Is Your Business Stuck in Workaround Hell?
You know what a workaround is, right?
You have a problem, but you’re in a rush and don’t have time to figure out what’s causing it or how to fix it properly, so you find a quick fix until you can get to it later. Except you don’t usually come back to it later. Right? We’ve all been there.
The Workaround Gap
The Workaround Gap happens in your business when you keep using quick fixes for problems without solving for the real business need. You keep leaving the hard work for another day. If you do this a few times it’s ok. If you keep stacking workarounds on top of workarounds, you end up with a process that is the sum of your workarounds – which is usually a total mess!
Here's a funny story my friend Joe told me when I first explained the Workaround Gap. I’m sure many of you have a similar story!
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“I bought my “Honda Testarossa”- a 1985 Honda Accord from a smiling curbside dealer. I was in my early twenties and I needed a car to commute to school and work. Not a month later it started stalling every time I stopped at a light.
My solution was to either switch into neutral and rev the engine or hold the brake and gas at the same time while stopped. (what could go wrong?!)
This workaround only lasted so long before I had to pay a Honda dealer $800 (a small fortune for a student!) to rebuild part of the engine.
The car made it halfway down the road before stalling again!
Furious, I managed to start the car, put it in reverse, reach up to adjust my rear-view at which time the “SNAP” of the mirror coming off in my hand made me freeze in place. I looked at my right hand holding the no-longer-connected mirror and registered the clattering sound of the engine DYING AGAIN!
After screaming a few choice words that can’t be repeated, I had a moment of clarity:
"I began to understand that it wasn’t going to get better - just worse"
Even with my moment of clarity, it took another 6 months for me to get rid of the car! I had to suffer even MORE PAIN before being willing to take action…the horn got stuck in the ON position before completely falling off, the glove box latch stopped working and the transmission had to be replaced.”
“if only I had known it would cost me thousands more I wouldn’t have kept the car so long”
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I know what you’re thinking. Nothing he could do about it! Hindsight is 20/20.
But is it really?
If you took the time to really understand the problems, the likelihood they would happen again, and properly come up with a plan, you would avoid a lot of the trouble you get into over and over again!
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Your Workaround Gap
So what does this look like at work? Here's a real-life story of a successful fast-growing company.
You start with one service or product and a few customers
- The sales team gets selling, operations figures out how to deliver your product or service. Accounting sets up invoicing, and collections, pays the bills and you get a monthly P&L to see how much money you’ve made.
- Nothing too complicated - right? You already know in your head how much your prices and costs are, so you know what you should be making roughly, and when you see your total P&L it confirms what you thought.
You want to grow, so you add some new products
- Operations has to make changes to the equipment to accommodate the different skus you’re now making, but they make it work. After all - when new sales are on the line - it’s all hands on deck! Just duct-tape the new packaging machine that isn't working properly and figure it out later.
- Customer service didn’t know about the new products till the first order went through, so they quickly enter the details into the system last minute to get the invoices out. They copied the format of the previous products. Why does it matter that some of these products use more expensive components, or are Private Label?
Sales lands an amazing new customer - the first in the US!
"Woo-hoo let’s celebrate!"
- How much are taxes and duties crossing the border in the US? Don’t worry about that, figure it out later...
- Just use the current exchange rate for now to set the price
- A new customer wants some rebates to close the deal - a signing bonus, some volume rebates, and some promotional spending money. The rebates are on all the sales, including the private label. But you will still make a killing on the account because the margin on branded is so good, so let’s just get it done!
First 6 months of sales the results are amazing!
- Lots of new revenue is getting booked, so when the monthly statements come in, nobody asks any questions because the $$$ is pouring in.
- Let’s go get some more products and customers!
And repeat, repeat, repeat! What could go wrong?
6 months later….
- Sales volumes still look good,
- but gross margins are dropping.
- Operations costs keep running higher than planned, and
- profits are falling.....
The CEO runs around demanding more answers!
"What’s going on?"
- Every team is pulling excel sheets together digging for answers.
- Sales is trying to find answers - only problem is the rebates aren’t in the sales cube so their numbers are wrong.
- The Finance team is working late trying to figure out why the margins are dropping - but the ERP system doesn’t track the products and costs in the right categories, and the volume rebates are all in complicated manual excel files.
And then your largest customer sends in a bill for all of last year’s rebates, ON TOP of your declining margins.
This is going to wipe out all the profit for the quarter.
You hear the CEO screaming again:
"WHAT IS GOING ON?!"
