Adapting to a "Structural Break"

McKinsey Quarterly's most recent issues have offered insightful articles about the necessity for rethinking some business practices to adapt to current conditions. In this informative piece from the December 2008 issue, Richard Rumelt makes the case that we are experiencing not just a recession, but a "structural break" -- a sudden shift in the way business is done. Rumelt suggests that this shift will require not just belt-tightening, but detailed reworking of growth-based business structures and market strategies that so many companies have had in place to capitalize on previously favorable conditions. No organization can afford wasteful and time-consuming internal communications. Nor can the healthier business units continue to carry less-profitable units whose costs are hiding within the complex, multifunctional management structures we have built.

In short: the time to deliberately isolate business units' support structures, and collect data to identify areas of opportunity, is now.

Rumelt's conclusion:

"In ordinary hard times, the traditional moves are reducing fixed costs, scope, and variety. But in hard times accompanied by structural breaks, you must rethink the way you manage. Companies that survive and go on to prosper look beyond costs to the detailed structure of managerial work. Several new issues come to the forefront:

• How much extra work results from the way incentive and evaluation systems relentlessly pressure managers to look busy and outperform one another?
• Which information flows can you omit? Information that doesn’t inform value-creating decisions is a wasteful distraction.
• Which decisions and judgments can you standardize as policy rather than make in costly meetings and communications?
• How can you work with customers, suppliers, and the government to simplify their processes so that you can simplify yours?

Barr Corporate Success can help you develop and execute strategies which streamline processes, improve functioning of tight-knit teams, and produce a more effective, productive, profitable organization. Call (513-470-8980) or e-mail us to start today. Let's get to work!

Succeeding in difficult economic times

Krissi recently appeared on the WCET (PBS) program "Business Beat", discussing what company owners, leaders and managers must do to succeed in today's difficult business environment with host Crystal Faulkner. See it here.

A transcript of their discussion:

FAULKNER: I’m Crystal Faulkner with the CPA & Business Advisory firm of Cooney, Faulkner & Stevens. My guest today is Krissi Barr, president of Barr Corporate Success.
Krissi, you go in and you help companies identify things they need to do to be more successful and then you actually stay there and help them get those things done. With so much changing today, what should companies be doing to plan for the future?

BARR: Three things. If you’re a golfer, you’ll remember the acronym “PAR”. Prioritize – focus on what matters most. Adapt to change – see change as an opportunity. Innovate. And the R, responsibility. Take ownership of the outcome. Make sure you get it done. Take action today. Surfacing across all of that is: Make sure your team is aligned to what your priorities are. And make sure the team, if it’s dysfunctional, builds a real strong foundation of trust, because you’re going to need that trust in these times.

FAULKNER: Well, how can people keep positive when it seems like employees, employers, and even the country is experiencing such tough times? What’s the secret of staying positive through all of this?

BARR: A lot of it is you. Focus on what matters most. Focus on the future. The power is in the future, it’s not in the past. So think about: What’s the core, what do I need to do? A couple of basics: Take care of your own energy. Focus on: Are you exercising? Are you getting enough sleep? Do you have quiet time? Tired people make mistakes, and right now is a time you can’t afford to make mistakes. Take care of your financial house. Make sure that you have enough finances and cash and flexibility to be able to take care of those things. The biggest one out of all of it – pivot. So many of us focus on what we’re afraid of. We go, “Gosh, I don’t want to lose that customer,” or “I don’t want to lose my job.” You should pivot, and go, “I want to provide the best service for my customers so that they see I’m an ally in helping them get through this tough time.” Or, “I’m going to be the best employee, and produce the best results for my company, so that my company comes out of this stronger than ever.” If you focus on what you want, versus what you don’t want, you’ll stay more positive.

FAULKNER: How can leaders and managers of companies help their employees stay motivated to do all those things you just mentioned?

BARR: That’s a tough one. I mean, you see customer or employees surveys. People go, “Communicate, communicate, communicate.” So I’m going to tell leaders and employees: communicate. Over-communicate if you have to. Make sure people understand what your vision is, what you’re doing, how the people in the company fit into those priorities, what are they doing to contribute to success, what are they doing to that helps your customers. Everybody – I don’t care if you’re in the accounting department or in sales – at one point or another is servicing the client, maintaining the client, or selling to the client. And they need to understand how they fit. That’s the best way. And also, don’t judge as much, but coach. Coach employees. When they see that you really care about them, that you’re committed to this – because it’s a lot of hard work – they’re going to trust you.

FAULKNER: Krissi, that’s wonderful advice. Thank you so much.

"So What Exactly Do You Do?"

For most of us, casual social situations sometimes bring the questions, "What line of work are you in?" The most succinct answers, in our case, are "business consultancy," or "strategic planning and implementation." But that's a little pat, and doesn't really answer the question, now does it?

It depends on what a business or organization needs.

With 20+ years of experience in high-level business, an incredible educational pedigree, a deep personal commitment to ongoing learning, and a personal track record of outstanding results, our founder (and chief!) Krissi Barr dives in, takes stock, and gets busy!

