schesser as well. She’s our CEO here at Five By Five. So I might just hand over to you Adam and maybe just wanna give a little background on who you are and what you do at
Adam: Great. Thanks, Jon. Hi everyone. Thanks for taking the time to tune in. I’m an accountant by trade, right? 20 odd years in the game.
But what I do each and every day is really help business owners build better businesses. And the background to that is really a passion for wanting to see business owners thrive, you know, build a good business, live a great life. And I have the absolute pleasure of working with business owners like Jon to implement what’s called The Great Game of Business. So high-level, what The Great Game of Business is all about, is essentially creating an alignment between owners and employees, where everyone’s on the same page, pushing them the same direction towards the organizational goals.
And what that results in really is the framework of “How do we help our team understand what’s important around here?”
“How do we help them connect to what’s important” to make sure that it is clear on how they can help move the needle each and every day, and give them a reason to care.
When we can do those three things. That’s when the magic happens at positive change.
So, you know, quite often business owners say, well, isn’t it always just profit, isn’t profit, the most important thing? But quite often, that’s not the case cause you can be highly profitable, but your income might be coming from one or two key sources. So that’s a risk. So trying to understand, you know, look under the hood and understand how our business actually works and functions and identify the most important thing we need to focus on is a big part of that process. And once that’s defined and making sure whatever you choose is what’s important where people can influence it.
Then we can start cascading that down. So people each day can understand, right – If this is what’s winning for the business and I know how I can help achieve that, and they’ve got a reason to care then, you know, in my experience, good things happen.
In terms of that reason to care factor, you know that can take many different shapes and forms. But quite often it’s a it’s a financial incentive, a bonus. And it’s sort of hinged around what I like to describe as a gain share, you know, so here’s the target line for us as a company, if we exceed that and where we’re in gain share territory, and we can again share some of that gain.
Jon: Oh, I was gonna say, so you, you came, so we’re based here at the Gold Coast you came in for a week. We spent basically a week, deep diving into our business and pretty much in the first day or so you identified a pretty major issue in our business.
Adam: Yeah, That’s right. You know, from the what’s important around here factor in, in analyzing all of the ins and outs of your business, really the key area for improvement was around what we described as your overrun rate. And simply what we meant by that is essentially the difference between the quoted hours to a client to build a website and the actual hours it was taking.
You know, so that’s quite often a common thing where you essentially over-service. And that’s what we called overrun, but in other organizations I work with, it could be around sales. It could just be around client numbers. It could be around gross profit percentage.
So there’s no fixed form. And it’s really just a question of, well, what is the greatest area from improvement? And then, you know in selecting that over overrun rate, making sure that everyone on your team could influence that because there’s no point having a number in the gun size, which people aren’t connected to, or don’t really have control or say over. So for example, I’d always steer away from profit, typically as that “what’s important” metric because really profit is just sort of something that’s very detached from the each and every day around the team, but for your team overrun rate, the difference between the hours quoted and the hours it takes to deliver is definitely something that we can work on.
Jon: Well, that’s what we call the critical number that’s. Yep. So that was the one number that we were focused on and through your very nice probing questions and really peeling back the layers on how we go about actually engaging with a client. So selling to a client, engaging with a client, each of those key steps in the process delivery, we’re able to go in and tighten up and sharpen up a whole heap of stuff that ultimately is going to move that critical number.
Adam: That’s exactly right. And that’s the point it’s like, okay, well, this is what our focus is of our organization. Then how do we interact with customers and how do we deliver our respect to that number? So how can I say this another way? Where are we bleeding time? You know? And I know in your case it was, it was a lot of back and forth with the website design. So then then how we actually get clients on board with the design direction in a very effective manner compared to what had happened was a change. So a lot of this then with focusing on something drives a lot of process change, which you guys are now benefiting from.
Jon: That’s the second step. So then it is hacking on the right drivers, yes. Third step was, we built out a scoreboard, correct?
Adam: That’s exactly right. So once you have designed the game, then it’s a matter of how we keep the game alive. So from understanding overrun rate, understanding how the team can help with that and redefined processes, or rework how they approach their work, then flash it up, just enhance the game analogy, right? The score board, and then a weekly huddle to talk to those numbers. What are we doing differently? How are we influencing or going to pull that overrun rate back this week, what’s the little project or experiment we’re going to try and implement this week to influence that overrun rate. So to pull it in the direction that we want. So that’s a really important part of the game. But also is saying that those are essentially our tools. Then, you know, the whole game’s about elevating the consciousness of the organization around that pain point and how we can work together. Hence my comment before that alignment. So by keeping that top of mind, but keeping talking on it, you as a leader, then benefit from essentially creating context. You know, what you’ve given now is everyone in the team context as to why this is important and importantly, giving them a reason to care about it as well, such that when you win, the team wins as well.
