With the rapid changes of a disrupted marketplace, it is wise to continually review your organization structure. As a senior in your organization, your leadership to align your company resources with your changing revenue base could be the most important task you have.

In the past, organization structure was determined by the traditional organization chart – the names and titles (power to make decisions) of who worked for whom. In times of crises, one of the first initiatives by senior management was to reorganize – move from centralized control to de-centralized autonomous work groups, and then back again when the previous change did not work out or the power base changed. Moving to a centralized command and control organization structure in times of crisis is common, especially when senior management feels out of control themselves. Usually centralized control is not designed to release the creative initiative of staff. Because decision-making is often limited to senior management, often the rank in file will sit back and spend more time complaining about what is wrong versus helping find the solution to the problem.

Where we all missed the boat was how to create the structure in the first place. We should start with our customers and continually evaluate what and why they buy, now and in the future. The next step is designing the business processes that deliver the highest value, in the most efficient method, to those customers. This design will create the organization structure: who does what and how they do it; performance standards and compensation aligned with value delivered; and often overlooked, level of authority to make decisions.

Seeking the help of outsourced expertise can help. What you will discover when you determine the optimized structure to deliver quality value, is the opportunity to outsource much of what was traditionally included in the previous organization hierarchy. Having a trusted project provider by your side will help you create an organization structure that provides a competitive advantage. GMO

A word of caution before you embark on this simulation. This is not a team activity. Consider involving your CFO and/or your controller and it is a wise idea to seek objective council from an experienced project provider. The goal of this planning strategic exercise is to create a plan and strategies that you never plan to use. The value of performing this exercise is to control fear and worry by being prepared for the worst so you can direct all of your efforts to increasing sales and turning around the trend.

To start, I want you to put on your turn-around expert hat. The first step is taking control of the money. Like the triage surgeon, the first objective is to stop the bleeding. Start cutting expenses not directly related to making sales, delivering service to existing customers, or costs to keep the doors open. Cut your expenses to create a new break-even monthly cash flow. Create a variety of strategies to conserve cash – the life-blood of the business. This is a perfect time to explore outsourcing opportunities. Like other planning strategic exercises, starting with the worst case scenario and working backwards to the present will open the door for creative thinking how to reorganize your existing value delivery chain.

Remember the goal; create a plan you will never have to execute. Perform this exercise like a turn-around expert. Manage cash like your life depends on it. Consider how you would negotiate with suppliers and your banker. Think about the long-term implications and costs associated with reducing staff. Prepare three scenarios: worst case, best case, and one in between. File this away with the intent of never having to use any of it. The value of planning strategically creates piece of mind so you can focus on the real objective – creating new strategies for competitive advantage. GMO

AAR was developed by the U.S. Army to incorporate continuous improvement learning as part of their military operations. You know the military has always briefed their leaders before a mission and performed a de-briefing after the mission. AAR is a form of de-briefing with new twist – continuous strategy modification using a planning process.

The goal of AAR is to learn: identify the facts, discover new methods, and apply this learning into future operations. If AAR sounds familiar to you, we believe the process is a variation of a quality tool popularized by W. Edwards Deming, P.D.C.A. Plan, Do, Check, Act. The goal of both AAR and PDCA is the same, continuous improvement by learning from the mistakes or successes of action.

Here are the nuts and bolts of AAR. Like all planning strategic methods, you start at the end and work backward. At any major initiative (project, proposal, big job), gather your team and review the original goal, what strategies were intended to accomplish the goal, and what was the end result. Avoid blame and criticism – the goal is learning not to beat someone up. Take 25% of the allotted time to review. Spend the remaining time (75%) of the process in analysis. Brainstorm new strategies. Take what you have learned and design something different or if the project was successful, decide how to replicate into other initiatives. The goal is learning and how to apply this continuous learning process into competitive advantage. If this concept is new to you, solicit some help from an experienced project provider. Have some fun. Your staff will appreciate the engagement and enjoy making their work more meaningful. GMO

Bell Labs, the think tank research and development division of Ma Bell, did this exercise in 1951. They mentally destroyed the old model and idealized what the phone system would look like if they started today. This planning exercise created new innovations like touch tone handsets, caller ID, and cordless phones – all became new products that we take for granted today.

