Tuesday, November 30, 2010

Cash: Master or Slave?

As the economy continues to sputter along I continue to see more organizations tightening their operational belts, sometimes at the expense of future growth. As sales begin to decrease organizations cut the ‘extras’, these include R&D, marketing and many times sales staff. Often these core functions, although conserving immediate cash, acts to cripple the future of the organization; when the economy does begin to run again.

What should organizations do? Warehouse cash until things turn around or spend what cash they have on hand. I believe the answer lies within the culture of the organization and its place on the competitive continuum. Over the past couple of years I have written how organizations sit on an economic continuum predicated by their competitive advantage and their culture. I believe the organization’s place on the economic continuum will strongly influence how they manage their existence during this, and any, economic season.

Of late, for many organizations cash flow has been and will be generated by ‘slash and burn’ models. Basically these organizations cut expenses to the core to keep the lights on, pay down debt or act as a backstop to future financial meltdowns. For many of these organizations, the drop of the gavel has meant cuts to corporate assets, like property, plant and equipment; the very assets that could be leveraged towards a greater competitive advantage both now and into the future.

As organizations have slashed their spending, the free cash flow generated from this behavior, as a recent study shows – has been warehoused. According to a study by the Georgia Tech Financial Analysis Lab using data provided by Cash Flow Analytics, from December 2008 to March 2010 the amount of free cash held by 4,000 U.S. public non-financial services organizations doubled, from $14 million to $28 million. This represented the highest level of free cash flow in the decade. While over the decade capital expenditures as a percentage of revenue fell from 5% to 3%.

For many organizations has become, swap long-term economic health or enhanced competitive advantage for a short term ‘glow’. There is no doubt that holding cash in an uncertain economy makes sense. But warehousing cash without consideration to making the organization stronger and more resilient makes no sense. This behavior mimics the human physiology, in that a rapid drop in the food supply puts the body into survival mode and all fat burning stops. While a more concerted approach leads to consistent weight loss.

According to a study by Charles Mulford, a professor of accounting at Georgia Tech, a few larger public organizations have maintained an upward trend in their capital expenditures along with maintaining a healthy cash flow. Are these organizations operating in a vacuum? Are they not experiencing the daily ups and downs of this sputtering economy? Or do they know something else, some thing other organizations simply haven’t seen. These organizations, I believe, have a clearer understanding of the different types of organizational capital and their position on the economic continuum. From the study, these organizations had different reasons for their commitment to continued capital expenditures. However the most common reason was to maintain their market leadership (domestically or internationally) and keep competition at a considerable distance. The resounding mantra of these organizations was their adherence to a long term strategic plan

A commitment to a long term strategic plan carries more than consistent spending on capital expenditures it requires a complete commitment of the organization to managing a working capital portfolio of funds to meet current, mid-term and long term needs. An organization who hasn’t worked out the nature of their capital, their culture and their vision is destined to crash and burn under the weight of being a slave to cash. While the organization that is committed to their place in the future while having a strong understanding of their working capital composition, and their cash flows will be the master of their free cash.

Wednesday, October 13, 2010

Time to Reformat?

Are we there yet? Try to sift through the media hype and you will come to the ‘I don’t know’ answer. It is extremely difficult to determine if the global economy is climbing out of hibernation or slowly sinking into a state of coma. The equity markets continue to behave like a buoy in the middle of hurricane Paula. However, from my vantage point there is still free cash and buyers in the economy; consumers are still making purchases. Granted not to the degree of a decade ago, but big ticket items are changing hands.

With the ebbs and flows of consumer spending, and with a hungry pool of commercial entities, how does an organization attract buyers to itself; in essence, away from other vendors? For many organizations they undergo a myriad of ‘strategies’ in hopes that something sticks. Success in this economic climate and beyond rests on, I believe, two main ideas. Success comes down to attitude and economic agility.

The attitude for successful sales is one of understanding your clients and prospects. The organization needs to understand the needs of their audience with the correct products and services. In unison with the right products and services comes the understanding of who the organization is; a niche high-end supplier vs. a low cost volume discounter. Through the understanding of the vendor’s market niche, sales are gained on a definitive quantity; value, price, options, etc.

Bottom line profits are the result of two entities, sales and managing costs. To drive the life blood [profit] of survival internal cost management must be scrutinized. For many the word ‘scrutinize’ equates to radical cost cutting measures similar to ‘slash and burn’. I have seen many organizations slash the very budgets that keep them visible in the market place. These line items include marketing, sales and R&D initiatives. It boggles my mind how an organization can expect long term survival, when it eradicates the market presence initiatives [marketing, sales] and the basis of product evolution [R&D].