What Barr Corporate Success Does

The one constant in business, as in life, is change. Ability to adapt to an ever-changing world is always a basis for success. And since the greatest assets of your company are its people, corporate success reflects your people’s success. BCS works with a team of your key players who are capable of raising company-wide performance to levels colleagues, customers, and competitors would consider the new standard.

The process to getting there is highly customized for your people and organization.

With a bottom-line focus, Barr helps your team:

• Increase net profits – Break the routine and change the rules. Improve the selling process, generate more customers at greater margins, cultivate advantageous vendor partnerships, evaluate and actively work with key performance financial measurements.
• Heighten competitive awareness and advantages – Stand out from the rest. Put into practice the skills, focus, and structure of businesses at the next echelon to capture new opportunities.
• Communicate better internally and externally – Foster creativity. Understand individual behavior, attitudes, values, and communication and how these impact team dynamics, sales, and customer relations. Improve company interactions, supplier relationships, and customer satisfaction.
• Create enthusiasm and excitement – Put fun back into the business. It’s phenomenal to be a winner on a winning team. The team proactively moves forward, not just putting out fires.
• Achieve tactical brilliance in strategic planning and operations – Aim high. Think big. Look for profitability in problems. Goals are specific, relevant, aggressively implemented, and actively tracked.
• Grow yourself, and your people... and reduce costly turnover – Be a star. Live up to your potential. Leadership, individual and team skills are sharpened with a vision for success.
• Cut costs – Leverage your supply chain and purchasing to drive down costs. Optimize operations efficiencies. Implement cost saving processes that cut costs without cutting corners.

The Big Picture

The Barr Corporate Success process is not just about strategic planning. It’s about setting exceptional goals and implementing actionable, measurable, timely actions to facilitate taking ownership for performing at much higher levels. By considering the big picture, business challenges, corporate culture, and personal concerns, Barr pulls all facets (and potential obstacles) together.

Barr helps teams get all oars in the water, pulling in the right direction, in perfect synchrony, to achieve amazing results. To learn more about how, please check us out at www.barrcorporatesuccess.com, or for personal attention, just call us! 513-470-8980. Or e-mail Krissi today! Krissi@barrcorporatesuccess.com

Relationship Woes?

Good relationships aren't difficult -- bad relationships are! In a business environment, poor relationships are also expensive. An Adecco Staffing survey of 1,000 workers reports that 49 percent of employees say yes, their relationship with their boss directly affects their productivity.

Yeah, it's that important.

Many managers don't really understand what motivates and matters to their employees. We sometimes assume, or think we know, but we don't. Let's look at another study, this time ranking the factors that most influence employee performance. In this study, not only were employees polled, but managers were also asked to predict what those employees' rankings would be. Were the managers right? Take a look.

What Managers Expected Employees to Say

1. High wages
2. Job security
3. Promotion within the company
4. Good working conditions
5. Interesting work

What Employees Really Say Influences Them

1. Full appreciation of work done
2. Feeling of being in on things
3. Help on personal problems
4. Job security
5. High wages

Feeling appreciated and clued-in ranks higher than wages largely because to be appreciated and well-informed prepares us to make outstanding contributions, meet critical goals, and make smart decisions that will result in career growth.

Think of the stereotypical editorial assistant, fetching coffee and doing front-line work -- the pay's not high, the prestige isn't high, and he hasn't chosen that environment to learn different blends of coffee beans. He's learning the business, making a contribution to the big picture, and working toward a fulfilling career.

Make time for important conversations...

Do you have to know the names of your direct reports' pets? Of course not, but knowing your employees' life and career goals helps you leverage what you and your employees have to offer one another into a healthy, productive relationship. A global consumer response survey of 1,625 workers gave some insight into welcome conversation. What aspect is most important when employers communicate with workers?

• Giving insights on how to be more effective (52 percent)
• Showing how to fit into the company's vision (47 percent)
• Explaining the company's vision (45 percent)
• Engaging on a personal level (41 percent)

Build those relationships. To your direct reports, you are the company. The company's strategic goals and how it all fits together comes from you. If you can't sum up those strategic goals, go to your boss, who may go to her boss... It's a conversation that may have unexpected benefits!

Return to Barr Corporate Success site

Lehner: "Skate to where the puck is going"

Eddie Lehner, executive VP and CFO of SeverCorr, showed nearly 200 area executives just what it takes to get a brand new steel company off the ground -- smart planning, supportive communities, and, most important, persistence. Lehner spoke March 14 to a joint luncheon for the Association for Corporate Growth and Greater Cincinnati Venture Association. A friend and former client of Barr Corporate Success, Lehner spoke compellingly of how he and other steel executives planned and financed the $900M start-up steel mini-mill in rural Mississippi from scratch.

"You're building what?" Lehner was asked

when he initially pitched the project. Some dismissed it as crazy. The steel industry is consolidating and fighting for market share with overseas competitors, but Lehner felt SeverCorr was at "the intersection of opportunity and chance." He anticipated the deal would take 3 months to put together. It took 21 months.

