I'll Never Do That Again!
Monday, November 01, 2010
by Bill Dorman CMC
Jim Ayers CMC, wrote a recent article
about strategy and the execution gap that reminded me of a potential consulting
assignment that seemed too good to be true – and turns out it was.
A former client, a small
optical manufacturing company, phoned and told us to quickly put together my
firm’s usual proposal and send it ASAP.
He needed a Strategic Plan (SP) to serve as supporting documentation for
new bank funding. He said not to spend
too much time on the proposal since he would put any resources at our disposal
to flush out the details and that we would work together to put the plan on
An overnight check for
advance payment arrived and we made plans to visit client, discuss the process
and gather information from all the business managers. All the data looked good and projections of
growth were about 15% for every function. According to interviews with
managers, the growth numbers were supported by surveys, sales force projections
and market research.
The financials were passable
but the company was short on cash flow, thus the need for a bank loan. It seemed that an infusion of new money would
fill the cash flow gap while the marketing/sales team put their plans into
motion. The Board of Directors asked
for the plan "right away” so we pushed it to completion. The company got their loan.
About 10 months later, the
situation did not look so promising. The company was faced with serious
financial difficulties. What went
wrong? It turns out that the company
really didn’t have the technical or managerial skills to pull off their
ambitious 15% growth plan and, in some cases, just didn’t have the head count
to effectively implement the growth strategies.
In hindsight, our SP was
just a paper exercise for the Board. The
company managers, it seemed, just went along with what the Board wanted to
hear, i.e., 15% growth per year over the next 3 years.
What could/should have been
done to prevent this negative outcome?
pre-proposal company background search to uncover anomalies beforehand.
Turn down the
assignment unless more time was allowed to include our own assessment of
current and future capacity and capabilities.
Spend more time
with managers digging into their criteria and drivers for growth rates
Put metrics in
place to track progress against goal and provide early warning of difficulties.
Other. What’s your solution? Send in your comments.