Thoughts on a Friday Before Labor Day Weekend

Celebrate American Workers

There she is, Lady Liberty.

Hopefully hard working Americans take liberty this weekend to recharge with an extra day.

Today, on this Friday, before a long Labor Day weekend, I am thinking that Labor Day always means a moment to recognize the spirit of American productivity and the ultimate catalyst for that productivity - the American worker. People are working harder than ever, in the face of escalating costs for everything due to record inflation, high energy costs, high rents and housing costs, job insecurity and competitive intensity from other nations. It is my hope that after the elections, things return to as normal a state as is possible, so that we can move forward with advancing The United States out of the social and economic doldrums we have found ourselves in for the last 15 quarters.

Political Season

Labor Day should have us raising a glass to the innovation and the passion America is known for - for developing products and services and solutions that make people's lives better, make things faster, more efficient, more enjoyable, more productive, and let’s take stock of how our nation has evolved in the last 100 years – and how we are at such a critical juncture facing a political season which is less than 65 days away. This election season is plagued with much uncertainty and questions that linger about candidate readiness. How, for example, can an individual that cannot manage a state possibly manage 50 of them - how can an individual that has failed in city, town, county, state circles be effective as a national leader? In any case, good government needs to keep in mind the delicate balance of our national economy, our global competitiveness - while at the moment we may be focused on the candidates and how they compete with each other at state, local and federal levels - we must be unified in order to ensure future growth, a strong military, readiness for uncertainty, the unfortunately increasing threat of inevitable global conflict, and mitigating the risk of resulting instability and insecurity.

Culture and EQ

Our founder Jim Malone had a great saying in regard to culture. Jim said, “culture is determined by the worst behavior that the organization tolerates.” One of my favorite books - one that's always required reading in every growth transformation, turnaround, restructuring and performance improvement assignment that I go into - is part of the HBR series. It's a book called On Emotional Intelligence by Daniel Goleman. If you've never read it, I suggest you do. The nexus of low-EQ managers, board members, and ownership groups typically leads to organizational failures - in financial and operating performance as well as low customer service and quality KPI's - and these organizations are plagued by poor culture making them tend to hit organizational competitiveness headwinds earlier and harder than many other companies do - because the companies tend to run on a culture of “my way or the highway,” “do as I say not as I do,” and “do it because I said so,” rather than having a collaborative exploratory conversation about what is right, what creates value, and more importantly - what creates delight for the customers of that organization.

Managerial Myopia and Weak Governance

Managerial myopia, which is rooted in low EQ - is what leads to organizational failure, and when those organizations fail, they call us and typically when we come in and do a 30-day analysis we rapidly discern and understand why frequently the employees have lost faith in management or governance or ownership, because they don't feel that they are objective and passionate about the business. They often don’t understand the business. It becomes an aristocracy more than a democracy. Weak or poor governance rooted in weak self-serving, immature, petulant culture destroys more companies than ineffective management.

There's no leadership when there are no leaders.

Forgetting To Sell, Forgetting the Customer

Over the years, and in countless engagements across countless industries there are some common denominator issues and failure factors I’ve seen, one of which is that companies that place little or no priority on sales and marketing, a second is that they fail in understanding why their customer buys from them. Another interesting reality is how many companies are “penny wise and pound foolish,” they will spend liberally on things that don't have an immediate impact, but they won't spend to get the right advisors to prevent poor decision making and to qualify determining the optimum path for the business in the future. Budgets and plans are always statements of priorities. Frequently they are wrong, or misaligned.

Manage Expectations by Having None, Paying It Forward

I don't know that it's a formal law of reciprocity but our firm’s philosophy - and my personal philosophy over the years - has always been to try to help people with no expectations. Yes, ?to put it out there first, to pay it forward - and as it's been said by many other people - “give, give, give, before you get” and if you approach this dynamic - call it universal karma, call it whatever you like but if you're doing the right thing trying to help other people I think inevitably you are rewarded in spades.

Services: Choose Carefully

The majority of the economy is services and in regard to many B2B services it's often possible to think of them in terms of services that are done for you, services that are done by you, services that are done with you, but most importantly there is the need to isolate and avoid services that are done poorly. Choose any service provider wisely.

Manufacturing: Manage The BOM and Costs?

Many manufacturing companies seldom take the opportunity to look at the BOM's - bills of materials - and the components that are sourced from different vendors that are used to manufacture their finished goods; also they tend to forget about the need to keep their incumbent vendors and supply chain honest by re-shopping those core components - because while there's not much that a manufacturer can often do about selling price, keeping in mind that they are reselling through chains of distribution, as my father used to say “it's not so much what you sell it for it's what you make it for, or what you buy it for,” taking a fresh look at bills of materials and supply chain is an opportunity to not only improve vendor performance and supply chain reliability so as to avoid stockouts and shortages, but also an opportunity in many cases to improve customer satisfaction through better quality. See better management of supply chain as a way to make better products.

