Archives For Into The Deep Series

 

Have you thought about the impact that you, as a leader, have in these toxic waters of economic downturn? Wise leaders are making the changes they need to make now so that they emerge better, stronger, and faster than ever – ready for the growth that will ultimately come. It is absolutely critical for those at the helm to be prepared to inspire and motivate those who remain onboard in order to emerge victorious. So what are some of the most important traits that a great Captain in this epic storm should embrace? Here are some reminders of what is important:

  • Lead By Example: Your people watch everything you do and listen to every word you say – then wait to ensure both are in alignment. The best way to lead and motivate is to be a real example of the way you expect others to behave. Be completely honest and as transparent as possible. Level with people – tell them how you see the current environment, acknowledge the limits of your own understanding, and engage the discussion by asking them for their views. Why? 1) your honesty and humility will breed respect and  2) your openness demonstrates that you walk the talk and 3) it clearly illustrates how together you are more than the sum of the individual parts.
  • Inspire Loyalty: The seas are rough, the water is toxic, and people fear being thrown overboard more than ever. It’s critical that they truly believe that you are on their side and supporting them. Create a vision that will make your teams see possibility and generate creative ideas. Inspire them to focus on the new priorities by doing so yourself – fearlessly. Engage decisions and projects that will produce incremental success so that people can visibly and viably see progress. Why? Because people need hope and they need to see progress – you can give them both and they will reward you with their loyalty. The more clear and vivid you can communicate a vision, the more your teams are bought into you and what may seem an impossible future  – show them the finish line and they will put up the sails and catch the wind.
  • Demonstrate A Real-Time Connection To Reality: Although today reality is a moving target, continuously monitoring the changing environment through ground-level intelligence can provide a realistic map to plot your way forward. Partnering to pool information across functions, or geographical boundaries, can provide useful insights and build camaraderie. As an added bonus, as you continue to gather information, the picture will change to reveal new opportunities or threats that can be proactively addressed. While the first order of a realistic assessment is to understand and accept the magnitude of the challenge, the fact is that there are few problems that can not be solved by engaged, active minds working together. Focus people on what is realistically possible, rather than what is not, and facilitate them searching for solutions that will move the organization forward.  As a leader, it is your responsibility to drive positive performance by transforming fear into action.
  • Manage With Intensity – Embrace Empowerment: Always remember to balance intensity with empowerment. Provide the training, resources and support your people need to do their jobs, but don’t micro-manage. It shows you don’t have faith in your people and demonstrates explicitly that you do not trust them. Tipping the scales back the other way, in difficult times your hands-on participation is essential. As you support people in doing their jobs, openly share and discuss information and ideas, and consistently act with the speed and intensity required in a volatile environment. You need to be intensely interactive  – listening, explaining, answering questions, pushing conversations to higher levels – and then doing it all again. People will be inspired by your intensity and involvement – not to mention seeing firsthand how you put reality on deck and engage them in a plan to address it decisively, as a team.

Facing the reality of surviving the current storm, while preparing for the long term effects of the toxicity,  requires a leader to constantly adjust – “X” no longer marks the spot.  Those leaders who look ahead, anticipate what’s coming,  and act decisively to adjust to an ever-changing reality will survive. Those leaders who lead by example, inspire loyalty, engage their teams, demonstrate a real-time connection to reality, and manage with intensity while embracing empowerment will not only survive the toxic waters – they will thrive in the new reality.

Please engage the discussion and let us know what traits you rely on to motivate and incite every person to think through and act on sustaining the organization. Please feel free to contact me at  Sheri.Mackey@LuminosityGlobal.com or by visiting our website at www.LuminosityGlobal.com. Check back next week for the next post on Leadership Across Boundaries and Borders.

As a leader in Sales, you are well aware that the waters are rough, indeed.  In the past, the goal has been very straight forward – make sure your teams are capturing customers and making their numbers. Good relationships and ongoing offers of discounted pricing – on products and services – kept sales flowing and ensured the all important numbers were on target.  Unfortunately, those days of smooth sailing are gone.  Adjusting to the new reality means acknowledging that things have changed – customers have disappeared or have greatly reduced purchasing power and costs do matter – even in Sales.

