Most leaders and commanders lead and make most of their important business decisions based upon an experienced “gut” — and only secondarily by a conscious analysis which is presented to them and processed by the rational mind. This “gut” is really intuition, which is the most powerful form of intelligence. It operates by analyzing multiple variables so rapidly we are not aware that the process is happening, and we just get a feeling — but this is not emotion. This “feeling” is not a feeling at all. It is our inclination based upon a rapid analysis of the facts and circumstances given a situation or presented with a choice.
Intuition becomes more powerful if it is acknowledged, respected, acted upon frequently and with greater experiences to draw from (i.e., maturity). As if it were a business decision muscle, exercise it more and it grows stronger, as will the likelihood our an increase in your ratio of good decisions to poor ones.
Emotion should be minimized in the business decision process. It is a function of desires, fears, dreams and past programming in your childlike subconscious or reactive mind. It masquerades as a “gut feeling” or a hunch, but it can be differentiated from intuition by the former’s speed and force (like a kick in the head) compared to evaluative lead time in emotional processing. With emotion, you are reacting to either an attachment to a certain outcome, or to a deep rooted desire or fear conjured forth from your subconscious. Emotions tend to come to you, and to wash over you, while intuition strikes like a hammer.
In sum, you can develop your business decision making skills by 1) learning to identify and distinguish intuition from emotion and by 2) maximizing your use of intuition and the rational mind (which consciously analyzes facts and figures), and minimizing your emotional attachment or leanings toward any outcomes.
OptumRx and its parent company think that they can merely pacify a few of the noisemakers and ignore the rest of the unspeakably abused herd. I don’t like when someone calls me stupid — Or worse, when they presume that I am… How about you? I’ve been assaulting them in the Court of Public Opinion, which means a great deal to me – It is marketplace justice — it is not bribed, bought or sold — and the sentence is carried out by the customers.
OptumRx has the worst customer service record of any of the firms within its industry in the entire United States! And since they do not care, we have to make them care.
THE CORRESPONDENCE RELATES TO MY POST “OPTUMRX MUST DIE”
NOTE 1: These people at OptumRx have all of the morality of monopolist-in-process Comcast (XFINITY) Cable, but in this mail in pharmaceutical racket, they are tampering directly with patient lives — literally. If you haven’t already done so, please take the Quick Survey by going to the hyperlink in the next paragraph.
NOTE 2: Been mistreated by OptumRx? Please help us by filling out a fast survey at the end of this article. http://douglasecastleblog.com/2014/01/05/optumrx-must-die-mailorder-pharmacy-monstrosity/ We need you! Thnx. #RF. If we receive enough compelling, emotion-packed responses to our Quick Survey, I will send a petition to the leaders of all of the Regulatory, Legal And Consumer Affairs bodies having influence in such matters, and we’ll either 1) Put OptumRx up to the light of intense scrutiny and possible punishment (including the loss of the ability to conduct their feeble excuse for a “business,”, or 2) We’ll get them to mend their incompetent, fraudulent and depraved ways, and win their long-suffering customers better care and cash compensation for the hardship which they (WE!) have had to endure.
Below is the Twitter exchange between the ignominious OptumRx (and their publicly-traded parent company, United Healthcare/ United Health Group). They certainly enjoy control, and love the idea of calling a country-wide problem an “isolated Consumer Matter.
Instead, what I received from the cowardly, guilty pukes at United this afternoon within only minutes of my sending my Twitter terms was simply a telephone voice mail from “Christine” (no last name, no title), from United Health Group’s Consumer Affairs Division indicating that she wanted to ‘help me resolve this issue‘, and that I could telephone her at 800-842-2656, press prompt 1, and then speak with her at her direct extension, which is 3042511. I’ll give her the opportunity to speak with me, but I smell a delaying tactic combined with a smokescreen. My suspicion is that I will have to speak with one of her titled superiors (with a last name, too), in order to settle this matter.
They are trying to insulate themselves from dealing with me directly.
I’ll not only keep you posted, but I’ll see to it that OptumRx, and its incredibly greedy, publicly-traded parent get their problems fixed an that things are made right — for all of us. And if you haven’t done it, take the Quick Survey (see the earlier part of this letter for the link) — if we get enough blood, bile and verifiable complaints — we will circulate a petition to all of the persons of influence at all of the agencies whose attention this may require.
