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November 2015 Vol. 4 No. 11
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Hello,
You can't anticipate all that will occur in the future, but you can achieve success faster by keeping everyone's eye on the prize from the start.
Taking time to define - and communicate - the end goal to those involved is an important action in this regard, and the subject of this month's newsletter.
I appreciate your comments. Simply reply to this email to send them to me.
Regards,
Founder and Principal
Goodrich & Associates
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Better Leadership Begins with Defining - and Communicating - the End Goal
A few years ago, I was called into a crisis situation at a VOIP ("Voice Over IP") Company. An unknown bidder had just won an auction to buy the company; employees had been expecting the CEO to win. A Federal Judge barred the CEO from the premises and four critical employees had just walked out the door. I was brought in as interim COO to run the company and close the sale. For a variety of reasons, the employees had been told little. One of the first things I did, therefore, was tell the employees that the company had indeed been sold and that we needed to continue to run the company and maintain service levels until we closed the sale. Why did I say this so early on? Because the fastest way to reach a goal is to have the entire team row there, together. "There" doesn't have to be precisely defined, just sufficiently clear to know the general direction; the exact endpoint can be fine-tuned along the way. If, on the other hand, you know you need to change course but haven't communicated it, the organization will waste time, with resources going in the wrong direction (if not outright circles). Furthermore, if employees don't understand where the company is headed, they can't alert you to obstacles or help divine the path. As I said in my newsletter on leadership, you can't lead nor can an organization follow, without a vision of where you are going: The end goal. Defining the end goal has an additional benefit. By providing clarity regarding where you hope to end up and understanding what it takes to get there, you can evaluate new opportunities along the way and decide if pursuing them will take resources from achieving your ultimate objective. The end goal provides a benchmark to measure the opportunity cost of new alternatives. For more on that, see my opportunity cost newsletter, here. Four Recommendations for Defining and Communicating Your End Goal: - Do a situation analysis, as needed. Setting the wrong end goal is usually bad, sometimes very bad. Often, for example, I am brought in when an entrepreneur with strong leadership skills has been charging after sales growth, but without regard to profitability. The end goal was clearly defined but, unfortunately, achieving that goal required going over a cliff. In my crisis management engagements, therefore, the first thing I assess is cash flow and the ability to make payroll. Closing the sale of a company in 90 days is not an option if you can't make payroll next Friday.
Often, however, the direction or objective is set at the outset, as it was in the VOIP Company. In these cases, no analysis is needed to determine that - you just need to determine how. In larger companies in particular, it's often the case that the overall situation has been analyzed, the objective set and strategies and plans put in place to achieve that objective. So if the end goal has already been defined, run with it.
- Analyze and adjust along the way. In the VOIP example, I pointed us in the direction of closing the sale. But the asset purchase agreement hadn't yet been finalized, so what we ultimately would have to deliver wasn't known. But we did know we had to deliver customers and that the purchase price would be adjusted by the final count. Additionally, we knew there had been a trend the last several years of declining customer count. So we focused on customer service and quality of service, both of which had been ignored in recent years. Once we had a signed APA, we knew in detail what had to be done to close the sale. The end goal sharpened from "sell the company" to delivering the specifics of what was in the APA. What we didn't do was conduct a lengthy analysis or prepare a detailed action plan before moving forward at the outset.
- Make sure key stakeholders, such as investors and the Board of Directors, are on board with the end goal. Absent this agreement, there will be powerful forces in your way. For example, pursuing a diversified customer base or product mix may conflict with an investor's goal of increasing cash flow or EBITDA and selling soon. In my insolvency cases, sometimes the secured lender does not want to sell the company because he can get paid simply by liquidating it.
- Spend time listening. Crisis situations in particular, require an ability to hear what's going on outside the four walls of your office. I have talked about this before. Listening can minimize the "unknown unknowns" among other things. I view listening as part of the ongoing situation analysis. People will highlight obstacles and other things in the way, allowing you to make mid-course corrections as necessary. In the VOIP Company, the top engineer told me that the VOIP network we were selling was tangled together with a different network we were shutting down. We had to develop a plan to untangle the two networks and then get it done, requiring a push back of the close date.
In short, when driving change or working towards an objective, it's essential to figure out the end goal - and communicate it with others - as early and as frequently as possible.
You can't anticipate all that will occur in the future, but success can happen faster by keeping everyone's eye on the prize from the start.
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Heard on the Street
The Fed seems to have a hard time deciding when to raise interest rates.
For a look at an even tougher problem, read Daniel Gross's article on how the ECB's accommodative monetary policy exacerbates the imbalance between debtor and creditor nations in Europe, but the ECB lacks alternatives to stimulate growth among the larger creditor nations. You can read the article here and learn more about the ECB's conundrum. |
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About Us
Goodrich & Associates is a management consulting firm. We specialize in helping our business clients solve urgent liquidity problems. Our Founder and Principal, Charlie Goodrich, holds an MBA in Finance from the University of Chicago and a Bachelor's Degree in Economics from the University of Virginia, and has over 30 years experience in this area.
To ensure that you continue to receive emails from us, please add [email protected] to your address book today. Goodrich & Associates respects your privacy. We do not sell, rent, or share your information with anybody. Copyright © 2015 Goodrich & Associates LLC. All rights reserved. For more on Goodrich & Associates and the services we offer, click here.Newsletter developed by Blue Penguin Development |
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