This starting from scratch thinking and linking it with an ‘idealized’ future state is a key principle of ‘creating a new box’ planning process. It can be beneficial to have a set of ‘fresh and objective’eyes help you in the process. Find a project provider that can look at your business without the historical references that have created your existing business model.

Soliciting the input from independent senior project providers that have no in-depth knowledge of your business or industry can lead to breakthrough ideas that can lead to future competitive advantage. Imagine what a new competitor would think about when they discovered your margins. What strategies would they create to take customers away from you. Would they create a business model just like yours – highly unlikely.

Thinking about all the ‘what ifs’ generated with the green field planning approach can also be liberating for you and your staff. Remember the goal is to create  new strategies to keep you competitive. This exercise can be the first step to a roadmap that eliminates, redesigns, or opportunities to outsource low value business processes embed in your current delivery chain. Lastly, this planning exercise can be a lot of fun and a fresh start to create more meaning in your work life. GMO

If you read our posts, you already know we are fans of strategic anything: planning, innovation, and especially, planning backwards – starting at the end and working back through the value chain. Planning Strategic takes this process to the next level – start with the end or death of a project, major initiative, or proposal and do a postmortem. Perform an autopsy and determine the cause of death (loss). Analyze the completed or failed initiative just like a pathologist would do to determine the root cause of health failure.

What you want to discover when you perform this postmortem planning exercise is not only the cause but what strategies you followed to make the decisions leading to the cause. Let us take a common business example of a lost bidding opportunity.  Assume you and your team have worked several months on a proposal that would generate 30% of current year expected profits. There are 5 bidders and you came out 4^th highest. The client selected the 2^nd lowest price bid.

The first step of this postmortem is getting facts of why the client did not select your proposal. Get the facts and do not speculate or make excuses. Try to avoid blame and rationalizations – put on your scientist (pathologist) hat and perform the business strategic autopsy.

Let us assume you met all the proposal criteria but your price was too high – sound familiar.  Work backwards in your delivery chain to see what decisions – what strategies in place – were made that determined your pricing structure. The obvious rational is your competitor is willing to take reduced margins – often the case. However, this is often an excuse for avoiding a critical analysis of your value delivery chain. Perhaps your overhead structure is too high. Perhaps your suppliers are not competitive. Perhaps your business model is outdated – maybe it is combination of all three.

Redesign your value delivery chain and look for outsource opportunities to lower your cost structure. Solicit help from an experienced project provider to help guide the process. Remember, the goal of this planning strategic exercise is the creation of new strategies for future competitive advantage. GMO

Ackoff was a leading systems thinker, college professor, consultant, and a prolific writer. (http://en.wikipedia.org/wiki/Russell_L._Ackoff) In 1986, Management in Small Doses. John Wiley & Sons: New York, Ackoff introduced the planning backward idea – planning with the end in mind versus starting with present circumstances. Of course construction and manufacturing have always started with blueprints and engineered designs, but organizational planning usually focuses on ‘fixing what’s wrong’.

So how do we start with planning backward? Begin thinking about strategic innovation projects to create competitive advantage. Work backward from customer needs and expectations. Eliminate or redesign business processes that do not create value. Outsource routine business activities to improve margins. Outsource projects to project providers to make change and accelerate the adaptation process necessary to compete in the globalize marketplace. Create meaningful work and have fun. GMO

In these challenging economic times, managing cash is job one. We all know, when we run out of cash, the game is over. The best place to start your cash management process is creating a plan. Start your plan with a forecast of realistic revenues for the next four quarters. If you have a CRM system, this step is relatively easy to do. If you do not have a CRM system, create a sales funnel listing each revenue source and payment expectations. Next, identify gross margins (the difference between sales price and total costs: cost of goods sold and sales and general administrative costs). Hopefully, you are cash positive for the foreseeable future.

