Let’s start with a story illustrating how supply chain security irrevocably altered the fortunes of a company that was
This story is in
Think of the time before Iphone and Samsung phones came along and conquered the supply chains of the industry, and the minds of the users. I tell that story elsewhere.
Here we focus on the simpler times.
A seemingly trivial random event, on a fateful day in March 2000, changed the destiny of the industry.
Both Nokia, and Ericcson, the stalwarts in the mobile phone industry at that time, were equally impacted by the same event – a
Both Nokia and Ericsson experienced business disruption to an equal extent as a result.
More importantly, the manufacturing capacity of the plant was damaged and it was difficult to estimate the time for repairs.
This is where the events take an interesting turn. Not everyone thinks of supply chain security beyond the physical security of goods in transit. For
In fact, all the security experts who have no background in supply chain security fail on this count – they never think deep enough in terms of the layers of
Nokia had invested months, if not years, in creating and perfecting a robust and responsive supply chain security, while Ericsson’s business network was relatively a middle-of-the-line affair that worked well when things were good.
Ericcson staff were content to go with the flow, without too much care and worry about this part of supply chain security.
After the fire, Nokia was able to see the full impact of the chip shortage on its own business, as well as the entire industry with a lot more clarity than Ericsson, and even Philips.
Moving quickly, it activated other parts of its business network to shore up supplies, to redesign some of the chips to manufacture them in other plants, and to take pre-emptive steps in the network.
Ericsson let the situation evolve at its own pace and made decisions more reactively.
The resulting gain in profitability and market share for Nokia and the loss of these for Ericsson tipped the balance of the industry to an extent where within a few years Nokia pulled far ahead of the Ericsson which never caught up with its erstwhile equal rival.
It does have some anecdotal entertainment value.
But the moral value is even higher. Here are some things to ponder:
I could easily turn this above 7 point list into a large magazine article (listicle), but my readership is wise enough to connect the dots themselves, and do not need
Given the quality of my readership – I have created a
If you really want to pay
I came across a startling statistics which prompted a new line of thinking that I wanted to share – hence this article.
Consider these statistics – over 70% of professionals would have worked as a consultant, or will work as a consultant, at some point in their careers.
In other words, if you are reading this article, then just look around you, and include people up to 2 rungs below, and up to 5 rungs above you – and think about all those people. About 70% of them have either been a consultant at some point in their
No wonder that with so many consultants around, today, more than ever before, it is extremely difficult to make a choice of the right consultant for your project.
So, how do you make sure that you choose the right consultant for the job at hand?
Before we go any any further…
Let us start with making an assumption that you have a project, and that you have a choice. That mean that no one is twisting your arm to hire the nephew of the chairman, or best friend of the CEO. And that the body of work is not a
Now, if you indeed have a project, and a choice – you will be in a conundrum.
When you go to your boss, or to whoever you go to for funding for the consultant, guess what is the silent CD running inside their brain?
“Are you going to waste my (company) money on a no good person/company (or a friend of yours), and make me look bad, OR, are you going to find someone who will visibly return 10 times the value of what you pay him out my budget, and make me look good?”
A mediocre consulting result does not cut it any more, even in low-performance companies.
You may not believe this, but most good consulting firms also want you to do exactly the same. Most good consulting companies have more work enquiries than they can actually fulfil – read this blog post if you want to know more about the view from the other side of the table. As a bonus, you will also learn how to get the most out of your chosen management consultants, while spending the least on them.
This post will focus on how to choose the best management consultants for the job you have at hand. I could actually give you a step by step formula, but it will be a lot easier to understand if I give you a list of the four most common mistakes, and the wrong things so many people focus on.
Once you remove all those common mistakes and wrong things to focus on, all that will be left is a single thing that you should focus on. That will make things so much more crystal clear than any step-by-step set of guidelines.
So what are the common mistakes that people make when choosing the right management consultants for their projects?
I say this when our longest stretch of client ran for over 13 years because every project is a new undertaking. I kept reminding our teams that we are only as good as our most recent results. No one should have the luxury of resting on their laurels, their brand, or their accident of birth.
