The Numbers Are In. Now It's The Calm Before The Storm.

The last quarter of the financial year based on a Gregorian calendar is filled with trepidation for many senior executives in the African pharmaceutical business. Especially for those responsible for the P&L in "Middle Africa" comprising a swathe of countries south of the Sahara desert and north of South Africa and the Limpopo River. Many know this swathe of markets as "Sub-Saharan Africa" often abbreviated to SSA.

This swathe of markets comprises diverse countries whose diversity is based on colonial ancestry (English, Anglophone; French, Francophone; and Portuguese, Lusophone), adopted business languages, religions and tribal ethnicities to name some of the areas of diversity.

Diversity across SSA is a metaphor for 'complexity'. It is this complexity that has eluded a tranche of senior executives responsible for delivering the numbers and investment cases for SSA.

From around May until the end of September each year, much of pharma is busy collating the numbers for the big annual internal business review (IBR). This business planning event reviews the numbers for the business performance to qtr 2. It then projects an estimate to the year-end of where the numbers will be versus the budget at the end of the year and finally, it then forecasts business for the next three or five years.

For so many senior executives the following are the probable and likely scenarios:

1. To end of Qtr 2. Business is below the budget. It is very possible that qtr1 was below budget. Promises were made to address the shortfalls. But by qtr 2 the business is STILL below budget and likely even further behind budget than at qtr 1 review. The shortfall is very likely too large to be able to claw back the position and put the business back onto the budget delivery line. Sadly, this is not an isolated incident. The prior several years have been EXACTLY THE SAME. Shortfalls, being below budgets and unable to recover the performance year in/year out with the same set of senior executives leading the business citing the same set of recycled excuses.
2. The projection to the year-end (termed the Latest View or LV or Whole Year Estimate, or WYE) is a repeated declaration of prior years that the budget will not be met. The under-performance or the shortfall by year-end is likely to be even greater than at qtr 2 business review. In other words, those running the business are embarrassingly admitting (unknowingly to themselves) that "they do not know what they are doing". If seniors presented such alarming results and declarations like these to me during my corporate life, I too would state openly that my managers do not know what they are doing and neither do they understand their businesses or their markets. No senior Executive Board should allow or tolerate repeated failure to deliver the numbers but at the same time consume the cash investment they put forward.
3. The following future forecasts (that were submitted in prior years) are now being downgraded versus the expectations that the forward forecasts set in the prior year. This comes under serious challenge by Executive Boards who rightly question "What has changed in a year that you were not aware of last year?" These questions are rarely answered to the senior's satisfaction. Again, when seniors downgrade the following year's forecast that they submitted the prior year, it does come across as though they do not know what they are doing and do not understand their business and their markets. Remember, this year they have submitted forecasts for 2024, 2025 and 2026. This time next year in 2024 to change and downgrade 2025, because they will finish 2024 Latest View below budget, is simply unacceptable unless there has been a seismic shift in the market - which is very unlikely within 12 months' time. It questions the credibility of seniors responsible for SSA. And rightly so.

Bring these three things together and what you have across many companies in SSA is a set of local and regional seniors waiting anxiously for the consequences of their poor performance. That anxious mail from HR for a 'career review discussion' or from a senior line manager to be called to 'a meeting at corporate'.

In the background at corporate HQ, senior HR managers are summoned to manage the exit of underperforming staff by the end of the year and start with a fresh set of bodies for the following year.

Some lucky underperformers may be found a cobbled-together role, relocated under a broom cupboard under the office stairs in some sort of 'advisory' or 'policy setting role' or 'Government Affairs' role for Africa. The intention is to push them as far away from the numbers and the P&L as possible, where they can do no harm. Being advisory, no senior needs to act on their advice or their proposed policy-setting proposals. They are 'out of sight, out of mind.'

Quarter 4 is the calm before the storm. The numbers are in. People's fate is being decided. The stretchers are being prepared to wheel out the dead bodies. The HR guys revisit the flight training simulator to look for a new pilot and first officer.

A poisoned chalice is about to change hands from the outgoing guys to the new pilot and crew, complete with new cabin stewards and stewardesses. The drinks and catering trolleys are being checked and the wheels are lubricated to keep the pilot with his First Officer alert with abundant lashings of coffee lest he falls asleep at the wheel.

If I stood back from this, I could almost bring myself to find it humourous.

Not the events about to unfold but a broader issue that goes unrecognised.

That issue?

Simple. The reality going from my past experience across many pharma companies in Africa is that NOTHING THEY DO WILL CHANGE THE RESULT.

The new crew will also fail to deliver the numbers.

The new Pilot and First Officer might have been good on a flight simulator for a Spitfire aeroplane from World War II but when they are put into the cockpit of a massive A380 double-decker 400-passenger aeroplane, they are lost.

That A380 is damn complex. There are dials and gauges everywhere.

But the key to flying it and keeping it shiny side up is to understand the basic tenets of flight and the four or five critical instruments to focus on at all times and not take your eyes off them. All those gauges and dials can be big distractions.

The new crew will not deliver the results.

Qtr 1 the following year will be below budget (often due to frantic pushing of stocks onto distributors to meet LV in the prior year) which means they open with too much stock and distributors do not order to forecast quantities in the budget in qtr 1. Some of that stock may be returned as expired or short-dated or credit notes applied - effectively giving cash back to the distributors.