Mail order pharmacies are supposed to be a more efficient way of getting medications to patients more easily, and at lower cost. They also allow the mail order firms (such as the notorious, odious, inept and malevolent OptumRx — formerly a loser called “Prescription Solutions” — later acquired by the much-maligned malignancy of a publicly-traded Healthcare Colossus known as United Healthcare) to use their best efforts to maximize their profits by sourcing all of the medicines through pharmacies located thoughout the United States which offer the lowest prices, and often the worst quality and service.
It is safe to say that OptumRx has the worst consumer satisfaction and service record of any mail order pharmacy (or for that matter, of virtually any service business) in the history of the United States. Listing things simply, the imbeciles at OptumRx, including the first line of “representatives,” two levels of supervisors and the invisible or permanently vacationing executives:
Cannot ever seem to get medications delivered on time, regardless of the threat to the patient’s life;
Are too stupid to understand basic requests and give straight answers to direct questions;
Threaten to hang up on customers who are irate because one of the unevolved cretins refuses (citing a non-existent law, or some cock-and-bull ‘company policy’ of convenience) to mail a refill of a controlled substance until the patient had run out of the medication totally, and then was told he’d have to wait for seven to ten days before he’d get his renewal in the mail!;
Tortured and tormented senior citizens who are helpless to deal for hours on the telephone between the flying monkeys operating OptumRX, their prescribing physicians, and the postal service;
Had people wind up hospitalized, at risk of permanent injury or death — these victimized people are primarily elderly or chronically ill and in need of constant, continuous medication, which OptumRx simply cannot or will not provide;
Send out the wrong medications, risking patient fatalities;
Fail to timely call patients when there are “difficulties” in filling their orders correctly, timely or in the necessary amounts;
Are never held accountable for the havoc that they wreak on the lives of the patients who must endure an endless series of phone waiting times, conversations with non-sentient creatures and their knuckle-dragging “supervisors.”;
Experience terribly inconvenient computer problems, outages, or upgrades when the volume of request traffic is at its peak — for example, at the beginning of the year… ;
Never show up as the demonic miasma that they are in the mainstream media, which is rumored to occasionally ‘bend a bit’ to accommodate Big Pharma, Big Oil, Governmental Institutions and Agencies, and [shockingly!] advertisers.
Why is nothing being done? Isn’t there an injustice that should be addressed by numerous consumer advocacy organizations, both private and government-funded (in all fairness, some are taking some action, albeit feeble), Insurance regulatory agencies (perhaps the Commissioner of Insurance), Health organizations, Eldercare advocacy groups….
Just Google search OptumRx and you’ll find a plethora of complaints, horror stories, and legal actions – one group, ConsumerWatchdog.org is sponsoring a class-action suit against OptumRx and perhaps its parent. Better still, Google (without the quotes) such goodies as “OptumRx + complaints,” “OptumRx + evaluations,” “OptumRx + customer service,” OptumRx + lawsuits,” “OptumRx + reviews,” or “OptumRx +fraud.” You’ll get names, telephone numbers and endless tales of woe. Following are some hints of the sentiment regarding this “wonderful, cost-saving, service-providing, polished turd bastard offspring of United Healthcare:
“This pharmacy is horrible and lies to customers. I ordered medication for my mother on 12/20/2013 and was promised it would be delivered by Jan 2nd, 1014. I had called them after noticing their website said the order was unprocessed. Instead it is now Jan 3rd and the website still shows the order as unprocessed. I called again and after being put on hold for 5 minutes, the rep claimed that the Dr.’s prescription fax had only arrived today. This was an emergency order and I had ordered a week’s worth of “intermediate” medication for her based on the arrival date promised by Optum Rx. Do I have any authority to sue them if their inability to get medication out on time affects her health adversely?” – Carol of Seattle, WA on Jan. 3, 2014
And how about this review from an insider at OptumRx?
“Was a customer service advocate for OptumRx. The main concern in the company was numbers, not service. Doing additional work to make sure a member got his/her medicine in a timely manner was last on the list. You are not allowed to do additional follow up, which made members have to call back multiple times, which was unnecessary. I can totally relate to the irate callers and their situations.