From a client perspective, there is a slight edge when they do not have to ‘educate’ a consulting firm in their company fundamentals. Yet good consultants come up to speed very
Many firms regularly tout their experience of over a century in your industry, or in management consulting in general. This sounds enticing. Yet, many of these very same firms struggle on their projects because the senior partners lack knowledge and time, and the junior staff lack direction. your chance of getting good results just based on long established history of the firms is no better than 50-50.
Brand is a powerful indicator of quality, and no doubt ensures a certain minimum performance in consulting. But, in this age of disruption and specialisation, does it guarantee the best possible outcomes for your projects.
If it was my money, I would do careful due diligence and put it a world class specialist who is top of his/her field and work closely with them, rather than on a vapid branded team who takes over the game and the glory, and hope for the best.
By all means ask after these – ask for projects history, testimonials and clients in and outside the industry. But know this – none of them is a guarantee that your project will succeed.
I did not want to set out to make an exhaustive list. You could add many other things to the list above – which will be either variations or extensions of the four themes above. And, when you read my two main criteria below, you will agree that only these considerations should decide the right consulting firm for each project.
These criteria are simple:
The first point is making sure that the expertise of the individual is up to the mark. In this era of internet
The second point is making sure of their actual availability for your project. The only thing you are leaving to chance after covering these two points is the actual goodwill and best effort of the person. But, it will really be a low life who will take your money, stay two days a week exclusively working on a project and still not expend full goodwill and best effort on the project. Such a person will not survive for too long as a management consultant, or a world-class expert anyway.
In another blog, I have written about How To Get The Most Out Of Your Management Consultants While Spending The Least On Them?
One of the common problems cited by the boards and senior management is that the consultants they hire do not understand their unique challenges.
This problem applies even more to large cookie cutter approach based consulting houses with thousands of consultants where the guys who have the knowledge are too senior (and too involved in their company’s internal politics) to focus on your problems, and the junior people who have all the time have little knowledge or experience.
Time and time again I hear clients complaining about this problem, and their aversion to teaching very expensive junior consultants everything about their own business, only to have it all regurgitated back to them in a report.
That is why our approach works – we focus knowledge on problems.
Let me give an example.
I was recently asked a question about the Key Challenges in the Supply Chain the Upstream Oil & Gas Companies Face?
See below my answer, and understand how unique the challenges in this industry are. All the generic supply chain challenges fade away in comparison.
My answer below:
I am going to assume that you are looking for challenges that are unique to this supply chain, and not generic challenges faced by all supply chains. I am also assuming that the boundaries of upstream go till the refinery and beyond that is the downstream oil and gas industry.
In the exploration stage, the investments are big and the probability of success is low. Exploration equipment, seismic survey vessels and equipment is very expensive. Today, it is also very data intensive work. You must procure contracts for equipment at the best possible rates, and keep them productive at a very high level of utilisation and availability. Getting parts to remote locations where exploration is underway and machinery or vessel is broken down is often a big challenge. The machinery itself is highly sensitive and must be treated with a lot of care.
Booms and busts are common in these markets due to oil price fluctuations. When the oil price is high all producers are rich and wants to explore and make more ‘finds’, and increase their proven reserves. When the prices are down they give up on exploration and a lot of equipment is ‘parked.’ MAnaging the economic cycle of the industry is one of the biggest challenges as a result.
Moving from exploration to pre-production, and then on to production has its own set of challenges. Consortiums of some of the largest companies on earth are involved in these processes. Co-ordinating these large companies’ activities is never a simple affair.
The business network becomes very complicated. Outsourcing is very common, and sometimes badly managed. I wrote the story of Deepwater horizon in my book Outsourcing 3.0 | Outperform | Outsource | Outprofit – Vivek Sood and will reproduce some parts below to give you a sense of the complications:
Deepwater Horizon, a semi-submersible oilrig owned by Transocean was a dynamically positioned drill rig of this type of vessel. A highly acclaimed rig for its numerous deepwater successes, it was deployed off the shore of Louisiana at an approximate cost of $1 Million per day to drill an exploratory well for British Petroleum (BP) who owned the exploratory rights for the block it jointly owned with two other unrelated parties. BP had chartered the oil rig from its owners, the Swiss entity, Transocean. Transocean operated this rig through a subsidiary – Triton Asset Leasing also based in Switzerland, although the rig carried a Marshall Island flag of convenience.
