Consultants with experience and hindsight can help executives make the right decisions and implement them for success

“Success is 51% good decisions versus 51% bad decisions”. But actually, when making the “post mortem” analysis of a failure, few business decisions can be singled out as “bad”. Some weaknesses in the decision processes may explain how a rationally “good” decision may not be “right”. And these weaknesses can be overcome.

Weaknesses in the decision process

Incomplete decisions

1. Incomplete information: When information is incomplete, decision may look good, but be wrong. What if a new regulation is about to change the market situation in a country that you don’t know well? What if you are missing a subtle yet crucial element of customer behavior in a foreign country? I once was expecting a mandatory administrative approval that seemed a small hurdle on my way, as there was no doubt I would get it; I did not know that, for historical reasons, it would take 2 years… But when preparing for a crucial decision, we also must allocate the time available to gather necessary information. And it is far from obvious to know when we have covered all the crucial information.
2. Cultural biases in unclear situations: Most decisions are not a choice between “yes” or “no”. And even then, “pros” and “cons” are not separated by a large margin. Evaluating a situation entails a lot of subjective judgment, possibly affected by cultural biases: years of competition with one company may induce to overlook another threat; a focus on technology may affect the perception of non technological parameters. Here are a few examples where challenging evidence can be crucial:
   • A major distributor is willing to take your product; is it a good enough reason to go for it?
   • You are heading a small company; would you consider using an international mammoth to help you grow, even though he could be a competitor?
   • You need funding and you are naturally turning towards national VCs; what if international fund raising was easier and bring unexpected additional benefits?
   • You have started expansion in the US, but you need more growth; would you consider trying Asian government agencies in countries that are on the other side of the map?
     
     In case of a crisis, emotional reactions will bias even further the decision process: some managers may become tougher than necessary, while others may not be able to adhere to tough decisions.
     
3. Ban on intuition: Intuition is merely a consequence of an unconscious analysis of information and processes fueled by one’s experience. This does not mean non-rational, but it means that one cannot make it explicit. An independent boss may impose decisions based on his intuition. But most decisions are collective (from Boards to project teams) and leave no room for intuition. Explain a posteriori why one trusted a wrong intuition is a risk that no manager can take, let alone a decision body. Decisions must be based on facts and arguments that can be demonstrated to the group. Right intuitions that may make the difference between a good decision and the right decision have no room in Board Rooms.
4. Short term perspective: Masters at chess and go are the ones who can best anticipate possible moves and evaluate the resulting situation. Business is exactly the same, and complexity is at least equivalent. But the world has evolved: the environment changes faster than ever: a revolution like Gutenberg’s printing press, invented in Germany, took decades to conquer Europe whereas the iPad was introduced worldwide in less than 2 months. Managers now favor reactivity, innovation and adaptability over long term planning. But fast changing world only means less time between crucial moves. It does not reduce the complexity. We used to have 3 weeks to produce a 5 year strategic plan, we now have 3 days to produce a 1 year tactical plan. Time pressure increases the risk of “apparently good” decisions: less time to consider a wide scope of parameters, to evaluate positions, to challenge cultural biases.

Decisions not made

Good or bad decisions are not the only thing to consider. There are decisions that are never made: options we do not consider (see before), moves that seem so obvious that we do not even question them and submit them to decision.

At the end of the 90s, the capital venture backed entrepreneurial model was so popular that most innovative companies adopted it without ever questioning the fundamental needs of their business. This model was not adapted for every business. Similarly, transferring a technology from one market to another using the same distribution model that worked once may seem an obvious and unquestionable movement that would not survive in fact any thorough analysis.

Decisions not fully implemented

Approving intellectually the soundness of a decision does not mean being able to implement it with full force and efficiency. And it may make the difference in the end. A good decision only half heartedly implemented may result in delays, and eventually cause a bad situation.

An entrepreneur who has demonstrated his ability to develop aggressively his business will only reluctantly follow a wise decision to slow down. A start-up CEO asked to stop technical development and invest massively in sales and marketing will find it difficult to implement the change, if his background is essentially technical.

Improving chances to make the right decisions

Leave room for experience

Management experience helps questioning what may seem obvious. It also helps perceive the consequences over time of a decision. Operational experience enables to evaluate what actions must follow decisions and how they should be implemented to reach the goals.