I was terminated because of an irate caller with a situation beyond my control. Placed the member on hold after going back and forth with her about her order. Because she hung up and had to call back, complained and said I was rude. I was terminated, mind you I never had any problems with the service I provided, no attendance issues, always helping. None of that mattered. Two thumbs down for OptumRx.”– Jane of Artesia, CA on Jan. 3, 2014
Indeed, these people are receiving horrific reviews everywhere you turn. Do you enjoy charts, graphs, pictures and visual aids when it comes to ratings and performance? Sure you do! Here y’all go:
I personally believe that we, as customers of this institution of depraved indifference to human suffering, should issue a petition citing our grievances, and upon its completion (we’d need at least 1,000 names of actual victimized patients who are registered voters) which should go to all of the following persons at the following organizations:
President Barack Obama, The White House;
The President And Members Of The Board Of Directors Of OptumRx;
The President And Members Of The Board Of Directors Of United Healthcare;
The Respective Commissioners Of Insurance Of Every State;
The Chief Information Officer Of The Federal Trade Commission
The Attorney General Of The United States Department Of Justice
The Secretary Of The United States Department Of Commerce
The Chief Information Officer Of The Department Of Health And Human Services
The Director Of The Federal Bureau Of Investigation
The Chairperson Of AARP, and perhaps some other persons in positions of influence as well as widespread publication (via release) of the petition to the printed and televised media.
I would not propose this approach if I thought that there were any other means of obtaining relief from this uncontrolled and unconscionable abuse. It will not be resolved by hordes of abused and injured individuals putting their individual stories up on the Internet.
BEFORE WE PREPARE THE PETITION, PLEASE TAKE THE FIRST STEP AND FILL OUT THE FOLLOWING QUICK SURVEY.
Please take a few moments to answer this Quick Survey. We will be posting the results to this website and to the social media at regular intervals. It is our objective to get no less than a total of 1,000 responses ASAP. After that, if my Public wants that Petition, it will be drafted and sent all over the country.
I’m guilty! I am so backlogged with tasks that my Native American name (no offense to any member of any Native American tribe actually out there in Indian Country) should be “Running Behind.” Mismanaging my time and tasks is obviously a problem from which I suffer. Just imagine if a company were comprised of individuals, just like myself who were managing their time and tasks like a bunch of weasels on treadmills? Or like a one-armed paperhanger? Or like a glassblower with the hiccups? [Had enough? Well, I’ll stop now. But remember: My blog, My rules.]
Here are my mistakes in terms of time and tasks allotted:
1) I have failed to delegate those tasks that I could have given to others. I’ve clearly taken on too much for myself;
2) I am multitasking instead of rotational tasking – in the case of the former, I use a peripheral focus on a number of things and perform very poorly – in the case of the latter, I focus on one task for a limited time (using a timer on my computer desktop), then proceed to the next task….it’s an installment approach to keeping from burnout while accomplishing everything on my to-do list;
3) I have unrealistic expectations of myself;
4) I am obsessed with control and not even interacting with other persons around me — how could I ever be an effective manager;
5) I am so enmeshed in my own personal tornado that I can’t possibly be paying any attention to the larger picture of my position in the company or project and the changes in the environment around me (a fire, a meteor shower, an invasion by an “Occupy” group.
The Solution? I’ll Sum It Up:
Rotate tasks – don’t multitask;
Switch tasks at regular intervals;
Take frequent brief breaks — walk around and see what is happening;
Stop beating yourself up if you don’t finish everything on time, or if you fail to complete all of your tasks — in industrial and behavioral psychology, we know that your general mood, your work environment, and your feelings about your own perceived “shortcomings” are more damaging to you and to the company.
If you’re not managing yourself, emotionally, physiologically and in terms of time and tasks, you will damage a precious Human Asset and Reduce the Collective Creativity and synergy that make a company’s output far greater than the sum of the respective outputs of the individuals who comprise its employees and contractors.
Douglas E. Castle
Some more material, courtesy of REPOST (I would, in particular, take a long, hard look at the last entry; I wonder if there might be some confusion between cause and effect:
Husbands With More Masculine Chores Have More Sex NewsLook — Jan 31 2013
Video News by NewsLook A study shows married men who spend more time doing traditionally female chores have less sex than men that don’t do as many of those chores. Jen Markham explores if the…[Author’s Note: I’d better finish up here so that I can kill a bison and drag it home to my cave so that I can share it with my wife. Red or white wine with bison? Anyone know?]
