Great wines, like great businesses, depend on balance

Great wines require great vines which must be carefully tended by skilled professionals. In addition to managing land that is subject to the changing whims of Mother Nature (like this freak hail storm in June of 2017), these farmers must carefully monitor each vine's exposure to heat, light, disease, water, and varmints.

In the Vineyard

Here in the Napa Valley, where organic farming is the norm, farmers have to be not only vigilant but also highly resourceful. They are constantly seeking natural ways to create the best environment for growing the tastiest wine grapes possible. When a new invasive insect, like the vine mealy bug, begins to feed off their vines, organic farmers turn to beneficial insects for help.

When you mess with the environment, even in an Organic way, you have to consider the potential unintended consequences.

Watch the Cane Toad video* to see what happens when good intentions go bad.

When rodents threaten to uproot their prized rootstock, wine farmers all over the Napa Valley introduce barn owl boxes to reduce the rodent population. (If you happen to find yourself in a vineyard, don't ask an excited vineyard manager for evidence that the owls are doing their job, trust me on this, there is evidence, even metrics of a sort. ) Much of the work in the vineyard is concerned with optimizing the nutrients needed to produce quality fruit. When vines get too little water, the farmers irrigate; too much, they plant cover crops to consume the excess moisture. In order to optimize beneficial sunlight and reduce overheating, they remove leaves on eastward facing vines and keep them thicker on westward sides. And then there is the whole science behind row orientation, hillside versus valley, and on and on.

To someone more capable of counting the number of barrels produced after all of the work is done than pronouncing some of the words involved in wine making and its consumption (terroir, malolactic fermentation, batonnage, Gewürztraminer), farming is pure magic. And I haven't even talked about BioDynamic farming. That one blows my little southern mind.

The more I learn about farming in this industry, the more parallels I see between what matters in the vineyard and what matters in business.

In the Board Room

Balance is as important to great business results as it is to great wine. Maintaining balance means more than paying rapt attention to typical accounting concerns like double entry accounting, debits and credits, or even Assets = Liabilities Plus Equity. It is about providing an environment that considers the myriad factors that contribute to long-term success.

Here are some ways to see your business with a farmer's eye:

• Unintended Consequences. What are you measuring? Are there unintended consequences of those measures? Do you have your eye focused squarely on revenue results and completely miss the resulting cash flow challenges? If salespeople are motivated and compensated for selling, they may have no concerns about the ultimate collectibility of those sales.
• Sunlight. What is the trade-off between increasing staff efficiency and having staff that really serve customers? Is watching headcount and measuring hours burning out your staff? Are your employees able to find their own work/life balance?
• Optimize Nutrients. Do you look at your business across all four interdependent areas (Finance, Customers, Operations, People) or are you looking only at the financial aspects? And what are you measuring? There are three bottom lines that matter for business success: Net Income, Cash Flow, and Return on Net Assets.

Great businesses, like great wine, depend on leaders who have a keen eye, a resourceful nature, and plenty of vigilance. Like farmers, these leaders must have a fearless devotion to their vision and a long-term optimistic perspective about those aspects of the business that are beyond their ability to control.

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... With thanks to Debby Zygielbaum for her time spent in the vineyard educating the team of accountants at www.bdcocpa.com each year. (And never mind about that owl pellet that ended up in my pocket.)

* Note that no Cane Toads were harmed in the production of said documentary, potatoes were used to represent said toads.