Do you see the risks in your path?

do you know the risks on the road?It was another rainy day, like many at this time of the year. And as you might expect, there were a number of car accidents on the road. This particular point in the highway is a trouble spot. The road inclines and bends to the right to weave around the hills. Given the design, the water flows rapidly across the left lane in a way that causes hydroplaning at times. I drive this path often and know to watch for it. But not everyone does. Today, there was a pretty significant accident in this spot.

In business, there are many risks in the road ahead. Sometimes you know to watch for them, because you have been down the road before. Other times, you may be on a road you have not yet traveled. How are you watching for the risks ahead to make sure you are able to safely navigate them?

The Song Remembers When

Remember whenMore than 20 years ago, Trisha Yearwood had a popular song that focused on how songs can take you back to a moment in time. I’ve been thinking about it over the last few weeks as situations or phrases have triggered conversations of the past. A chat with a mentor, a key risk in a company that had a big lesson learned and approaches to business that ebb and flow depending upon the time. And while Trisha’s song was about a relationship, the message can be broadly applied – certain situations can quickly take you back in time.

The thing is, many times memories reside with a person. They become embedded in the fabric of their experiences and help shape them into who they are. The challenge in a business context is taking those learnings and embedding them in the fabric of the organization so the business becomes a learning organization and can take those prior experiences and apply them to similar situations today. Companies that do this well create a culture that allows for quick decision-making, but has these experiences in mind. They stay away from heavy bureaucracy and cumbersome processes. How have you created a learning culture in your organization?

Trust, but Verify

trust but verifyThe topic of trust comes up regularly in conversations, usually by someone who feels they don’t have enough latitude or autonomy in their job. Many times the person feels micromanaged. And in speaking with their supervisor, the perspective is the person wants complete autonomy without having to report status of their work. Both are equally valid perspectives. The challenge is finding the balance where both parties feel their needs are being met.

When thinking about this topic, a quick search of the internet revealed the quote was regularly attributed to Reagan when dealing with the Russians during the cold war. Relations at work shouldn’t be as tense as US relations with Russia during the cold war. Finding common ground through conversations about what each person needs and the importance of having free flowing information to manage the business can be enlightening. How do you trust, but verify?

Is finance to blame when a business struggles?

finance problemsWalking around a business can tell you a lot. Are people focused and moving with a sense of urgency? How is the safety record? Are a lot of people getting hurt? Are there clear goals and objectives posted on the walls? Do the operations look efficient or are there a lot of extra steps that don’t seem value added? You don’t have to have a sheet of paper with numbers to know. A strong management team will know if the business is operating at its potential or not.

So, when you hear that the reason a company is doing poorly is because the finance team isn’t functioning properly, it’s time to take out the BS detector and start challenging the excuses.

Yes, finance has a critical role in the success or failure of a company. If it is not functioning well, there are certainly a number of issues being missed in the company. But a poorly run finance department is not the root cause of a business’ problems. Rather, it is a symptom. So when you hear this commentary, dig deeper and find out what is really going on. Bigger problems lie underneath.

How safe are you?

how safe are youThere it was, rolling down the freeway on the top of a flatbed truck. A silver, concave hunk of metal that used to be a minivan. The wheels were turned in and the driver’s door and seat were pushed in to the middle of the vehicle. Whatever happened, it was clearly serious and hopefully one that the passengers survived.

This sight was still in my mind a few days later when speaking with someone about driving and the illusion of control. As much as you do to be safe, at times it is impossible to avoid the unsafe impact of others.

In business safety, programs are designed so that all people are focused on being safe, not only individually, but collectively. The hallmark of a truly successful program is creating a culture that stays with people not only at work, but at home. How are you creating an environment that creates a culture of safety?

The Perfect Storm or the Last Straw

perfect storm or last strawI was recently in conversation with a group of folks talking about a business that was struggling financially. One of the folks commented that the company was experiencing a perfect storm of events, the last of which was a downturn in the market. And while the comment seemed to resonate with people in the moment, it wasn’t actually the case. There weren’t several events happening at the same time that caused the issue, rather the market downturn was the last straw.

