Month: September 2017

Planning the When

My uncle moved his pharmacy about 50 years ago.  He could only choose one location, and he mapped out where he thought the growth of the city would be.  The first few years were hard, but as the city grew, his shopping center became the center of town and the store site turned out to be a very successful location.  He balanced today’s customer against tomorrow’s.   Too early, and you build in a corn field and are bankrupt by the time the community arrives, too late and you pay higher rent, or are completely shut out of the market.

CFO’s (and CEO’s) work in a particular time frame.  Some think about next month, some about next year, some about 10 years from now.  This is typically called the strategic time frame. My Uncle’s time frame was 20 years, the length the time he’d be committed to a lease.  To make a positive difference in earnings you typically need at least 6-12 months.  Strategies take time to develop, initiatives need to be planned, advertising ordered, product sourced or manufactured, distribution organized, and sales teams trained.  Of course, you can make a negative impact on a quarter a lot quicker, simply run out of inventory.  My friends in the Hispanic grocery business called that “throwing a party without having any beer”.  Not a recipe for a good party.

A good strategic plan is about figuring out what to do.  You generate positive initiatives, put them in a rational order, fund and staff them, and sequence them so performance targets are achieved.  But when should these initiatives be focused?  If too short term the projects will be small, too long term and the market may change and the opportunity disappear.  Balancing the “when” becomes as important as picking the “what”.

Elliot Jacques was an organizational development consultant who felt most OD problems were organizational and not people problems (see here for his requisite organization page).  He felt that people had a natural time frame and controversially believed it couldn’t be changed.  I don’t know whether that is true, but I do know that there is too much short-termism in plans.

Short-term projects tend to push out long-term projects.   Silicon Valley CFO’s stay about 3 years in a job.  There really isn’t time to think long-term when you spend six months learning the company, two years working and six months planning your next gig.

I’ve worked with management teams that spend 100% of their time focused on hitting the weekly numbers.  These management teams react fast when things go astray.  They also tend to be inward, operationally focused.  So intent on what is in front of them, they miss opportunities to grow the business.

 

This applies in your personal life. There are probably 2 or 3 things that will make a difference in your life in 10 years.  Are those things being addressed now on your to-do list?   I talk with people every month about retirement, and too many lack a plan.  Be kind to your future self, think about the future and make those constructive changes you know you need to do.  The earlier you start, the smaller the changes need to be.

A good project plan has steps to help you reach your goals.  A good strategic plan has interim steps that support your long-term goals.  Look at your strategic plan (or project plan or to-do list) and see if you have a good mix of short, medium and long-term items, and be kind to your future self.

***

Dr. John Zott is the Principal consultant at Bates Creek Consulting. John is the chair of the Careers Committee at FEI Silicon Valley, a senior adjunct professor at Golden Gate University and comments regularly on issues that affect consumer businesses.  If you are looking for a CFO for your e-commerce/retail/consumer company, or are a former student, colleague or would just like to connect – reach out.

Simple, Better Decisions

Although I prefer to help businesses grow, sometimes growth goes bad and the company becomes a turnaround.   I worked with a firm that went through a very rapid growth phase, was hit with an unexpected event, and ended up declaring bankruptcy.  I joined shortly before the bankruptcy and saw them through the money raise and bankruptcy exit.  It is a valuable experience that is way under appreciated by hiring managers.

One day early on in the process, the outside corporate counsel (a close friend) and I were sitting in the back of the court room waiting for our turn.  Several smaller cases were being heard by the judge.  After listening to a few of the facts, I noted to my friend that if these firms made a few relatively small decisions six months earlier they could have avoided the whole bankruptcy proceeding.  The lawyer turned to me and said “every case in bankruptcy court could have been avoided by making a few better decisions earlier.”  Although this doesn’t sound that profound now, it did to me then.

Decisions have consequences, and bad decisions lead to bad outcomes.  Although it can be personally satisfying to blame one person or one decision for a bad outcome, there are often multiple decision points and multiple people involved and plenty of opportunities to take another path.    The downward spiral of performance is often accompanied by a closed mind.  You can’t fix a problem you won’t see.

Management teams repeat their core message to the staff, which communicates strategies and values.  This repetition helps solidify the culture and keep the company on track. Unfortunately, as circumstances change, sometimes the strategies must change.  Repeating the company line when it is no longer relevant is like dancing for rain.  The only winner is the guy getting paid to dance.

Worse yet management teams that don’t recognize change become further out of touch with the front-line staff that faces the market and the changes.  Respect declines when your boss is telling you to focus on “a” when you can clearly see the problem is “b”.

The first rule of holes is “when you find yourself in one, stop digging.”  Management teams need a method of tracking performance that tells you when you are in a hole, an open mind to recognize that circumstances have changed and the fortitude to go and fix the problem.

***

Dr. John Zott is the Principal consultant at Bates Creek Consulting. John is the chair of the Careers Committee at FEI Silicon Valley, a senior adjunct professor at Golden Gate University and comments regularly on issues that affect consumer businesses.  If you are looking for a CFO for your e-commerce/retail/consumer company, or are a former student, colleague or would just like to connect – reach out.