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.

A Resolution Plan for Success

"New Year's Day... now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual..." - Mark Twain

Chances are better than even that many of us who made New Year's resolutions have abandoned them, or are flagging. According to a recent study conducted by Harris Interactive^®, only 22 percent of men and 14 percent of women follow through on our resolutions. Most of us drop our efforts by Valentine's Day, having faltered early and been overrun by the all-too-common cascade of rationalization and resignation.

If you're struggling, take heart. You can achieve your goals, and keep your resolutions. Having failed in the past in no way makes you weak-willed. What gets in the way of most of us is a total lack of preparation for success in achieving our resolutions. Here are some tips that can improve your odds.

Be specific. You are much more likely to follow through on a resolution with dates and measures in them. For example, "I will lose 2 pounds a month until Memorial Day, with an end goal of losing 10 pounds. I'll weigh myself on the 28th of each month." Contrast that with, "I want to lose weight." Which is more likely to produce results?

Be realistic and fair toward yourself. How many smokers have failed by vowing to quit a 3-pack-a-day smoking habit "cold turkey"? And dieters by limiting themselves to starvation-level calorie intakes? Achieving our goals should be enjoyable, not punishment and deprivation. Rigid and severe regimens are an "all or nothing" approach which can only exhaust you by constantly testing willpower. It's best to start with small, sensible, progressive goals that don't cause misery. Cut back in small ways. Give yourself small milestones along the way. As you succeed in those progressive goals, extend and expand them. Such goals are also more likely to result in a true lifestyle change, rather than a short-term crash course that is unbearable in the long run.

Review. We're often making the same resolution we made but didn't keep last year. You have a perfect opportunity to identify some potential problems! Think about the situations and obstacles which tripped you up last year. Did you end up pigging out on neighbor Bob's chili-cheese dip at the Superbowl party last year? Did Cousin Lisa's smoke-break call you outside despite your intention to quit? In either case, make a mental plan for what you'll do when tempted. Take gum to chew; bring something tasty but less sinful to munch on; sit away from the food; or take a few quiet moments out back, rather than out front with the smokers.

Write it down. By putting your resolution in writing and posting it somewhere within your view, you'll remind yourself to make choices that are consistent with your goals. As anyone who benefitted from taking tons of notes in school will know, merely writing it as you hear it can often give a little memory boost to the material. Many of us are visual or kinetic learners, so the mere act of manipulating a pen in writing our goals, or seeing it in black and white on a piece of paper, can impress that goal more deeply on our consciousness.

Share your goals. This may be the most important tip of all. It's unfortunate news for "the fairer sex," but men are more likely than women to always or often keep resolutions. (22% of men, versus 14% of women). Do men just have stronger wills (no) or is it something else? The key may be that men are also proportionately more likely than women to share resolutions with their spouses or others (41% of men versus 29% of women). Success in any given goal is much more frequently achieved when the goal is widely known and shared. What if everyone at the Superbowl party knew you were trying to lose 10 pounds? Would you be less likely to go for a third serving of the chili-cheese dip? If your family knew you had committed to one cigarette every 6 hours, you might be less likely to join your cousin in the garage for smoke-breaks. That's why sharing your resolutions is so important.

With some preparation and forethought, you can keep those resolutions. Be firm, but kind, with yourself, remembering that it takes 3 weeks of fairly consistent effort to cement a new "routine." Every step you take toward achieving a goal, no matter how small, is a significant improvement, and can't be wiped out by a small misstep. Get back on track, and take it one step at a time.

Let's get to work!

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.

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