It is important to understand the difference between a perfect storm and the last straw. In business planning, it is difficult to plan for a perfect storm- it is an unexpected and difficult to predict scenario of multiple independent events that happen at the same time, so developing a response in advance is nearly impossible. The last straw, on the other hand, is possible to plan for if management is actively looking at the company’s risk profile, cost structure and market presence. How are you doing at looking at the risk in your business and avoiding the last straw?

Where do you fall on the cash management spectrum?

cash managementI was on a call recently and the focus was cash, my favorite topic! We were talking about how much is the right amount to have on hand, looking forward at investments in the business, etc. Then, one person said: cash is either focused on in businesses that are in dire straights or high performing businesses. It was a great comment! Companies tend to focus on how much cash is on hand when they are about to run out and manage receipts and disbursements closely. On the other end of the spectrum for a very different reason, cash is managed daily to maximize the cash flow in the business.

I’ve favored the daily cash flow report. If distributed to key managers and key personnel, people become engaged in increasing how much cash is generated in the business. Conversations arise about significant expenditures and how much inventory is needed. I’ve seen people in different parts of the business work more closely together because they understand the interconnections in the business. At the end of the day, everything turns into cash. Where do you fall on the cash management spectrum?

Risk Can Be A Good Thing

risk measurement and managementMany years ago, I worked with a man who said that people misunderstand risk. His perspective was risk is a variable – it can be a differentiator that creates tremendous value, or if not managed, can make things go very wrong in your business.

I’ve adopted his perspective over the years. And he is right. The critical factors are deeply understanding the nature of the risk, how it can be managed and if you have the capabilities to manage it or someone else is better off doing with that role. If you can’t or don’t have a perspective on what the entirety of the risk is, don’t take it on.

Successful businesses and people understand this. They take on risks that they have the ability to manage, but carefully evaluate those they don’t so as to not risk the entire ship if it doesn’t go the way they expect. Do you have a good grasp of the risks in your business and how to manage them?

Are you missing sales opportunities?

missed salesI love Starbucks. Yes, I’ve fallen into the wide swath of followers that pop in on a regular basis. The product is always consistent and I know that anywhere in the world, I can count on it. But, I’ve been surprised lately by how early in the day they run out of food. I regularly frequent five different locations and have found at each location the salads (as well as all fresh items) ran out starting at 2:00 and over a period of weeks worked down to stock outs by 9:00 am. I’ve inquired at each store about this and all tell me they regularly run out of food early in the day, leaving many like me to search for lunch (or other food options) elsewhere. Wow! What a missed opportunity.

That got me to thinking about why this is happening. Is it lack of understanding of the true demand of the product? Does anyone look at what time of day food runs out? Surely, the cost of goods potentially not sold is so minor in comparison to the number of sales they are missing. Is there a supply chain problem somewhere (the situation became a supplier issue with no fresh food for a week)? I don’t really know, but as a customer, I’m frequently disappointed. So, how are you making sure you aren’t missing opportunities to satisfy the demand for your product? Do you have mechanisms in place to understand what your customers want and when? Do you have a supply chain that works and can seamlessly address any supplier failures? How do you not miss that sale?

Rushing Things

rushing thingsI was sitting at a red light waiting for it to turn green. Just as it was about to turn, a young man on a skateboard came flying into the intersection. He clearly didn’t want to wait and was moving quickly. As the light turned green, he flipped the skateboard over and rolled across the intersection. Luckily he got up unharmed. Everyone at the intersection was paying attention and didn’t move when the light turned green. Disaster averted.

But that’s not always the case. We have all had times when in haste to get something done, the results were less than optimal. Rushing can lead to setting sites on the finish line – like crossing the street, but not recognizing the hazards around. There is a difference between moving quickly and deliberately and rushing. The difference is that risks are identified and mitigated. Are you moving quickly and deliberately or are you rushing things?