Stoneridge Software Featured in Top-Performing Firms Session at Microsoft Envision
The inaugural Microsoft Envision event, recently held in New Orleans, featured hundreds of sessions for business leaders. Stoneridge Software President Eric Newell, along with Dave Hofferbarth, managing director of Service Performance Insights, presented a session on a benchmark study of top-performing professional services firms.
For almost 10 years, Dave Hofferberth, Managing Director of Service Performance Insights, has gathered one of the most comprehensive databases of industry metrics for professional services firms. Based on his yearly benchmark study, Dave shared his observations in several areas for organizations who outperformed their peers with faster revenue growth, larger projects, and more satisfied clients – leading to higher profitability.
Stoneridge Software was named one of the top 20 "Best-of-the-Best" in SPI's 2016 study. In his portion of the session video below, Eric shares some of the things that led Stoneridge Software to achieve a professional service firm "Best-of-the-Best" rating. Dave's shares his observations at the beginning of the session video.
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Eric has identified three areas which he attributes to Stoneridge Software's success.
1. Entrepreneurial Operating System (EOS)
The EOS philosophy is based on a book by Gino Wickman called Traction. Traction takes ideas from a lot of the best business books and applies them into a theory that works. Fundamental to the understanding of the EOS is the understanding of these six elements:
There are several successful businesses based in Minnesota, where Stoneridge Software is headquartered, who are using the EOS to run their company. As part of the EOS adoption, Eric meets with a monthly CEO group to talk about issues they all face, which he has deemed extremely helpful.
Stoneridge Software has used EOS to help establish a set of core values, which have become a key driver. Integrity, Tenacity, Technical Excellence, Client Centric and Enjoy Our Work. Our organization uses this set of values to hire, to manage and to make daily decisions. Everything is really tied to the core company values to establish direction.
Niche, Marketing, Yearly Plans
The EOS philosophy has also helped to establish our niche, our marketing strategy and a 10-year, three-year and one-year plan for the company. Each quarter the leadership team and company review these plans and make adjustments.
To achieve some of the goals set forward by the company, there is the concept of a "quarterly rock." A "rock" is one of the most important goals to get accomplished. These are identified so that during that quarter the company is able to put forward the resources to execute on that goal. Stoneridge typically takes approximately three things to get better at and two new things to accomplish. This balance helps not only drive us forward but also get better at what needs to be improved.
Leadership Meeting Agenda
Using the EOS has helped Stoneridge establish a leadership team meeting for an hour-and-a-half each Friday. Time is set aside to review issues, the company scorecard, kudos, employee headlines. This process has been very effective. Issues don't linger because they are discussed each week.
2. SPI Research Benchmark Study's Impact
Stoneridge Software first read the SPI Research Benchmark Study report two years ago and decided to do a self-assessment. In most areas of measurement, at that time, the company was around what the study would score at a "level two." "We scored well on attrition, and revenue per employee was in line," said Eric. "But our processes definitely need to be improved."
Some of the most important things Stoneridge learned from studying the report were:
- The need to manage a backlog of billable work and the need for projected hours tracking.
- A sharper focus on pipeline vs. revenue projections.
- A better awareness of our need for overall process maturity.
3. How to Best Use a Scorecard
A business scorecard is a set of numbers and analytics reviewed on a weekly basis, such as the number of full-time employees, the percentage of team members billing at 40 hours, accounts receivable and collections, consulting revenue vs. target revenue, a utilization chart, and what the pipeline looks like. Stoneridge Software has taken these categories and applied the use of Microsoft's Power BI tool to drill down into the analytics even further.
How does a scorecard help make decisions?
- It's Refreshed Each Week - Our scorecard is refreshed each Wednesday and reviewed by leadership on Friday. It shouldn't take three days to put together a scorecard. It needs to be simple enough that it's not counter productive.
- It Asks Questions Based on Data - Do we have an AR problem? Are our consultants staying busy? Is our pipeline large enough to hire another resource? We can answer these questions and identify any problems and address them.
- Building a Quarterly Enhanced Scorecard - One of our next investments is to build a quarterly scorecard to take a broader view at things like retention, revenue per team member, and other things that are important, but don't need to be reviewed on a weekly basis.
Participating in studies like the one provided by SPI Research, and using resources like Traction's EOS has helped Stoneridge Software to establish a framework to track and measure results, with the end goal of improving operational efficiency and increasing profitability.