Porosity – Brick vs. Sponge

What is the difference between a brick and a sponge? If you think about water pouring over a brick there's only so much absorption that can happen - but if you think about water pouring over or into a sponge - there is absorption - because the sponge is porous. So, the individual managerial mind, ?the collective mind, and in many cases, the mind of an organization and the culture of that organization needs to be more porous so that opportunities don't wash away. Opportunities don't flow off the top of the organization like water rolling over the top of a brick, but rather new thinking and commercial opportunities can permeate and penetrate - because the organization has opened itself to being receptive and it has demonstrated an ability to absorb new ways of thinking and explore new markets, products, offerings. In many organizations that I've worked on, I always use the expression “it's better that we ask for forgiveness than permission,” because if we're living in a culture of fear and intimidation, it stifles growth and it reduces the likelihood or the willingness of employees to bring forth the solutions and the great ideas that that they have. A culture that doesn't encourage thinking in collaboration results in a company that's on borrowed time. Innovate or die.

Fly Over States?

Have you ever heard the song “Fly Over States” by Jason Aldean? It's a great song for a number of different reasons I guess I've been blessed over the years to have worked on dozens of manufacturing and service companies, and very frequently industrial manufacturing companies are in states that might be considered to be “fly over” states the upper Midwest, the Midwest, the mid-Midwest, the Western states. ?I think of Oklahoma in particular - I had the good fortune to work on many projects in that particular state over the years and what I found are some of the hardest working, most dedicated, humble, real and passionate manufacturing employees that you'll find anywhere - and while it's easy to fly over a state like Oklahoma and look down and say, “well it's just the middle of the Midwest,” or “it's essentially northern Texas” Oklahoma is a place where God fearing tough people work hard in manufacturing, oil and gas, aerospace, renewable energy, agriculture, and in a variety of other industrial businesses. Also, on this Labor Day, let's not forget that many of the so-called fly over states are the states that feed us.

Back On the Slippery Slope

It's always fascinating to me how many businesses that we have worked on and turned around and fixed and then on the way out the door the board or the ownership group puts in somebody that has no business being in that position, and rather quickly - usually in 60 or 90 days the bloom comes off the rose and the organization starts to slip again, the immature or petulant executive spends their time in analysis paralysis mode – often marked by bureaucratic egoism. These so-called “leaders” force morale to slide back to a low point of what it was before the turnaround; good people start to leave, and they fall into the trap of thinking that they can shrink to greatness or shrink to profitability. I've seen it time and time again and the worst mistake that a board or ownership group can make is hiring a friend or somebody that they know that needs a job. A bureaucrat doesn’t do anything worthwhile because they don’t know what they are doing. I heard one of these fake it till you make it CEO's brag about how for the first 90 days of his new job he wasn't going to do anything but watch. What?

When The FOB Creates the WTF

I've been extremely fortunate in my work to work with some of the greatest people in manufacturing and service companies - and to have the ability to work hard alongside them to transform those businesses and to improve them far beyond where they were the day I walked in for my first day on the job, and ideally and hopefully leave them in capable hands - so that those employees can have job security and their customers can rely on a stable vendor into the future. Unfortunately, recently I heard a tale of one of the companies that I had worked on some years back that is going through a series of struggles. They've lost 40% of their sales Y/O/Y, some significant contract opportunities, they've lost about a third of their good people and for whatever reason their board of directors is sticking by the choice they made for their senior executive to run the business – a friend of theirs – or what we call an “FOB” – Friend of the Board - even though the business has failed miserably. Well, the FOB hired by the BOD turned out to be an OJTCEO? (On the job training) and the business has STB.? Asking us to come back is an admission of their governance failures so they won't do it.

I hope it turns around again but it looks like at some point in the future the customers of that business will not have reliable supply, the employees of that business will not have employment, and they will have lost all of the good things that were in development - new products, new innovations, new technologies. I hope a buyer comes along that offers them better stewardship as the employees and customers deserve more. That is an unfortunate circumstance, but it often happens when poor governance hires poor management.

Grow It, Fix It, Exit.

If we can help your business with “the three its,” well, give us a call at 239-588-0008 or e-mail us at [email protected]

Paul Fioravanti MBA, MPA, CTP

QORVAL PARTNERS LLC

Naples, Florida 34103

www.qorval.com

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