5-STAR Business Networks come together in many forms
As the exploratory well it was digging nearly came to completion, on 20 April 2010 Deepwater Horizon became front page news on nearly every newspaper on earth. The incident was reported in a press release by Transocean  as follows:
“Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a fire onboard its semisubmersible drilling rig Deepwater Horizon. The incident occurred April 20, 2010 at approximately 10:00 p.m. central time in the United States Gulf of Mexico. The rig was located approximately 41 miles offshore Louisiana on Mississippi Canyon block 252.”
“Transocean’s Emergency and Family Response Teams are working with the U.S. Coast Guard and lease operator BP Exploration & Production, Inc. to care for all rig personnel and search for missing rig personnel. A substantial majority of the 126 member crew is safe but some crew members remain unaccounted for at this time. Injured personnel are receiving medical treatment as necessary. The names and hometowns of injured persons are being withheld until family members can be notified.”
The details of the incident, as per the figures from popular mechanics  were attention-grabbing:
4.9 million: Barrels of oil (205.8 million gallons) leaked from the Deepwater Horizon well, about half the amount of crude oil the U.S. imports per day
19: Times more oil leaked from Deepwater Horizon than spilled from the Exxon Valdez in 1989 (10.8 million gallons)
62,000: Barrels leaking per day when the wellhead first broke, roughly the amount of oil consumed in Delaware each day
53,000: Barrels leaking per day when the well was capped on July 15, roughly the amount of oil consumed in Rhode Island each day
397.7 million: Dollars’ worth of the oil spilled at current market prices ($81.17 per barrel)
665: Miles of coastline contaminated by oil
The resulting investigation to establish the causality, contributing factors and liability will fill up a book many times the size of the one you are holding.
Outsourcing is a fact of life in business today
We will however, briefly focus on three relevant parties – BP, Transocean and Halliburton for the sake of discussion relevant to this Chapter – on modularized outsourcing. BP had outsourced the task of drilling to Transocean. At the same time Transocean had bought the Blowout preventer from Cameron International Corporation. Whether it can be argued that BP or Transocean had outsourced the task of Blow-out Prevention (BOP) to Cameron is not certain; neither is the liability on malfunction of the blowout preventer because of allegations of lack of proper maintenance. Cameron agreed to settle all claims related with the Deepwater Horizon tragedy with BP for $250M – without any admission of guilt. The situation with Halliburton is still unclear. As per a CNN news-report :
BP and Halliburton sued each other in April 2011 claiming each is to blame for the deadly explosion on the Deepwater Horizon rig and resulting disastrous oil leak. Halliburton was in charge of cementing the Macondo well and claims that its contract with BP indemnifies (releases) Halliburton of any legal action resulting from its work as a contractor…
In a response filed Sunday, BP asserted that “maritime law prohibits indemnification for gross negligence.”
As part of that four-page filing, BP reiterated that it was seeking to recover from Halliburton “the amount of costs and expenses incurred by BP to clean up and remediate the oil spill.” BP has estimated in the past that the total cost will be around $42 billion, and by the end of November 2011 the oil company it has paid out or agreed to pay out $21.7 billion to affected individuals, companies and governments around the Gulf.
In an e-mail to CNN, Halliburton spokesperson Beverly Stafford said “Halliburton stands firm that we are indemnified by BP against losses resulting from the Macondo incident.”
Outsourcing tasks does not transfer responsibility for those tasks
President Obama quipped in an interview with CNN  On May 14, 2010 “you had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else…The American people could not have been impressed with that display, and I certainly wasn’t.” The legal wrangling continues and will take considerable time and expense to resolve. We need not go into the gory details of dollar numbers too big to even fully comprehend, but from our perspective in this Chapter three key points stand out:
People often wonder where the best opportunities for start-ups are. Supply Chain Security space is getting a lot of attention in this regard.