Sales and stock reports (of the examples I have seen in client work) are largely irrelevant - paralysis by analysis - and fail to give vital information on which decisions need to be made.

By qtr 2 the following year, the business will still be behind budget. Nothing has or will change from the prior year.

The new Pilot is relying too much on his inherited crew. This strikes me as being bizarre. Instead of acknowledging that he has a crew that screwed up the business and likely does not understand what they are doing, he will STILL rely on that crew of failures to deliver the results that of course will not follow.

I hypothesise the following:

1. The current team do not know the business, or the market and does not know what they doing based on serial failure to deliver the numbers year in/year out. How else can one explain repeated failure year in/and year out?
2. The business tinkers here, and tinkers there but largely does more of the same, yet expects different results (the numbers to be delivered). Einstein remarked doing more of the same and expecting different results is the first sign of lunacy! To change the results, the new pilot needs to do things differently. But what should be done differently? He doesn't know. Neither does his crew that he has inherited. They lack insights to understand what needs to be done differently.
3. The serial failure is due to the inability to define the real issues and problems for the shortfalls in performance. Without clearly understanding the real issues, they rely on 'any action' to fix whatever is causing the underperformance. They desperately seek actions to be put to the corporate senior Board, who often are gullible to believe they will make a difference, when they will do no such thing. There is a lesson there for senior Board members who allow and tolerate underperformance for successive years before making changes that make any sense or have a chance of succeeding.
4. If you are declaring another year of failure or taking over a failed business that has not delivered the numbers, you need to (a) stop relying on your crew that created the mess and (b) bring in someone to carry out an independent review that identifies where the business has issues holding it back from delivering the numbers. Seniors will recognise that you are trying to address the issues by understanding the root causes - that none of your inherited crew has managed over their tenure in their roles. It is a wise man who seeks learned counsel from those who have a better understanding than he.

When I carry out an independent review, it is thorough, and comprehensive and spans disciplines from distributors, marketing, sales force, pricing, and market access. I worked in supply chain and logistics as well as commercial. I understand the entire seamless axis from demand to supply fulfilment. That sets me apart from other consultants who work at one or the other end of that axis leading to massive gaps in understanding of business failures.

The new pilot often assumes that he has staff across those disciplines that I review. But he fails to recognise that they are in their roles by title and not by track record and experience as their underperformance proves. Thus, they are not able to suggest through an internal review what needs to be changed, why it needs to be changed and how.

Consuming costs year in/year out but failing to deliver the top and bottom line across several years is always going to be a question mark for that person's future.

But it need not be.

Do not accept the poisoned chalice knowing that next year the results will not be delivered (again). This is akin to being set up as 'the fall guy' to be blamed for failure.

Instead, bring in an independent expert who can tell you where the real issues are that are holding your business back, and be prepared to hear that your issues may include the very people that you have inherited that you need to sort out. If you are in charge, make your own decisions. Asking them their thoughts about bringing in an expert is very predictable what they will tell you. Your people will tell you and persuade you that you don't need me or an expert.

The reality is that they are afraid I will highlight issues that could include their shortcomings and inadequacies. Ignoring an independent review from an expert could leave you vulnerable when next year the business fails to deliver and especially when you cannot answer why it has failed to deliver and what is wrong, where and how it can be rectified.

Picking winners in this territory is fraught with difficulties. In my forthcoming book to be published, I devote a whole chapter to "How Do You Pick Winners?"

It sets out how to identify the bluffers from the real talent, the skills needed in winners that you must focus very heavily on, and how to test and establish the presence of those skills. I share my own recruitment process I used and by request, I have also addressed the vexed questions around employing a local person versus an ex-pat and the issue of the location of the job holder (in the market or outside the market).

Companies have swung back and forth in the argument about "being in Africa for Africa" versus being based outside of Africa. And they have swung back and forth between ex-pat appointments and employing locals.

Sadly, neither has made any difference to performance. It makes a jot-all difference.

I explain in my book why such short-sightedness in such bi-polar thinking leads to failure to deliver the numbers. The reasons will shock readers. This section will be a must-read for anyone in HR, recruitment and selection and 'talent acquisition' who are supposed to be experts at 'picking winners'.

Looking at the high failure rate and the high dead body count of seniors across SSA, it tells me that HR, 'talent acquisition' and recruiters appear to be remarkably poor in choosing winners. Read my book to understand how to pick winners and how I did it and went on to deliver a gruelling P&L for seven tough years for a very demanding and ambitious set of results for my senior executives.

The results are testimony to a person who does know what he is doing and understands the complexity of his markets and businesses. There is no stronger measure of ability than that demonstrated through results with supporting documentation.

About Samkoman Consulting Ltd (SCL):

SCL is a boutique consulting firm started by me over a decade ago focused on the pharma industry challenges across Africa and the common ground of how to address the failure in the delivery of numbers and attain critical mass for clients in Africa. I have over 20 years of experience across SSA as Territory Director Africa for AstraZeneca and as a consultant Director of SCL to the global top 20 Pharma companies in Africa.

If any of the points resonate with you in this article and you would like a free 'discovery call' to explore if we can benefit by working together, feel free to book a free no-obligation 30-minute Zoom or Teams call directly into my diary with the link:

https://www.calendly.com/amitvaidya2021/