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I'll Never Do That Again!

Monday, November 1, 2010   (1 Comments)
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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 paper.

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? Is it:

A. Conduct a pre-proposal company background search to uncover anomalies beforehand.

B. Turn down the assignment unless more time was allowed to include our own assessment of current and future capacity and capabilities.

C. Spend more time with managers digging into their criteria and drivers for growth rates projected.

D. Put metrics in place to track progress against goal and provide early warning of difficulties.

E. Other. What’s your solution? Send in your comments.

Comments...

Kathy Maixner says...
Posted Thursday, November 4, 2010
Looking at A-D above, I'd say be sure to focus on "C". A,B, and D are task oriented. C will really discover the motivations behind the need to "hurry" and as you say, the "drivers". My experience has been that there are times when the drivers override everything else - and the drivers can be self-serving and counterproductive. It's imperative that a good consultant ask the hard questions and that our clients are open to our interpretations and findings. It's important to make it clear to the client upfront that what our discovery process uncovers may contradict his or her direction. If I sense a hesitancy on the part of my client to hear the truth, I won't move forward until we've reached an understanding.

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