Sunk costs are wasted, and often recurring expenditures on a purchase, program, idea or business campaign which, by all rational means is either dead (unproductive) or doomed to failure, Yet we persist in throwing good money after bad either because our emotions or egos want so badly too prove our initial ideas right, or because we have invested such a significant sum that we are irrationally thinking that a few more dollars might “turn it around” – or, as my British friends call it, the “in for a penny, in for a pound,” mindset.
Sunk costs are emotionally unaccepted losses. They represent the triumph of Human psyche over sound business policy. If you have some of theses fiscal black holes embedded in your budget you are going to compromise your subsistence, and possibly miss out on opportunities (the Opportunity Cost is the “if only we could have”: cousin of the Sunk Cost); you will need an objective outsider to identify them for you, and to help you to allow logic to triumph over fragile sentiment. In my practice I’ve disliked having to undertake this repair the most — I invariably have to be as much of a psychologist as a restructuring or strategic planning consultant.
The best way to avoid these anchors to business failure is to learn to draw two lines:
1) What is the absolute maximum you’ll spend, without exception. Limit your fiscal exposure by a rule established early in the game; and,
2) What is the maximum time that you are willing to wait to see a definable, quantifiable result.
If you can establish and live by these two parameters, you and your business will have a far better chance to survive and thrive. I would much rather establish these policy guidelines for a growing company than to have to walk blindfolded through a minefield of voracious pet projects.
Evaluating a business’ situation and what should be done to further its best interests requires dedicated time, objectivity, emotional detachment (those latter two are different — objectivity comes from clear vision, and a grand, experienced perspective while emotional detachment comes from not being emotionally constrained from sacrificing any sacred cows, or offending anyone), and the experience and expertise of someone who has lived through a large number of these types of situations previously.
You need a tactical and strategic specialist upon whom you can truly rely. And you are already frightened that a stranger will compromise or destroy things which you have emotionally invested in.Interestingly, this very fear and attachment are the factors that keep leaders from leading the great businesses which they’ve built in moments of either crisis or critical decision.
Your business is in dire straits. You don’t know quite when it happened but your business is hurting: cash flow is very then, both fixed and variable costs seem to be on the rise, and your regional managers no longer seem motivated beyond their biweekly paycheck. You wish that you could stop everything that you’re doing and spend a few weeks examining the business in detail, but you are 1) too busy and involved in the business process and 2) not at all objective. You lack time and objectivity — and to top it off you are too emotionally involved with the business to make the changes that might have to be made. You and your attorney conferred with me, and came to the conclusion that you needed a Turnaround Consultant, and asked if I had an interest in the engagement. I am at your offices this morning, because as good a visionary, leader and hands-on manager as you are, you lack time, objectivity and the emotional detachment necessary to be effective in doing what must be done.
It requires time, objectivity and emotional detachment to do what has to be done for a business at any critical point in its evolution: whether that is averting financial disaster; contemplating adding a new product or service; thinking about outsourcing or using virtual office services to cut your staffing requirements (and the expense which comes along with having a full-time employee — now close to 37% on average of the employee’s base salary in most corporate cases); contemplating developing a virtual export or import division; evaluating a merger opportunity with a competitor in your industry who is significantly larger than you are; evaluating combining your business with you largest supplier; thinking of recapitalizing through either a private placement of equity interests, a public offering of securities, a deal with a private equity firm; a “guaranteed” public offering of your company‘s common shares through an investment banking firm; or, signing on for a large line of credit at seemingly good terms with an overseas firm out of the Middle East which only wants a 7% equity stake in your company.
When a business is at a critical inflection point in its evolution, life cycle or critical path, the key individual cannot necessarily trust or confide in anybody except for his or her lawyer or his or her accountants — but these professionals are limited in their scope of practice and expertise. The person whom you seek is usually referred to you by your legal counsel or perhaps by your independent accounting and auditing firm — and he will have those attributes necessary to guide you past that inflection point that we spoke of earlier:
It’s at these times, whether the decision involves avoiding a disaster or acquiring another firm in order to make a giant step in your business volume and diversification (not to mention the increase) in revenue sources that I feel delighted to be needed.
Thank you for reading me, and for circulating my posts through your ever-growing social media channels.
Why does BPM matter? (ebizq.net) – They Invent New Acronyms Every Week. And When They’re Not Doing That, They’re Finding New Uses For Existing Acronyms Just To Create Confusion – I Thought That “BPM” Stood For “Beats Per Minute”. That’s Why I’m One Of Those SOBs Who Avoids Acronyms.