If you have a negative cash projection, this is the time in your cash management process to get help from an experienced financial project provider. Find someone on the outside that can help you make the tough decisions you need to make to stay afloat until the economy changes or until you can make the necessary internal changes to succeed. Remember the thinking you need to get out of this negative situation is not the same as what got you here in the first place. Outsourcing to highly skilled financial expertise is the most cost effective method of reserving cash and managing through tough times. Hiring outside contractors with years of experience to help you is also smart business. It is extremely difficult for any senior to be objective in highly stressful situations. Having a trusted and highly skilled provider at your side will make the cash management process easier, especially if you have to make tough decisions cutting expenses to survive. For more information about the best ways to outsource your projects, please contact GMO. Remember cash is the life force of your business. If you run out of cash, you die.

Based on our experience, these projects have something to do with a longer-term vision in areas of your business that require your  attention. Often, these project ideas take a backseat to the short-term daily operations because all your energy and resources are dedicated to maintain (or survive)  the status quo.

Some examples of longer-term projects that may create a competitive advantage  include:

marketing versus sales; finance versus accounting; innovation and product development versus marketing; engineering versus day-today operations; human resource strategy versus daily management activities; new products or new markets versus  the existing revenue model; or re-engineered business process improvement versus your existing delivery system . As you can see, the project list is endless.

As a senior manager, you know what needs to get done because you know your business better than any outsider. Project providers help you get things done.

You might be thinking, how does hiring a project provider differ from hiring a consultant? You may have already been down that path. Does this quote from Bill Marsteller resonate with your past consultant experience. “ A consultant is a person who knows nothing about your business to whom you pay more to tell you how to run it than you could earn if you ran it right instead of the way he tells you.’ You already know your business. You don’t need a consultant to tell you what needs to be done. What  you need is a project provider to help you do projects to keep your business viable – now and for the future.

These are challenging times. Maybe now, more than ever. Big challenges require change, and as we all know, change is always tough – especially when the day-to-day operations absorb every resource at your command. Project providers are here to help you. Think of them as a ‘handyman’ (or woman) to help you do the projects you want or need to get done. One of the objectives of this site is to be a resource for ideas and people to help you. The next step is simple: contact one of the providers listed on this site and talk to them. If you prefer, you can contact us at GMO and we will help you think through your project and find the best person to help. We welcome your participation.

]]> http://www.gmoutsource.com/project-providers/feed/ 0 http://www.gmoutsource.com/project-heebie-jeebies/ http://www.gmoutsource.com/project-heebie-jeebies/#comments Wed, 16 Dec 2009 20:25:14 +0000 GMO http://www.gmoutsource.com/?p=173 So, what gives you the ‘heebie jeebies?” You know what I am talking about, the things that put the spooks into you, the things that keep you up at night. Are they real or only boogie men you have conjured up in your mind ?

As a busy senior manager, you have a full plate. Today, more than ever. More than the recession in the early eighties or the bump in the nineties. This economic cycle we have today is unparalleled in our work history ( I doubt if anyone reading this was in business in the great depression). There doesn’t not seem to be anyplace to hide or on the surface, any opportunity within our reach. Welcome to the ‘heebie jeebies.”

Epictetus said, ‘it’s not what happens to you, but how you react to it that matters.’ One way to deal with these times is to take charge of how to react.

The first step is to separate what you have control over. We often worry about things we have no control over or have little to do with how we focus our time. Maybe you are a worrier or maybe not – just concened. But, if you are, it helps to worry with perspective. Take a few minutes to write down your worries. Make a list of everything. Write down the worst that can happen if they came true. Separate what you have control over and cross off the uncontrollable. Now, the ‘face reality’ part, which ones on your list are ‘real’ and which ones you could control, if you took action.

This simple task can be the genesis of a project list. Some items on your list may take a major under taking, but many may be simple to do and need to get done so you can move on to something more significant. The project providers on this site are here to help you get them done. The next step is easy. Make contact and discuss the options. Get help with the projects that will help you react to these economic challenges. You will sleep better – I guarantee it. GMO.