Here’s a life boat with some less well-known tips  that may help Sales to survive, when others around you may be sinking fast:

  • Critically evaluate structure, purpose, objectives, and KPI’s:   In many cases, all of these components may need to change. Perhaps it is wise to reorganize – combining functions, regions, or customer segments? The initial changes may be dispiriting, but if you can make them all at once and they are focused on those who do not display the attitude or aptitude required in the “new” organization, Sales will become stronger as a result of the changes. The goal is not only to reduce costs, but also to get everyone focused on what they need to do for the customer and against the competition. Make sure you understand what the new purpose, objectives, and  KPI’s encompass at each revised level, and that the necessary training is provided to ensure buy-in and commitment to the new organization.
  • Create an intelligent network:  Build information networks that span the clients organization, continually assessing customer pain points and providing solutions before they even realize they are challenged. As a leader in Sales, ensure you are transitioning your sales people into  the eyes and ears of the organization – a network that provides ground-level intelligence that can be used to fuel fundamental decisions regarding overall corporate strategy and tactics. This new, evolved sales person will need to have the capacity to analyze each client to determine current and future profitability. They need to be able to tell you how decisions are made at the client site, what the dominant psychology is, and how that psychology is manifested as it pertains to  client decision-making, forecasts, purchasing, promotions, and product lifecycles. They all affect your ability to sell… and collect.
  • Know what your customers cost: Have a detailed understanding as to how each client affects each piece of the value chain. A good customer on the surface may cause you to incur hidden costs if they demand frequent changes, customized processes, or unusual services/materials. These types demands may put undue pressures or costs onto  production or purchasing departments…or they may tie up too much cash by requiring unique materials or components. An important customer that pays late can also become a liability when the seas are rough and the company is managing for cash. When a client’s ability to pay or credit rating drops, you don’t want to be the last one standing on deck when the Tsunami hits…
  • Know which customers to drop:   Sales people need to be able to help the company answer some critical questions – Is a customer viable? What strains are they under? Are they highly leveraged?  What does their cash flow look like?  What is the real cost of doing business with the client? Obviously the decision to drop a client needs to be made in conjunction with the executive team, however you need to have done your homework in order to make a sound recommendation. If the business case points to the client as a significant risk and they must be dropped, ensure your sales people partner with the client to ensure a smooth transition to a new supplier. Remember, if the client has a positive experience there will be a mutual respect and the potential of working together in the future will remain intact… should the opportunity arise.
  • Link Sales to R&D: Assign your most  aggressive and business-savvy people to a dual role – sales and business development. Creating cost-effective  solutions to client challenges often emerge from  discussions amongst people with different knowledge bases.
  • Tie sales people to CXO’s: The best intelligence is useless unless it is put into the right hands. Set up methods to ensure what is learned in the field  gets to the senior team. Set up weekly conference calls between your best sales people and critical decision makers… or initiate a program where the executive team will call a few of your sales people each week.  Top executives will have the opportunity to pick up ideas or nuances  from your sales people that they would not get from a formal meeting or a report – it will allow them to discern customer patterns, while motivating those participating on the calls to become more curious and vigilant.

In turbulent times, the context of Sales changes drastically. With orders dissipating and numbers falling out of control, the wise leader ensures sales is a critical component to the solution, rather than part of the problem. With the right focus and planning, your organization can steer the lifeboat out of rough seas and become better, faster and stronger in the process.

Please engage the discussion and let us know how you keep sales afloat in rough seas. Please feel free to contact me at  Sheri.Mackey@LuminosityGlobal.comor by visiting our website at www.LuminosityGlobal.com. Check back next week for the next post on Leadership Across Boundaries and Borders.