Experience is not sufficient without hindsight. Hindsight comes when people take the time to stand back and analyze (something people do more often about failures than about successes). Hindsight adds to experience the capability to formulate in rational terms what is only an intuition for others.

Contract experienced executives

I remember a very short sentence from one of my shareholders, who had been invited to our Board meeting: “You will never be in place on the shelves early enough for Christmas”. This warning was ominous and right. Had we listened to him, we would have changed drastically our strategy and avoided a crisis.

The competence (experience) was there and available, but we did not include in our decision process to seek after it. The same sentence, from a contractor paid to deliver his wisdom would have probably drawn more attention.

Experience in decision and implementation, analytical skills and hindsight are a precious resource to help executives make and implement the right decisions. These are the people we select for our short consulting missions.

About the author: Olivier Pujol has worked over 23 years in many countries, positions, and companies. He has conducted business in 12 European countries, in Africa, NorthAmerica, South America, and Asia, for companies like Schlumberger or Honeywell, as well as SMEs and start-ups. He has been in the position of CEO, COO, fieldmanager, strategy and M&A specialist, business developer, and consultant. He worked on offshore platforms, in the jungle, but also in board rooms and electronic labs. Olivier holds an MSc of l’Ecole Centrale de Paris, and an MBA from Insead. He can speak 5 languages (French, English, Spanish, Portuguese and German).

Times are generally tough for most businesses.

Also, the reasons for the demise of companies was probably weak management, lack of management accountancy information, lack of adequate response to change, over trading i.e. the BIG project and high gearing plus normal business hazards and investors pumping money in without understanding the changing market place. Industry requires excellent business models developed by skilled and experienced people who understand how to operate a successful company. If companies take on board excellent successful business people with knowledge, then Industry would be in a better position.

Lower levels of demand and pressures on cash flows are particular concerns. I would like to share with you my `22 – point plan for success`.

Although few companies may have cash at the bank on deposit, this can certainly dwindle if they do not operate efficiently. Therefore, they should use cash at their disposal only when necessary and still control the business as if they were borrowing money.

In all cases, in business life generally, money makes the world go around, irrespective of the level of profits or turnover. Credit control must be tight and very pro-active and the profit earned on each job must allow not just a percentage return but the right sterling/Dollar/Euro return. Customers with low-profit jobs must pay on time. If they don’t, turnover means nothing and we just become busy fools.

I have broken the areas down into sub-headings in order to examine each of the different areas:

Tight Financial Control

1. Prepare a fully up-to-date budget of how you really expect your business to do within the next six months in the light of the current environment. Think first about the expected levels of sales and then estimate the level of costs. You must be honest and realistic there is no point in trying to kid yourself.
2. Use this budget to prepare weekly cash flow projections for the next three to six months. You should think of each type of expenditure and when it needs to be paid. Estimate likewise for each type of income. Also, you should have updates on the projections every month.
3. Calculate your financial needs for the next six months, in full detail. In particular, ensure you have sufficient actual cash resources to match the cash flow projections. Then decide if you need any new external finance. If you need additional funds, plan well in advance. Do not leave it until the last minute.
4. Keep all your records up to date and monitor the accounts regularly, particularly regarding the cash situation. You should look at not only the debtor days, but also the outstanding amounts, which have not been paid for over three months. This is the area upon which to concentrate.
5. Ensure tight day-to-day control over cash and limit the number of personnel authorised to spend it. Every item of expenditure must have a budget. Ensure money is spent within it to gain total control over expenditure.
6. Make all personnel conscious of costs, from Director level downwards. Encourage personnel to think of cost-saving ideas to discipline staff not to waste money.