A temporary cash crunch situation is something that occurs in the ordinary course of business in most every organization, especially when the business is of a seasonal nature or when the businesses is in a rapid stage of growth, i.e., inundated with purchase orders but without sufficient cash to fill them and to also pay recurring expenses. But if a cash crunch situation is chronic, a diagnosis of the reason must be made, and appropriate actions must be taken. This article will give you the ability to do both.
Bear in mind that when I speak of revenues, I mean total sales, both as computed on the cash basis and the accrual basis, but when I speak of expenses, I actually mean cash outflows of every nature. Throw away the accounting and auditing textbooks for just a bit so that we can deal with bare bones economic reality. Also by current, I mean as either generated or paid in the ordinary course of operations.
Most every enterprise experiences a period or periods of cash crunch, especially if those businesses are either seasonal or rapidly-growing companies which are generating purchase orders, but do not have adequate cash to fill them while still meeting their obligations, such as payroll, occupancy and the like. There are remedies for both of these situations because they are either predictable or can be financed with short-term debt to enable them to either withstand the “tight season” or to let their cash flow catch up with their market demand.
If cash crunch is chronic, and is an ongoing problem, there is something wrong with the business on a fundamental level. Either revenues are too low, or current expenses (outflows — remember that we’re using lose terminology here) are too high.
If the expenses or outflows are not truly for operations but payable to a lender in the form of , for example, a short-term self-amortizing debt where the payments are large and swollen with principal, the lender may be negotiated with to arrive at an interest-only loan with a provision for a rollover of the principal at the end of its term (optimal for maximizing utilizable cash flow), or possibly a longer amortization period where the payments are lower, conserving more cash flow for operations.
Sometimes a business is improperly capitalized and it requires equity to be infused in order to retire debt. Many businesses which have good fundamentals need to de-leverage themselves by retiring existing debt with equity. This is appropriate unless the equity is used to cover current expenses.
The test is this: If you deduct the debt payments from the total current outflows, and you subtract the number obtained thereby from the revenues, the resulting number should be positive. This means that the business is not properly capitalized, but is probably fundamentally sound. These companies are good candidates for refinancing.
If the number obtained is still negative, then it is highly likely that the business is fundamentally unsound, either due to its core purpose, mismanagement or some improper assumptions which have gone uncorrected for too long. Revenues can be increased by increasing sales through better marketing and sales, or by increasing prices if the market will tolerate this.
When certain food or beverage prices are suddenly increased, a restaurant may hike up its prices and say, for example that “due to the increase in the cost to us of coffee, we are sorry to have to raise the price per cup to $2.25. If the market tolerates this it is a wonderful strategy, especially if done in steps, or if accompanied by a re-packaging or the product or service to somehow differentiate it from what it was previously. The perception of added-value tends to justify an increase in price.
The other possibility is more difficult, and the prospects less pleasant: You may have to negotiate with your employees (or terminate some of their positions), cut back on the use of your contractors, or re-negotiate costs with your vendors. Vendors can often be persuaded to reduce their charges by 1) indicating that the situation is temporary, and that they’ll receive a premium after you’ve reached a certain sales level or after a certain amount of time has passed or 2) an incentive wherein the vendor participates in either your revenue when you’ve reached a certain threshold, or in you company’s ownership (this is an example of a partial vertical integration strategy).
The acid test of the fundamental soundness of any simple business model is this: If debt service is eliminated, do revenues exceed current expenses. Put more realistically, without considering debt, do your revenues (where the earnings process is complete and they are either in the form of cash or accounts receivable) consistently exceed your ordinary current operating outflows including product (inventory purchases as required) or service purchases? If not, can they be restructured to fit the aforementioned parameters? If the answer to both questions is “no,” your business model is fatally flawed, and that must be dealt with — we’ll discuss this at another time.
If you increased your sales volume, increased your prices to customers, eliminated any idle personnel, negotiated with your suppliers, and gotten your bank loan replaced with equity, then you still may be suffering because your customers are not paying you on a timely basis, while you’re paying your vendors promptly.