Do you fully understand the impact the financial crisis has on your company, your division, your teams…your people?  How do you make a conscious effort to sustain your company through the crisis?How often do you lead by financial measures other than budget? The reality of the situation is this – if you are a leader in any capacity, you should be thinking about how the global financial crisis is affecting your domain and what you are going to do to contribute to your own sustainability.

The responsibility to keep the organization (and your livelihood) afloat is not for the CEO and CFO alone. While they are the structural and functional center in the midst of the contracting economic environment, every single leader has an important role to play.  From Customer Service to the Board of Directors, everyone should be actively contributing to the future of the company – in good times and bad. We typically don’t think that way, however, it is critical to understand how the efforts of each and every function must align and coordinate in such a way that the entire fleet is headed in one direction.   If we are to emerge from this crisis better, faster, and stronger…we had better begin to navigate our way more effectively in these turbulent economic seas.

This week, let’s consider a few high level thoughts for keeping your Operations afloat in rough seas:

1) Command Your Crew. People are essentially the engine of production in service and manufacturing and the principle of managing for cash flow remains at the forefront of what you, as the Captain, need to command.  People are the key to your success, and one critical aspect pertains to how you are leveraging your resources. Obviously an idle staff is an unproductive staff –  constantly re-evaluate and staff operations in line with the operational needs. In addition, remember that your crew is made up of humans and times are tough – ensure your people feel they are treated equitably while also ensuring rewards and recognition are available for those who go above and beyond – they don’t have to be cash related…

2) Lower your cash breakeven point ahead of falling revenues – fast. How will you consolidate production and how will your choices affect cash flow and other priorities? Will a software investment  make your system more responsive  and efficient? Is subcontracting a part of the process an option to better managing costs? Whatever you decide, know and understand that any decision you make may have far reaching consequences on the entire system – make sure you consider the full  impact of any changes and get input from all affected parties.

3) Rethink your capital investments. As you continue your quest for cash, it may seem obvious to postpone or cancel capital expenditures. This should be evaluated carefully…remember that depreciation alone will allow you some expenditures without any real cost. While it may be tempting to abandon ship on spending, always keep in mind that what you delay today, may cost you more tomorrow…stringently evaluate every expenditure, carefully weighing both benefits and costs equally. Projects with high strategic value  shouldn’t be delayed.  Most competitors choose cost savings over strategic investments when they come upon turbulent waters –  if you choose investments wisely, the winds will be with you as we emerge from the storm of economic crisis. Knowing where to spend and where to cut is a skill that will test your aptitude for navigation, not only as the Captain of your ship, but also in regards to your capacity to rule the seas in an ocean full of pirates – once the seas have calmed.

4) Manage your product lines. Be merciless in evaluating which product lines with their multitude of versions and extensions should walk the plank. The unnecessary complexity of multiple, complex product lines could sink your ship – weighing it down with additional cash expenditures that will not allow your vessel to stay afloat. Remember the 5:50 rule: 5% of your inventory will derive 50% of your revenue.

5)  Consider Outsourcing – and Insourcing. Lighten your load wherever possible – you will be more flexible to navigate in rough seas. Carefully review operations, focusing on what differentiates you from the competition – that is your bottom-line value. Everything else should be considered fair-game for outsourcing – especially those aspects of the business that may create economies of scale that are not possible in-house. A viable alternative may be insourcing – keeping redundant employees onboard  to reduce or eliminate the current cost of outsourcing. It may be advantageous to drop anchor on outside contractors and let your existing crew take up the load. Weigh your options carefully, and evaluate the impact on your overall cash flow to see where you come out ahead…

6) Manage Inventory. It is critically important that you are aware of the financial implications that inventory brings – both raw materials and finished products are cash traps. Tie yourself tightly to sales and marketing to ensure that cash remains the focus at all times and base your manufacturing processes on  just-in-time, produce-on-demand, or some variance of these practices to ensure that all aspects of inventory at maintained at minimal levels.

Whether you are in a manufacturing, retail, or a service environment the above points will apply – what will change is the lens from which you are viewing them. Just the same, they should all be considered and evaluated as to how they can be applied on your ship – otherwise, you may find yourself thrown overboard in stormy, shark infested seas, treading water and hoping for a rescue that may not arrive in time.