Purchases

7. Do not take on any major or risky contracts for which you purchase goods. In addition, do not enter into any agreements with manufactures/suppliers for guarantees of any particular product. Look at your stockholding, not just at a manufacturing plan. Also, the possibility you may be holding stocks elsewhere of which you are unaware. For example, sales executives holding stock at their homes or even in your warehouse.
8. Keep to your payment timescales with your manufacturers/supplies. Negotiate settlement terms, also retrospective rebate structures where you can, but only as long as fits in with your monetary control. You should not breach any contractual arrangement as you could obtain a bad reputation for settling bills.
9. You must ensure each purchase is made at the best possible commercial price obtained from manufacturers/supplies.
10. Constantly monitor your manufacturers/supplies who offer special prices on stock items, such as labels, media supplies and much else. You must constantly buy better by operating more efficiently now and in the future.
11. Ensure you have precise payment records for each of your customers. At all times know who owes money, the amounts involved, which debtors are in dispute and what action is being taken to collect the outstanding monies. Give the credit controller full authority to take any measure to obtain the monies due when they exceed a certain period. You must only involve sales executives when the credit control department is unable to collect the monies. It must be restricted to less than seven days and then the credit controller must take whatever action he/she thinks is appropriate. This is the only way to safeguard the company’s interests.
12. Establish a firm credit policy and emphasise your payment terms to customers. In addition, ensure you have a standard procedure for pursuing debts with specific actions at given intervals after the payment due date. It is vital to have a practical working procedure so everyone understands what actions are being taken at different stages.
13. Credit checks should be carried out on all new customers and you must regularly review the credit limits for existing customers. Each account must have an overall credit limit and you must advise your sales executives of those credit limits to ensure they are followed. Be very careful of Auction sites operating as e-business and other dot.com company’s offering print jobs!
14. Ensure you produce your sales invoices as quickly as possible. Check they are accurate, complete and legible and are being sent to the correct person at the company concerned. This especially applies to some of the larger companies. Ensure all records are 100% correct.

Tight controls over Scheduled deliveries and Call-offs

15. Constantly review all call-offs and scheduled deliveries. Failure to do so slows down the operation of your business though not issuing sales invoices, so you cannot take the profit and cash when it is needed. Ensure you operate a call-off schedule within a twelve-month period.
16. Regarding a manufacturing plan, you should review the inventory system. Identify areas to improve efficiency and cost cutting and ensure you do not carry unnecessarily high stocks of raw materials.
17. Focus on stock control, in particular for the high-price and high-volume items. Better control here will make more of an impact on inventory costs.
18. You should minimise work- in –progress and finished goods stock by making the production process as fast, simple and as streamlined as possible. You should also identify and remove frequent bottlenecks of slow-moving stock items. You should deliver all finished goods promptly. This will save on stock and the cost of holding stock and you will have more room to maneuver.

Effective Sales and Marketing

19. Avoid any additional sales unless they actually make money fast and without any problems. Otherwise, your working capital will be further strained. You must look at profitable products that give you a growth-inducing margin of return not reducing margins operating by dot.com companies.
20. Look at your most valuable customers in terms of margin for return of sterling/Dollar/Euro and long-term loyalty. Ensure you maintain close contact with customers, visit them regularly and as agreed with the customer. You must improve relationships as much as possible by `listening` to what your customer’s say they want and serve them well. You should also focus on the products you are not selling.
21. Although some companies do not use call reports, I feel a report of some type is beneficial to find out the frequency of sales visits in any working day. Ask your customers whether they seek an improved service from your company, improved Products, or anything else that improves the relationship. In other words, a record that allows you to see what your sales executives see. You should progress your company by identifying those products that your customers are unaware of. A suggestion would be to carry out a monthly mail shot with customers` sales reports to promote a product or service. This could help you find out where you are losing orders and where you could be obtaining the orders for products you do not sell.

Reducing Overheads

22. Times of change are ideal situations to scrutinise each of the company’s overheads and costs that do not vary with output. Significant overheads you know include rates, power, light and of course, staff costs. Overall, you will pull through any (recession) change by being efficient in the way you operate. A Company led by sales should try to gain as much information from their sales executives as possible in order to monitor the activity of personnel.

Summary Tips for Survival and Success

• Watch your cashflow; be careful not to rely on future earnings when you spend.
• Investigate immediately unscheduled changes to your finances-such as exceeding your overdraft, or getting behind on bills and PAYE payments.
• Understand your creditors and do not stretch them too far.
• Keep debts under control.
• Do not be dependent on one customer or supplier.
• Investigate the effect of operating changes.
• Check internal controls regularly.
• Never ignore even the smallest problem/issue.

Successful businesses are lead from the top, in maximising prosperity for all.