In fact, just today someone asked me on a popular platform about opportunities for start-ups in Supply Chain Security space . They wonder whether these were more in software, or consulting arena.
Here is my view:
It would be neither of those two. Rather it will be a combination of hardware and software – initial application know-how will have to come from the user side.
Let me explain.
Post-2001 (911) the world of supply chain security has changed dramatically. The regulatory environment has evolved dramatically (as we explain in my report Global Supply Chain Group’s SUPPLY CHAIN SECURITY REPORT). But that is not the only change. Almost everything – customer innocence, political and cultural norms, technology and particularly technology – has evolved dramatically as is explained in this report.
Most importantly – the threat perception has evolved considerably. Look at the diagram below which summarises the supply chain threats over the decades:
So far, this is common sense representation of common knowledge. What is not common knowledge is how technology has evolved in response to these trends.
There are at least 6 technological streams which find applications in supply chain security. You will find them in the report, or in this survey on supply chain security – Supply Chain Security Survey
But the most interesting insight in the report is that almost all the opportunities offered are in combinations of hardware, software and some know-how in the application.
That is not to say that pure-play companies do not exist. In fact, many companies have evolved to products with a considerable component of application know-how. In mature products that is always going to be the case.
But, for a start-up, a combination of hardware, software and some application know-how is the best bet
Yes, everybody – from Steve Jobs (when he was alive) to the biggest Private Equities – uses management consultants. In fact, it will be safe to say that if you are not using management consultants, you may not be getting anywhere.
That is not to say that everyone who is using management consultants is making great progress.
The BIG difference is that those who get the right advice at the right time in the right manner, get the best value (for their companies, and for themselves).
In this piece, I am not going to answer who is the right consultant for you, and how to choose one. That is probably a topic for another blog.
The key question that I will address here is really the one on top of this page.
So, let us just start with two assumptions:
Now the burning question is – How To Get The Most Out of Your Management Consultants While Spending The Least On Them?
Similar to all other industries, the value chain in management consulting industry is fast unraveling. Most clients are much more sophisticated than 2-3 decades ago, and do not buy into the mystique of the brand.
A whole bunch of ex-consultants from the top-tier brands are free
Many of them have created networks which allow them to bring the best of top-tier brands at a fraction of the price.
In this context here are FIVE suggestions, in
Many top boutique consultancies have by now amassed such a vast repertoire of expertise in their own narrow area that they could be rightly named as world’s best in that area of expertise. They have distilled and condensed this expertise into book/s which are always worth way more than the price charged for them, simply because they offer a lifetime of experience in a few hours worth of reading.
Sure, sometimes key actionable details might be held back, but they are easy to discern from the general gist of the material. Because many people keep the books to a level of the lowest common denominator, some of them can also be too simplistic, and that is the reason for moving on the step 2.
While books may sometimes be diluted to target the lowest common denominator, reports and e-courses are now being produced to the highest professional level that these boutiques are capable of. Of course, you still have to pick the right consultant, but chances are that you can ask them to sell you their methodology, or gist of expertise in the form of an e-course, or report for a very small fraction of price that they would charge to perform the service itself.
Now you may think why would a consulting firm do this? Will this not cannibalise their business model?
While this possibility does exist, most good boutiques almost always have more project work than what they would like to do. After all they are the global subject matter experts in this area. So, how do they avoid doing the same thing over and over again? You are right, by putting their methodology down as a series of steps and letting their potential clients follow the same steps that they would have taken.
Of course, there is always the danger that the client teams would not be able to do it all by themselves. But, for overcoming that problem, see point #5.
Many boards, and management teams are not entirely convinced that the project is required. Frequently, the members have vastly different opinions, and do not have time to go through books, or reports – even if these are sent to them.