Please engage the discussion and let us know how you keep operations afloat in rough seas. Please feel free to contact me at  Sheri.Mackey@LuminosityGlobal.com or by visiting our website at www.LuminosityGlobal.com. Check back next week for the next post on Leadership Across Boundaries and Borders.

As a business leader today, you have the unprecedented challenge not only of surviving, but accelerating through, the worldwide economic downturn. Credit is scarce, sales forecasts are depressing, unemployment is rampant, and the morale of remaining employees is sinking fast. To make matters worse, we are adrift at sea in a squall of epic proportions and no one seems to have a compass to navigate out of the eye of the storm. When we do eventually emerge, we have no idea where we will land or what the conditions will be. What we do know, is that this is a time of turbulent change worldwide – and with turbulent change comes both opportunity and risk. As people look to you for strength and guidance, you can be sure that you will be tested like never before. How you manage the ongoing crisis will have an enormous impact on your employees and your organization.

As the Captain of your ship, will you be the leader who seeks opportunity in chaos? Will you see the changes coming before others, put up the sails, and move faster than the competition? Will you ensure every business function, in every region, is aligned and coordinated so that everyone is in the same lifeboat, rowing in the same direction? Will you engage risk as a critical component of opportunity? Are you willing to rethink your strategy, so that you are financially agile and able to engage the opportunities the markets offer in times such as these? Or…not?

In recent times, the importance of holding cash has often been overlooked. However, as we struggle to stay afloat in rough seas, the best opportunities often reveal themselves when credit is tight and access to capital is limited. Cash allows access to hidden treasure – providing a mechanism to take advantage of market downturns when other investors are cash poor. The more cash is accessible, the better a company is able to gain access to capital and investment markets with a lower rate of borrowing for capital expenditures, acquisitions, or share repurchase.

Throughout the world, businesses are being forced to re-think how to operate in an environment where cash, once again, is king.  The ability to adapt to the changing tides remains a crucial competitive advantage – and for the foreseeable future, that competitive advantage is most accessible to those aggressively managing cash as a critical metric. Given today’s technology, there is no excuse for any leadership team not knowing the corporate cash position, across the organization, every day.

As you attempt to keep your eyes on the horizon, revenue growth is not the benchmark it once was. Now, every leader with financial responsibility must consider cash flow implications as part of the decision making process. That doesn’t mean savagely cutting all costs and hiding below decks until the storm has passed –  good investments should be made, however any cash expenditures should be carefully scrutinized and evaluated from three internal perspectives:  earnings from operations, working capital, and the sale of assets.  Sales should be weighed not so much by margin, but instead by how much inventory and receivables will be tied up and for how long. Projects previously evaluated on ROI, must now also be judged in terms of how much cash they consume vs. how much they can generate – and how soon they will actually bring in a return.

As leaders navigate their way through turbulent environments and confront the inability to secure capital due to increased credit restrictions, those who shift from a focus on the income statement to the balance sheet and cash reserves will triumph – coming out of the economic downturn much stronger, and more competitive, that ever before.  While top and bottom-line growth are important, the necessary condition to fuel growth is the availability of cash. As we are all well aware, even profitable companies can find themselves submerged in rough seas if they are not aggressively managing their cash. Although a critical success factor in its own right, profit is an accounting principle – bills and employees are paid with cash, not profit. With the ongoing financial crisis, companies that want to survive the storm had better hold onto cash as if were a life preserver, and declare credit dead weight. Those who ignore the need to refocus and neglect their cash flows may find themselves in Davy Jones Locker – as permanent residents!

How has your company changed the way it manages the financials in turbulent times?

Please engage the discussion and let us know how you stay afloat in rough seas. Please feel free to contact me at  Sheri.Mackey@LuminosityGlobal.com or by visiting our website at www.LuminosityGlobal.com. Check back next week for the next post on Leadership Across Boundaries and Borders.