People are stressed, and can’t give answers, no matter how loud the CEO yells!
This is what happened: (it usually takes months to figure out)
- New products weren’t set up in the right categories to track margin by product type and brand
- You sold much more Private label than expected, so your product mix was worse
- Private label margins were much lower than branded
- Duties and taxes crossing the border weren't considered in the price
- You based all our assumptions on the exchange rate at the time - and of course the USD weakened, so now your sales are worth less than planned
- Sales and Finance didn’t talk to each other about the new customers, so volume rebates weren’t calculated and accrued properly from Day 1, leading to a giant catch-up adjustment a year later
These are just the process issues! What - there’s more?
On top of all this there are System Problems:
- your ERP system can’t do any of the rebate calculations
- you can’t track product margin by category
- and your sales cube doesn’t include all the costs
Operations has a whole host of their own problems because of the sku complexity
- they have built too much of the wrong inventory because sales forecasts are wrong,
- your customers are screaming for products because you're late delivering,
- so now as a last resort you are flying in products to make your customers happy
- which is costing you even MORE money!
How did it all go so wrong?
This is the Workaround Gap at work
When you look for the quick solution every time to keep going, and don’t work together across functions to solve problems with real processes. The stacking of multiple workarounds makes this more and more frustrating as complexity increases.
Common symptoms include:
- Frustration, stress and ultimately employee turnover
- Manual reports, rework and delays
- Errors that lead to bad decisions
- otherwise known as - Excel Hell!
The Finance team in growing companies is trying to support the company’s increasing demands and complexity. They have done their best with workarounds and repairs but they aren't allowed to pull over or even slow down.
Instead, leaders keep pressing the gas even harder as sales, marketing and operations increasingly demand more. My friend Joe likes to say:
"It’s like changing the transmission, screwing hubcaps on and rebuilding the carburetor while driving as fast as you can."
Obviously, you need to move with speed when necessary. But you need to know when the RISKS outweigh the benefits, and to actually make conscious choices about cutting corners.
Otherwise, you will find yourself driving down the highway in a 1985 Honda with a duct-taped steering wheel, holding your rear-wheel mirror in your hand, hoping the brakes still work!
So how do you get off the Workaround Highway-to-Hell? Stay tuned for Part 2 of our Series next week:
5 Steps to Help you Close the Workaround Gap
Share Your Workaround Gap!
What’s the craziest workaround story you have? Share them in the comments below!
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CFO | Executive Leader Turning Strategy Into Results | Passionate Team Builder | Creative Problem Solver
5 年Great post! Extraordinary growth is exciting and awesome but often leads to work around hell. You need someone at the table to focus on core business processes as part of the strategic planning process. That’s what I do. Make everyone else’s jobs easier by focusing on core business processes as part of planning to avoid toxic backlog, (also known as losses on hand).
I like helping people where I can. I am considered a good listener, an idea man, and an excellent advisor. I am a survivor of AML, and always willing to listen, encourage, and offer help to those battling cancer.
5 年A workaround is a great topic. Working in Healthcare IT, I have seen this with busy clinicians. I would periodically visit my wife while she was working on her nursing floor. Each time I would go the staff on the floor knew I was with IT and would point out IT issues that needed to be addressed. I would ask, Did you call the Service Desk for help? They would say, No, We don't have time to wait on the phone to talk to someone. They simply would go find another computer to work at instead of the one closest to their patient.? I suggested to the Service Desk manager that he send someone out daily to round on the floors to find and fix these problems. To my knowledge, they never implemented this action due to limited staff, which they wanted on the phones.?
Leading and coaching global teams for growth and value creation
5 年Great summary Katya Forsyth
Leader in Finance, Accounting, Business Transformation & ERP systems
5 年Great example, and it illustrates perfectly what usually happens.? I've found from some learning in professional coaching that we too often focus on Action and the subsequent Reaction; instead, what if we focus on Action, then Reflection, then Learning, then New Action.? The hurry to get a solution in place trumps the option of reflecting on a problem and learning from it.? In reality, we spend more time fixing the issue later, when it would have taken less time up front to stand back, breathe and plan for success.? Thank you for sharing.
Sales & Business Coach for Entrepreneurs at a Crossroads | My clients call me the Oprah of Sales | Wisdom Whisperer |
5 年That graphic perfectly illustrates ALL the problems with having a workaround focused culture vs actually fixing the problem in a process-focused way. I look forward to the rest of this series because all that is blaring in my head now is: How on earth are we going to FIX it Katya!!?!?!?!