As a starting point, to bring everyone on the same page it is highly useful to have a presentation from a subject matter expert, and, a discussion subsequent to it. This offers an opportunity to get one of the the world’s best experts
Subsequent action plans, if any, can be formulated at the end of this discussion where all these, and many other options, might be put on the table.
This is, by far, the best way to start an engagement on a positive note.
A much more engaging start is by conducting a full day, or two day workshop. In many cases, this may be the only engagement you need, whereby bulk of the knowledge transfer happens during the workshop and your team/s are well equipped to handle the project subsequent to the workshop.
Of course, a workshop costs much more than a board presentation, and your team may not yet be fully ready for it – especially if the board or senior management is still not on the same page. Yet, the only way to cover the topic in enough detail to make a dent into it is by doing an intense workshop.
None of the above four ways of engaging precludes you from coming up with an arrangement where your team has access to the expertise of your preferred consultant when they most need it.
Most top boutique owners and subject matter experts have tens of thousands of hours of expertise with hundreds (or even thousands) of similar situations.
For this reason, they are able to quickly size up the circumstances and, similar to a good lawyer, doctor, or any other professional, come up with the best course of action in the situation based on a handful of possible root causes. They can suggest the hypotheses, how to test them, what to do after testing, and how to formulate action plans based on the test results.
In other words, while they may not yet know exactly what to do, they will easily know how to find our exactly what to do.
After that, who is the best team to carry out the action can be determined independently, or with their help.
As one highly experienced client told me nearly two decades ago:
This expertise is really the only thing we want from consultants. We hate to pay several hundreds of dollars, per hour of time, for novices fresh out of college. We detest having to fly the novices first
class,and pay for super luxury hotels for their stay. But we put up with all that, just to access few hours of expertise of the top partners.
With the disruption in the consulting business model – you do not have to put up with all these
Just ask for exactly what you want, and pay for it. It is that simple.
Start of the year is always a memorable occasion – full of joy and hope. It is also the time for new intentions, new hopes, and new habits.
Like many families, we use the end of the year break to set the tone for the coming year – individually, and as a family.
That is the best way I know of sustaining momentum in Global Supply Chain Group for the last 20 years, as well as for physical, intellectual and skills development of three young boys growing up in a culture of entitlement.
One of my sons, who is studying a very tough engineering course at a highly competitive university made an extremely good point in a conversation with me. We were discussing how we can both achieve a breakthrough far above what we achieved last year – he in his study results, and I in my golf results.
The reason it is worth repeating here is because we have both gone though a year of effort to achieve these respective breakthroughs, with not enough success.
We were reviewing our methods and efforts from last year when he commented that if do the same things, in the same way, all we can get is the same result.
My thoughts immediately turned a number of my clients, who always complain that they have tried everything to get a breakthrough in their supply chain and business, and gotten little results.
Exactly the same situation is applicable there. I summarise the situation in the following diagram:
Now that he has made this observation, we are slightly further ahead on the curve in the last 4 days. We know that we need better methods, not just work harder.
But now comes the hard part – I am not a golf expert, and he is not an engineering expert. In fact, I touched my first golf club only after the age of 35 or so. To find methods that will take my golf handicap from 13 to 4 is not easy.
It is not that there are not enough people each with their own methods. It is just that I don’t know which one of them will work for me. That applies to a regular golf-pro lesson too – I tried those one year.
I want to solicit the help of my well-wishers, so they can suggest some methods that might work. I have to find my own way through a maze of methods to choose the ones most likely to work for me.
Then I have to apply the chosen method – till it is clear that they are effective, or not. Then, I have to incorporate them in my
My sons’ challenges are even bigger. Luckily, I am not studying engineering in UNSW, or for HSC in a selective school. Yet, I am sure they will measure up to their own challenges. That is the nature of these things.
although I am writing this blog post to note down my precise thoughts just for a handful of people, it might be useful for a whole lot of other people too. That is why I am making it public.
This post is written in response to a frequently asked question that I face – and having no FAQ section in our website, this will have to act as a substitute.