My vision over several years as allowed me to be a successful Managing Director, managing print manufacturing plants and print management/workflow solutions companies to increase turnover, profit and effective/efficient business communications. My winning attitude leads to success and making businesses really fly and taking action to stay in business with my `22 point plan for Success` is my professional challenge, it is my special focus, my business, sharing management concern for a commitment to excellence, profit and positive cash flow.

About the author: Colin is a former successful Managing Director of Transactional/Print Manufacturing Plants, Print Management/Workflow Solutions companies and other organisations, former Group Chairman of the Academy for Chief Executives and Non-Executive Director, helping companies raise their `bottom-line` and `increase cashflow`. Author of several publications, research reports, guides, business models on CD-ROM’s/Software and over 400 articles published on business and educational subjects worldwide. Plus, International Speaker and Visiting University Professor on the International circuit.

Companies and organizations globally are striving to increase profit and shareholder value in times of phenomenal socio-economic change and political financial upheaval. Business is never easy and when times are tough the consensus often is to focus on core competencies, ruthlessly cutting costs, doing more with less. Perspectives can be reduced in recessionary periods as companies focus to survive. However, perspectives, whilst powerful are culturally determined and open to influence, redirection and positive change. Business management in all companies must embrace the wider perspective to benefit from the compelling value available across the socio-technical horizon.

So what are the wider perspectives?

There is little doubt that consumers everywhere are becoming much more environmentally sensitive and vocal. The issues around C02 Footprint, fresh water, energy, pollution, waste, health, resource depletion, climate change, poverty, the Green Movement, etc., affect every citizen, company and organization on this planet. We are much more interconnected that we ever realized and the success of companies today and in the future will depend on their perspectives and actions in embracing major problems that impact all citizens.

Therefore a company / organisation strategy ideally, regardless of size, should be in alignment with goals that identify positively with issues facing the community, country and citizens globally. Companies must act responsibly and be seen to care.

How do companies adopt the wider perspective whilst maintaining profit levels and market share?

The higher vision gear-change for companies can be much easier to implement and offer scope for multiple profits, new revenue channels and cost saving opportunities. The focus should be on people first and emerging technology second.

People First

In times of rapid change and economic upheaval employees can be stressed and vulnerable. Hence companies need to embrace their teams effectively with better communication (more flat line structures) and where necessary, add esteem-morale building strategies. Military type command structures offer zero value in 21st century businesses. Companies need to have all employees (team members) on board by consensus, mutual appreciation and respect – and this can only come naturally by being sympathetic to the needs and aspirations of staff in the first place.

Companies that are in sync with employee goals are more in sync with community values and wider issues globally that incorporate major issues like Climate Change and Sustainability. Take Google for example? Aware of the massive energy requirements from servers and internet users around the globe, Google are actively looking at ways to source alternative and sustainable energy. They see the wider perspective.

When everyone in an organisation pulls together amazing productivity values and ideas are created.

Emerging Technology

Emerging technologies like nano-bio-technologies offer remarkable value in helping companies to 1, save revenue, and 2, build brand value via positive reputation.

How can emerging technology save companies money?

Every business on the planet can further reduce operating costs. By starting small within the office, factory, car or town, nano coatings alone, for example, offer solutions that:

1. reduce water usage
2. remove aggressive cleaning chemicals
3. stop environmental depreciation and reduce carbon footprint
4. cut emissions and pollutants
5. enhance energy efficiency, minimizing waste
6. reduce mechanical wear and material consumption
7. open doors for new cleaner products and revenue
8. improve health, food production, resources

By implementing Clean Tech strategies companies save revenue

These “green” technologies offer additional compelling value however because there usage actually helps address sustainability issues & protects our environment.

A company or organisation with environmental and sustainable goals in addition to its core activity attracts a positive energy ethos that can drive real Brand value forward. Costs and risks are reduced. Employees, supply chains and clients can be galvanised into collective positive action. We are all in this together philosophy. The triple profit line of profit, community value and environmental trust pushes companies and organisations into a much higher league visually and operationally, with humility and respect for humanity, society and nature, being drivers incorporating the wider real perspective. The win-win-win principle has never being so apt and necessary.

Many companies and organisations are aware of the benefits of going green. However many are still unaware of how nano-smart fluids can turn them into profitable and responsible operations overnight, simply by adopting incremental changes, using nano technology and related emerging technology.

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