If your average days to payment on your accounts receivable is 55, and your average days to payment of your current expenses is 35, that 20-day discrepancy can be killing your business, depending upon your profit margins. Sadly, you can’t pay your vendors with your receivables. There are two things to be done to eliminate that 20-day discrepancy:
1) Collect the receivables faster; and
2) Pay your vendors more slowly.
That gap between average days that your business waits to collect its receivables, and the average days its takes to pay its vendors must be reduced to zero, or to a negative number.
You can collect your receivables faster by offering some of your less creditworthy customers less credit, and giving some of your better, faster-paying customers more credit. You can offer early payment incentives or cash payment discounts. You can collect partial payments in cash. Use some imagination. Any of these approaches alone or in combination will cut that 55 days significantly if you focus on achieving this.
You might even get a line of credit up to some percentage of your “acceptable” accounts receivable, factor your receivables, or utilize single invoice financing in order to get that number down a great deal further. Often the real cost of factoring or similar arrangements is about equal to what you might sacrifice if all of your customers took advantage of a discount for paying in less than 30 days.
To eliminate turning a simple article into a doctoral dissertation, suffice it to say that slowing down payments to your vendors requires some diplomacy, some negotiation, and some creativity — but then, if you are in business in these times, you must have an abundance of creativity.
Quick, Easy Metrics:
1) Your average collection days on your receivables (it’s a weighted average) should equal or exceed your average payment days on your current bills;
2) Your average collections days on your receivables divided by your average payment days on your current bills should be equal to or (hopefully) greater than 1.0;
3) The value of all of your cash and all of your receivables divided by the amount of your current bills should always be significantly greater than 1.0 (i.e., no contribution margin). While this is not a measure of cash availability, it is a measure of your gross profit on sales. The bigger the dividend produced by this computation, the greater your basic profit margin and the greater the contribution of your sales to ultimately cover fixed overhead.
The idea is to avoid a cash crunch (assuming that your basic business concept is fundamentally sound) by collecting and hoarding as much cash as you can, and holding off on the payment of bills as long as you can. Remember: If you business is sound, a cash crunch crisis is a phenomenon only created by bad timing. And it’s quite curable.
If only Detroit were one of my Turnaround Business Clients (sigh), either the bankruptcy might have been avoided, or its method of conducting its “Municipal Business” might have been radically changed some time ago. There should have been much more oversight, checks and balances in all aspects of management, and operation, financial and forensic audits by a competent independent third party firm on a short notice basis. But then, the sad aspect of the public sector is that is by no means as accountable, or as interested in its investors (the taxpayers), as would be a simple medium-sized company.
When you combine poor accounting (and a lack of individual accountability), a lack of variance analysis, a lack of integrity in leadership, the absence of a formalized budgetary review process, the informality of fiduciary authority and a plethora of useless contracts for services and purchases that were not of benefit to the client [in a business they either call that “Other People’s Money” (OPM), which doesn’t really have to be accounted for directly if there’s enough of it (and who is keeping count as the nectar pours through the sieve? And more importantly, who knows what the total available capital for expenses and expenditures actually is?), or, in the worst case breach of fiduciary duty, fraud and embezzlement.
Goodness, if taxpayers realized that they were really shareholders, with the right to demand an accounting, a reconciliation, and an explanation of any ‘treasury leakage’ either through negligence or through political favors paid for at the expense of the populace. — DEC at 1Turnaround.
What follows is my curating and rather extensive and opinionated commentary regarding an article which I found in my inbox from Scoop.It!, a wonderful source of excellent articles and opportunities to really get a grand view of the topics which interest me, and are of crucial importance to my clients.
I am in full accord with the writer’s point of view as it concerns Detroit, specifically, and as it concerns all businesses and organizations which have fiduciary responsibilities. Sadly. election politics as well as organizational office politics tend to bring out some unsupported or unsupportable promises which ultimately will become perceived as lies. In any business or organizational structure (For-Profit and Not-For-Profit) you cannot make empty promises, as they will cost you all of your negotiating power (based largely in credibility), and possibly your career when the truth comes out.
Let’s assume that we are following a sensible business protocol, and that we are responsible to the Board, our colleagues, our employees, our customers (or constituents), our creditors and our investors. A methodical approach must be undertaken — it is sad that these politically-oriented individuals don’t examine the financial position and projections of the governments or businesses which they are trying to get the opportunity to lead prior to embarking on their campaigns.