Somehow people have no qualms paying nearly double of my rate (including support staff) for a large branded consultancy service – but resent a much lower rate when it comes from a much more competent consultant without a famous multi-century brand.
However, the conversation always starts as a justification for the hourly rate without any comparison points.
I recall several l years ago a similar conversation where I was challenged to justify the rates by a highly (extremely) competent senior executive. He, rightly, pointed out that he could do almost everything that I could do, so why would he need me.
But then, I pointed out that today’s executives are working at a pace which is akin to driving at 150 km/h (90 mph) on an extremely busy and rowdy highway. There are vehicles large and small rushing at breakneck speed from all possible directions. people are barely keeping to their lanes and easily cutting each other off. Risks of accident are extremely high. Those who meet with an accident are left on wayside. Those who make it to the destination, barely have time to recuperate before they start on another project.
No one has time to look in the blind spots. If you slow down you are overtaken and left behind – never to catch up again. Others are ready to jump into your seat at a moment’s notice. And, if they are not as competent as you – it does not matter.
What you need is an early warning radar system that assists you to plot your way through the maze around you – taking all the relevant data points into consideration.
You pay the price for collision avoidance, for arriving safely at your destination with your sanity intact, and for enjoying the journey to a large extent.
After some thought, my friend on the other side added his keen wisdom to the conversation.
He said (and I paraphrase) “for a moment I was disturbed by the thought that if they are not as competent as me, it does not matter. But then I realised it is true, because branded mega-consultancies act a airbags, or other bags, of some sort. So my main decision now is whether I want preventive care, or palliative care!”
And, that size or brand image had only a small impact on the style of consulting practiced by a person.
In the end, it all came down to personal ethos. And, that should be the most important consideration when you hire a management consultant.
“What is success? How do you define it in your current role?”
It was a simple question.
I asked this question of the room in general. I expected multiple replies from the all the executives in the room.
Then, I realised that none would be forthcoming.
A number of cultural factors were at play. The boss was in the room. No one wanted to be seen to be on the wrong track.
I had only 45 minutes to deliver some breakthrough insights to the group. Many people had flown in for the one day conference from distant locations.
My help had been enlisted by the ‘boss’ to get his team to lift the game. I better deliver what I had signed up for.
I had prepared my keynote presentation. The facts, the figures, the frameworks all stacked up. It could all be neatly delivered – well enough to justify my fees for the speech.
But, the audience were simply too ‘disengaged’ due to presence of the ‘boss’. Obviously, I was not fully aware of this dynamic – or, I would have thought twice about the engagement. Life is too short to take assignments with no probability of success.
Yet, there is always a way to succeed in every situation. Especially, if we think broad and deep.
But, the time was running out. I had to think quick. I had to think on my feet. Was it possible to send the ‘boss’ out of the room?
Would it have been possible to negotiate that he stay out of the room in the first place? No.
Then, it would be impossible to send the ‘boss’ out of the room.
Then, what else could be done? What was the right way to proceed?
I decided to change tack on a short notice.
I asked the audience to divide themselves into groups of 8 individuals and introduced a simple supply chain game. I improvised some gaming aids.
The rules were very simple to understand the execute. Each group was to play the game three times, and note down the results.
I asked for volunteers to come up and share their experiences from the game. There were many enthusiastic volunteers. They even linked the learnings to their work. They saw things that no one else did. Their were ecstatic by the end of the gaming session – and not just from the games.
I asked three group leaders, with one key point each, to stay on the stage. They expanded on their key points. They talked about why these points were important to their business. They talked about what changes could be made to the business from next day itself. They were enthusiastic, knowledgeable and on the right track. They started making points that linked up with my presentation.
I flicked my presentation to the last slide – where these same three points summarised the entire presentation.
The group leaders had already delivered what I had signed up to do. There was a thundering applause from rest of the audience.
I was at a Melbourne Cup luncheon yesterday, and someone asked me why I do not write about Bitcoin.
On my mobile, I showed them a paragraph from my book THE 5-STAR BUSINESS NETWORK written in 2013, where I talk about the emerging Digital Currency Networks.