Jon: Which is what you define as a stake in the outcome. That’s correct. And that comes in the form of rewards and recognition.
Adam: Yeah, exactly. So quite often, you know, it’s a financial incentive, you know, as I said, if we hit our target line, there’s a financial payment that said it can take any shape or form. There’s no rule book, it’s really what’s fit for purpose. So that, so in terms of those, what’s in it for me factor, you have, you know, the incentive tied to the actual achievement of that critical number. But then quite often, we like to motivate the team with little rewards and recognitions around those key activities.
So if someone’s making a commitment and I use that term, because those key activities as part of the game, that how I can help are really making a commitment to your fellow teammate to say, right, this month, I am focused on developing this new process or executing this new approach or developing this procedure such that it’s going to help the overrun rate effectively. And then the whole idea is with some score board and a little bit of fun we can get to the end of the month and celebrate with your teammates, spin a wheel and win a prize type of stuff. So it’s just the total thank you piece.
Jon: As Carla has said, we make sure there’s lots of awesome prizes, like a coffee for a week.
Carla: Yeah. A bunch of different stuff. Gift vouchers, book vouchers, etc. Everyone gets excited for the end of the month to spin that wheel.
So Carla, maybe you can share your screen and actually show an example of the progress that we’ve made. So the numbers were not pretty at the start of the process. But very rapidly, we were able to move the needle. So maybe you want to just talk about our score card and where we started. So I remember when we first kicked this off, the, the actual overrun rate was 120%, wasn’t it?
Carla: Yeah, that’s correct. So when we sat down with Adam and we took a look at all of the previous projects for the year that we had delivered, we realized that we were over delivering by 120% on the average job. So that really became our focus number is that overrun rate percentage. And then as you described, we tweaked the process here and there to try and bring that number down as a group. So every single person on the team, had a role in doing that and collectively that all worked together to influence that one number. So you can see here by the brown/orange line on the graph. That’s where we started back in, I think we did it end of June early July, Oh, July. And so that’s where our start line was.
As we were learning all the new little tweaks and changes and implementing those updates, you can see that the line sort of sat there for a few weeks. And then the changes really started to happen. So we had a spike once we closed out a lot of stuff from the basis of new ways that we could get a project delivered. And then from that mark, you can see a very steep decline on that overrun rate as all of that hard work started to pay off and “playing the game” as we call it here internally became the norm. So all of those tweaks and changes that we started implementing just became part of the normal process and that then had that very significant drop in our overrun rate. So as you can see here by the left hand side our actual overrun rate, meaning the actual number that we’re currently sitting at it’s at 74%. So that’s in six short months, almost six short months. We’ve managed to bring that down from 120 to the 75-ish percent. What the blue line represents here.
And this has actually been incredibly valuable for the team is the forecasted overrun rate. So it’s all great. Having an overrun rate for all of the projects that we’ve closed, but having a forecast overrun rate allows us to project where that overrun rate is actually going to come at. And if that is high, we know that we still got some work to do on the project to close it out. So we’ve got a forecast overrun rate that we look at day in, day out, everyone’s working to pull that number down.
And then that influences our actual overrun rate. So we’re pretty stoked, the team was really excited to what we call close out the game. I think it’s called Adam, at the end of this month. We are all pushing hard to try and get that actual to 70%, if we do that, we will hit our top tier bonus that we set as a team. And what that’s really done is really get everyone to talk the same language. Everyone’s got the one very clear, common goal that we’re working towards and everyone has their role to play in bringing that goal to life.
Jon: Cool. And that was the first six months sprint. We were just talking with Adam two weeks ago around then what’s the plan for the next six month game. And ultimately what we’re trying to do is then halve that again. So we want to do is get this in and around that sort of 30% Mark from an overall perspective. So what this has done from a, a business capacity perspective is we were with the team and the resources that we had, we were flat out, we were super busy because we were overdelivering by almost 2.2. Right. what it’s done is it’s created a whole heap of capacity in the business. Not only from a general sort of stress perspective. So it’s reduced a whole heap of stress and pressure and burden on the team but also created more revenue earning opportunities for the business which is really exciting. And yeah, so that’s, I guess a bit of a high level overview. Adam, would you add anything else into the, into the mix there?
Adam: No. Other than to say, you know, one of the Great Game mantras is – Rapid financial results lasts in cultural change”, . And I think, you know, you guys are the pinup children of that these days, you know I think it’s phenomenal result, congratulations to you and your team on the effort, you know, to get to this point and all of the changes made, as coach, it’s awesome to see. Really looking forward to, getting us down towards the 30% mark.
Jon: Just getting warmed up at so thanks for your support and guidance and appreciate you taking the time today.
Adam: Not a problem at all. Thanks.