Academic journal article Management Accounting Quarterly

Winning the Fight: Using Target Mapping to Leverage Fixed Costs and Meet Customer Needs

Academic journal article Management Accounting Quarterly

Winning the Fight: Using Target Mapping to Leverage Fixed Costs and Meet Customer Needs

Article excerpt

Many businesses are struggling to deal with the current severe economic downturn. one small business--a martial arts club--decided to perfect its offerings and focus on increasing its customer base despite the poor economy. The staff used a planning method called Target Mapping to figure out how to do this. In the process of implementing its Target Map, the team found that several preconceived targets shifted and that the Target Mapping process enabled it to respond quickly to environmental changes and arrive at a stronger overall plan. The plan, which was implemented with little expense using the original facilities, provided a positive cash flow. Target Mapping is relatively easy, and others can use the process the gym owner followed as a model.

A small athletic club that was established in Bellingham, Wash., in 2007 was at a crossroads toward the end of 2009. Even though it had an excellent, well-trained staff and an accessible location, the owner felt that the club was not utilizing its facility and staff as effectively as it could. It offered classes in Muay Thai, wrestling, Brazilian Ju-Jitsu, boxing, Mixed Martial Arts (MMA), and strength and conditioning, and it had grown primarily by word of mouth.

People involved with the club tended to be diligent practitioners of martial arts, focusing on the discipline in order to master their physical skills and to experience the broader effects of life enrichment that flow from the pursuit of excellence. Understanding this passion, the club owner and one of his students, co-author Tristan Saario, focused on a Big Hairy Audacious Goal (BHAG) for the club:

To grow to the point of opening a full-sized "super gym" while furthering the sport and remaining a positive presence in the community. (1)

In order to accomplish this goal, they identified several features they felt should be included in a super gym:

1. A cage and ring for training and sparing,

2. A massage room for easing sore muscles,

3. A weight room, and

4. A padded floor training area for general instruction and wrestling classes.

Listing the Obstacles to the BHAG

As part of Saario's studies at Western Washington University, he had been introduced to a technique for reaching BHAGs called Target Mapping (TM). (2) The starting point for a Target Map is an agreed-upon goal. In a typical TM process, the team develops an obstacle list that consists of anything currently preventing the company from achieving its goal. The next step is to determine what conditions must be present so that the obstacle disappears. Then an action plan is developed so that each condition is reached, and, finally, metrics are added to monitor progress toward the goal.

The club had to deal with several issues. One problem the gym faced was low enrollment for the square feet available. Most of the costs of the club were, and are, fixed. They included the salaries of the instructors and the maintenance of the facility, property taxes, and insurance payments. There were virtually no variable costs. The real constraint at the time of the analysis was limited cash.

Even though the facility could handle more members, the facility size limited the variety of the services the club could offer. To serve the potential and current base more effectively, the club had to review the class offerings. In the quest to grow and attract more members, the club owner and Saario listed the following broad-based obstacles:

1. People are hesitant to try something new,

2. People are not aware of the diversity of the product offerings,

3. Public stigma against fighting hampers the diverse growth of the student base, and

4. Product quality will become harder to oversee as the organization grows.

Obstacle Truth-Telling

It is critical during the TM process to articulate the obstacles clearly. Yet stating negatives about one's company can be difficult and risky. …

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