But the truth is that given the attention Bitcoin has garnered over the past 5 years – I have barely written anything more on it. During the period the price of Bitcoin has been very volatile, and every move has been accompanied with millions of words written by the mainstream press as well as the more respected blog writers.
Take a look at the 5-year graph below:
The value of a single bitcoin rose from nearly 0 in 2016 to over 25,000 AUD in late 2017. Since then it has been very volatile, now relatively steady in the range around AUD 9,000 mark.
Lots of people came on TV and explained all the reasons why it was where it was that point in time.
Braver people made predictions too. Some even proved to be right for a period of time. Some of those reasons sounded even plausible.
Many people asked me for my opinion, and I always referred them to Enron. I explained that around the start of the century when Enron was in a similar place, people in parties would ask my view on it.
Enron was the darling of the quick buck brigade at that time. Some people even made money on it. Much more money that anyone would ever make by flipping houses, or companies.
But there were at least two big reasons I did not offer an opinion:
Many friends who knew that I scored the only 100% mark ever in the sloggiest finance course in my MBA would not believe either of those too reasons. And, they would press me for an opinion. Perhaps they had money riding on it.
Some, the wiser lot, even took my unwillingness and inability to offer a point of view as a sign, and made the decision which turned out to be right for them. A few even thanked me. Yet, I claim no credit for saving them a buck, or two.
I was merely stating a fact –
I Don’t Understand It.
And, that is all I have to say about the Bitcoin.
If you want to know about more things that I do not understand – feel free to offer suggestions.
Boards always ask the hardest questions. That is why these gentlemen (and ladies) get to be on the boards. They know just the right questions to ask at the right moment. Towards the end of this blog I will relate my recent experience with one such question. They may not know the answer, but they know that they are facing fundamental disruption.
And, they take their roles very seriously. Sometimes, more so than the management.
On one hand, they can massage the quarterly (or monthly, or annual) numbers and pretend that the results are much better than the actual results. A temporary high can be achieved month after month, quarter after quarter, year after year till the fiction can be no longer upheld.
Then you end up losing a tremendous part of your market value in a short period of time. While this story is all too common, the most usual alternative is not pretty either – read the story I recount in this blog post.
So why do many companies resort to massaging numbers? Are they not aware of the consequences? Or, are they just hoping to kick the can down the road till the next market explosion?
One of the reasons is clearly hard nature of the other side of the road.
But clearly thinking is not enough. There are already enough strategists who have done nothing else but thinking (and writing what they think).
If you are wondering why so many of strategists’ reports just gather dust on office shelves – the real answer is simple. Lack of confidence.
Confidence in the findings, as well as, in the ability to implement the recommendations. After all, by now we have a generation of advisers who have made nothing but slides all their lives. Most practitioners have serious issues with that.
Most strategies fail to foster confidence because they are based on industrial age thinking. You cannot fault the managers. Even the best business schools continue to teach outdated industrial age thinking today. And, in the rough and tumble of the real world, very few managers have time to think and work out that they have been taught an outdated business thinking process.
I have written many blogs on the difference between the industrial age thinking and the information age thinking, so I will not repeat entire blog posts here. But I will put in one simple slide to highlight the difference:
So while leaders talk about disruption, there actions remain embedded in traditional thinking. Fresh thinking is even harder than traditional thinking.
Not just that, there is a new kind of leader that is required for disruption. For strategists data is everything – it allows them to focus on the select few things that matter.
Supply Chain CEOs think differently. They are able to focus on the entire B2B network simultaneously – both on the demand side, and the supply side. And they know which levers to pull when to make them match in real time. My book THE 5-STAR BUSINESS NETWORK covers the nitty gritty in a great deal of detail. But here are the five key levers in a nutshell.
My next book THE SUPPLY CHAIN CEO will cover scores of case studies and practical examples of the difference, and how you can apply these techniques in your company.
Before, I stop penning this blog, let me highlight the question that the board asked. The question was – Why can’t we do both the things together?
It is a great question, and I am still thinking of the answer.