A general rule to start with is that you cannot ever make a promise which is unconditional, especially if it is dependent upon the promises of others (grants, investments, lots of new business revenues, a technological breakthrough and the like). Make fewer promises of good and plenty, and more commitments to fixing problems at their source to ensure safety, stability and success.
Aside: Not to ridicule anyone at the federal government level, but you can’t make inferences to “getting out of debt by increasing borrowing,’ or balancing the budget and helping businesses by increasing taxes on the poorer and middle classes and reducing services to them as well!
Never make a commitment that you do not intend to keep, and that you do not have a plan (a method) to keep. Exaggerate costs and the length of estimated completion or delivery time frames – it makes it easier to be a hero.
In terms of examining, monitoring, course-correcting and maintaining or improving the enterprise (whether it is government or non-government, For-Profit or Not-For-Profit), the protocols are universal.
Of course, in the case of all-too-many governmental subdivisions and entities, there is tremendous complexity, inadequate supervision, and labyrinthine accounting, authorization and record keeping. There’s too much capital, and too many persons with access to it, without proper oversight. A large number of seemingly trivial expenses and expenditures can eventually accumulate into a cavernous loss. This waste (being kind with my choice of terminology) is taxpayer money — in private enterprise, the shareholders would be taking the company’s management to court for this type of abuse. They would be speaking of breach of trust, breach of fiduciary duty, diversion of funds, fraud and possibly embezzlement.
I believe that Detroit is the first host organism to fall victim to an epidemic , and that municipal bankruptcies will be hooping up like crocuses in early springtime. And we’ll get closer to the truth about the extent of the federal deficit and the value of the U.S. dollar, fresh off of the press. That’s a scenario for The Global Futurist Blog to paint.
But then, I’ve gotten off of my focus. Let’s return to a standard fiduciary management protocol where each individual in the chain of command or hierarchy structure is responsible — truly responsible — at every level:
1) If a responsible individual sees or suspects a problem, it must be reported immediately to the appropriate persons of supervisory authority;
2) That person of supervisory authority should follow through with vigilance and persistence to see to it that the problem is solved before it wastes any more money and before it worsens;
3) The problem must be expediently fixed, and noted as such – after all, every minute of loss is a drain on profitability and solvency;
4) If there are too many systemic problems, and the organization’s current financials as well as its proformas (always have worst-case, realistic-case forecasts handy; they should be created frequently as assumptions and conditions change; they are a powerful management tool, and an early warning system) are not looking good, senior management must gather the right experts, both from inside of the organization and from senior management’s “A” list of outside professionals, and;
5) Re-examine the organization’s entire business model in terms of S.W.O.T. analysis, critical path dependencies analysis, and possible displacement (or antiquated assumptions) analysis. Look to prune your sunk costs and nonproductive recurring costs;
Note: From this point forward in my discussion, I’ll address this issue as if the business (even if it is the business of running a municipality) were yours, and that you were the executive ultimately in charge.
6) Reconstruct the organization’s business model with the help of the assembled expert committee, create a realistic, turnaround reconstruction plan, promulgate it to all of the involved and affected individuals, as well as to all other parties doing business or trade with the organization. Let them know of the changes, what the time frames really are, what sacrifices or compromises they will have to make lest the team effort fail (Note: If you’re a charismatic, credible, strongly committed leader, you will convince every individual, from the board room down to the janitorial staff that they are each, and all, partners in the the success of the business, and that necessary sacrifices may have to made to bring stability and better results for the benefit of all). Take a serious tone, especially when asking for sacrifices and compromises. Make everyone feel like a stakeholder and an employee or an agent of help;
7) Work the new plan to the letter, diligently, faithfully and without deviation. Report to all of your “partners” frequently as results come in and new forecasts are made. Your diligence, conscientiousness and candor in terms of reporting frequency and transparency will be appreciated and might make potentially hostile parties feel more like allies in a group project and a united effort. That latter is the effect for which you should strive – it justifies the sacrifices and compromises…and to make it even more potent, be certain that the C-Suite occupants, senior executives and the directors make visible meaningful sacrifices as well. You don’t want to look like a “too-big-to-fail” company that the U.S. government just bailed out [grin];
8) Demonstrate by variance analysis (projected versus actual results) how you are actually achieving the goals set forth in your turnaround business plan, and how you have converted waste and losses to a positive, potentially distributable fund balance;
9) From that positive pool of hard-won cash, reward all of the parties who have cooperated in the effort (at a sensible level,and not just to the senior most executives and directors, but to all of the participants, sacrificers and compromisers who have made it possible. Everyone enjoys a participatory celebration of success and a feeling of having participated in a victory…everyone! The object:
Demonstrate in distributable dollars and cents that the tough cuts have paid off in terms of solvency, stability and a positive cash flow. A great leader (as opposed to a basically attired career politician) rallies his forces for a job successfully done, reminds them that their efforts need to continue, and also reviews the victorious results of the variance analysis — show them how inflows have increased and how outflows have decreased. Make them all feel like stakeholders.