"It's humbling, and perseverance is 99 percent of everything. You have to put in the time, pay the price, keep going 'til you get to 'yes,'" Lehner said.

Why steel, why now, and why in the U.S.?

"Consolidation of the industry has left room for entrepreneurs to slip in underneath," Lehner said.

These entrepreneurs began their "crazy" mission with extensive combined knowledge and a sincere commitment to revitalizing steel in the U.S. They identified obstacles working against existing steel companies, and the largest was transportation costs. The answer: location, location, location.

"Transportation logistics is at a crossroads," Lehner said,

citing the saturation of insterstate highways. If SeverCorr could avoid long haul trucking, using water, rail, and short-haul trucks, savings would be substantial. The team knew any new steel venture would need to be located near the growing automotive manufacturing market in the Southeast. Auto plants for Kia, GM, Nissan, Honda, Mercedes-Benz, and Hyundai are clustering around the Mississippi River in Alabama, Louisiana, Tennessee, and Arkansas, seeking deep water for access from Brazil and Venezuela. Lehner followed the example of Wayne Gretsky.

"I skate to where the puck is going, not where it is."

Efficiency throughout the supply chain is key. SeverCorr benefits from new technology and equipment, with no legacy and maintenance costs from older equipment. The team developed trust with its suppliers; they negotiated consignment deals for raw materials which compact the cash conversion cycle so that the company need not pay for the pig iron until it hits the smelter. SeverCorr is the first domestic steel mill able to roll 72-inch hood stampings for automobiles, capitalizing on a local market not being met. Other factors smoothed the way for SeverCorr. Lehner cited Mississippi Governor Hayley Barbour as "a motivated governor" committed to economic development and willing to offer incentives. The Tennessee Valley Authority was able and willing to provide the vast power required for the mill. SeverCorr took full advantage of Mega-Site certification -- a McCallum Sweeney program that acquires tracts, performs Phase I and Phase II due diligence, and has the sites ready for development. The company bought a 1400 acre "golden triangle" bounded by the airport, river, and rail, breaking ground in October, 2005.

The community welcomed the plant, and more than 9,000 applied for the 400 initial jobs. Recent announcement of a Toyota plant to be built 70 miles from SeverCorr is yet another boon.

SeverCorr's talent management is also an update to traditional models. Lehner said the company has a covenant with its workforce, an egalitarian philosophy stressing

"commitment, knowing what we're doing, and why we're there. "

With construction expected to finish this October, SeverCorr is positioned to revitalize the domestic steel industry, and spark development throughout communities in the rural south. The day it opens, the mill will be the largest solid waste recycler in the state of Mississippi. Despite years of effort, months spent in hotels, and more than 900 pitches to financiers, Lehner speaks enthusiastically of the journey.

"It's not often you get to advance your field like that," Lehner said.

Return to Barr Corporate Success http://www.barrcorporatesuccess.com

Strengths Can Become Weaknesses

Investor and financier extraodinaire Warren Buffet has said that most people could be as successful as he if they got out of their own way. While leaders have coping styles which enable them to get beyond daily crises, some of those coping styles can trip them up in the long run. Are you defeating yourself with one of the following tactics?

• Avoiding confrontation. Sometimes the stronger you are, the more you avoid confrontation. "I don't want to upset people," you say, but it may be that you fear losing control.
• Hiring great advisers, but not listening. It's difficult to change habits, which have been reinforced over time, but ignoring your most insightful colleagues isn't the answer.
• Not acknowledging when you're wrong. It's somewhat horrifying, initially to think, "If I'm wrong about this, I may be wrong about other things." It takes great strength to admit being wrong, but builds a strong team mentality and eliminates the protectionism that perpetuates mistakes.
• Not dealing with reality. Same situation -- if you can't handle one reality, others are sneaking up on you. Confront and deal with reality.
• Waiting too long to cut your losses. Your stick-to-it-iveness has served you well in many situations, but throwing good time, money and effort after bad won't always bring about turnaround.
• Dwelling on strategies without following through. While it's lovely to behold your strategy from afar, execution is key. Strategy is a process -- not ironclad marching orders -- that helps you move forward purposefully. Yes, you will find flaws, but can adapt and move on to success.
• Relying on analysis over instinct. Logic and reality don't always synch. The market moves fast, and over-reliance on analysis sometimes takes more time than you have.
• Trusting instinct over analysis. Yes, this contradicts the previous pitfall -- but either extreme can be disastrous. Let's face it: Desires and wishful thinking can distort your "gut feeling." Ground yourself in reality, without getting buried in analysis.
• Playing favorites. Rewarding "brown-nosers" might gratify your ego, and temporarily make your life easier, but will poison team dynamics and cost you talent and turnover.
• Mocking what you don't understand. Nobody knows everything, and taking the position of interested learner increases your knowledge and understanding. Dismissing new info as unimportant can mean missing huge opportunities.

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