10) Promise to continue on course, and to remain vigilant and practical, as well as honest and tough. Continue to restructure and turnaround the business periodically with a “no sacred cows” and a zero-based budgeting approach. These techniques and tools work.
There are all types of tools, terms and radical actions used to describe techniques, protocols or proceedings at law for businesses that are troubled, and these terms tend to be tossed around loosely in a crisis management panic mode; the most popular ones are turnarounds, restructurings, bankruptcies [actually protection pursuant to Chapter 13 of the Federal Bankruptcy Code] trustees, “Chief Restructuring Officer/Advisor” [a title which is becoming increasingly popular and that I increasingly wear], bulk asset transfers, immediate cutbacks (or summary firings, usually of the wrong individuals).
The first step to undertake if you are a concerned party – a possible litigant, a person or fund who/which stands to lose, even an employee labor organization (formal or otherwise) which has a vested [no pun intended] interested in being able to permit its members to provide for their families’ basic needs. The air is filled with tension and fear. Clear thought is rare.
Before getting to the Checklist, be certain to do the following, as an involved person and as a key decision maker:
1) Think things through quietly and with complete focus;
2) Engage in financial triage – prioritize — assess the possible extent of the damage (be pessimistic in your estimates), and what five measure must immediately be taken to stop the situation from worsening. Don’t look at cause and effect or shaming and blaming; you haven’t the luxury of either time or immaturity;
3) Do not take action yet;
4) Assemble your core team or “kitchen cabinet” an advise them, in confidence, that a crisis is has occurred (and is still occurring);
5) Arrange an emergency meeting with your attorneys and accountants, as well as your core team. Then explain the situation in plain, noninflammatory language, appoint or hire your Chief Restructuring Officer and have him or her chair the meeting, wherein you review the points or topics set forth hereunder:
Conglomeration Or Other Business Combinations Of Expedience
The Chief Restructuring Officer now has to coordinate the efforts of the team for optimum, timely performance and corrective action.
As always, thank you for reading me, and for turning around (deliberate, contrived but funny choice of term) and sharing my articles with your colleagues, connections and topical groups through your social media platforms using your ever-expanding arsenal of social media sharing tools.
In any business there are certain dependencies which may become, over time, a threat to the survival of the organization. A simple example is in the case of any source which has become your sole supplier for any product or service. Of course, the extent of the threat will vary in direct proportion to the significance of the role played by that sole supplier — your “default source.”
Several areas of exposure are cursorily described below:
1) Your supplier increases prices to your company for one or more reasons — perhaps he is feeling particularly powerful; perhaps his cost of producing the goods or rendering the service has increased, and he is passing this increase along to you; perhaps he has lost another one of his most important customers and is trying to cover the revenue loss by overcharging you – at worst, he may be trying to weaken your company to the point that you become an easier, more pliable takeover target;
2) Your supplier simply cannot produce timely enough in or in sufficient quantity to service your needs — this may endanger your company and can cause problems with some of your most important customers… what if your supplier’s business is failing? There is the chance that he can bring your company down with his;
3) Your supplier’s quality of production or of service is deteriorating, slowly, but surely.
If you have a dangerous interdependency, your fate may rest with that of your favorite supplier. And your supplier’s fate is not necessarily subject to your control or your needs. There are too many exogenous factors at play.
Having lived through this scenario on numerous client engagements, I would gently suggest to you that you always have several alternative sources of supply, and that you keep them “warm” by ordering from them on a ’round robin’ or some other equitably and sensibly excusable (plausible) basis. The only good exclusive source of supply is the one that you happen to own; and tha, by itself, if still no guarantee.
In words which bring to mind the late Johnny Cochran, attorney cum minimalist poet, “Diversify your source of supply.” Amen.