What these organizations fail to realize is that their real wealth rests within wasted processes in their organization and not in programs that will assist in weathering the storm. For many years I professed the mantra of continuous process improvement. To that end, I always professed that an organization must view its processes and procedures under the microscope and at each step ask the question ‘why’. It is only through questioning whether a process or a step adds value will one determine those defunct processes.

For many firms, time has overlaid new policies on the tails of old policies, new procedures get back-ended onto existing procedures and at no time does any one stop and try to unravel this thick mat of policies and procedures. I always believed that in every organization there are a few processes that are near the peak of efficiency, and only minor adjustments are needed to gain optimization. However, after an in depth analysis of several large organizations I have realized this was not the case.

I have always believed the best way to gain new insight into existing processes is to bring an in outsider to oversee that process area. Many years ago I had the privilege of working with an organization which had all of their senior executives on a three year rotation through the executive management ranks. The philosophy of the organization was to increase sensitivity of the executives for various departments. However, a byproduct of which turned out that efficiencies in processes were gained. Bill Taylor, in his article Trading Places: A Smart Way to Change Your Mind, expounds on the value of how the most innovative ideas come from outsiders.

I believe the greatest success in effectively scrutinizing processes comes by way of an outsider with the idea of breaking what isn’t broken. In their book, If it Ain’t Broke, Break it!, Kniegel and Patler demonstrate that organizational success isn’t the product of doing things the same old way. Success is the product of breaking the existing rules and thereby breaking away from the pack. The pack of current competitive forces.

So after years of adding more applications to the system, more processes and procedures to the mix, the agility of the organization is crippled by the weight of all of this ‘stuff’. Just as computer geeks profess, when applications start running slow – it is time to reformat the drive and reload the operating system. For most organizations, now is the time - clear the clutter, get a fresh perspective and reload the organization with a fresh ‘operating system’. This may be your last chance before a system crash!

Friday, July 09, 2010

Is that Blue in the Red Ocean?

The economic recession of the 21st century has impacted more lives than any other recession in modern times. Some economists contend that the current recession has had a greater financial impact than the Great Depression. However grave the impact, this recession has, and will continue to, provide the soil of survival. People and organizations alike, being pushed to the limit must survive. Survival is an interesting concept; in the animal world it is the fight or flight response. In the modern day economic world it is downsizing to reengineering. What ever the action, the strong survive.

Organizational survival depends on culture and the willingness to change. Change is the tool of organizational survival. The ability to change puts an organization ‘in’ the game, not on the sidelines. All too often organizations, who reach a monopolistic level, believe they can weather any storm, only to find that they have been left behind because of their unwillingness to change. A while ago I had the opportunity of speaking with a senior board member of a global financial institution. As we were discussing organizational evolution she shared a story of the hiring process for a new CEO of the company. When the incumbent was asked what would be their first task as a new CEO, the reply was ‘I will make change’. It was this phrase that sealed this candidate in the CEO chair. The company’s resistance to change made them antiques in the marketplace.

In Spencer Johnson’s book, Who Moved my Cheese, the author takes a look at human behavior and how the unwillingness to change leads to death. The most riveting quote, I feel is, “If you don’t change, you become extinct”. It this inability to change that has lead to the fall of many organizations.

Over the past few years I have written on how organizational culture places organizations along the ‘survival’ continuum. The organization’s willingness to step outside of current and historical practices to find a new way to survive will be the organization that not only survives, but the one that becomes the leader of the pack. How do organizations ‘step out’? Stepping out requires a new perspective on how the business model operates. It is ALL about perspective. In the 1989 movie Dead Poet’s Society, John Keating, played by Robin Williams, has the students stand on their desks to get a “new” perspective on their class – world.

A new perspective on a historic vocation brings new demand from the quagmire of stagnation. How have companies, amidst heavy competition and economic downturn, like Casella Wines, Cirque du Soleil and Southwest airlines stood out head and shoulders beyond their peer groups? These organizations chose a new perspective and redefined their market space.

I believe the economics of the present day is the impetus for organizations to redefine themselves. Since 2008, North American law firms have shed thousands of legal and support staff. In addition, many legal practices have simply locked the doors and turned off the lights. Those that remain have either been sufficiently large to weather the storm, or have cut back costs to stay afloat. With little view of economic recovery in the near future, the pressure on professional services will continue to be high. The market place has become a red ocean; a kill or be killed strategy. What professional services need to do is recreate their market space away from a zero sum game. This re-creation is creating a Blue Ocean Strategy, according to W. Chan Kim and Renee Mauborgne; in their book of the same name.

Professional services have long been a self-fueling machine of inefficiency. What other organization charges their customers for training staff and being inefficient? The infamous billable hour is the ball and chain of inefficiency, and clients have unhappily dealt with it. One perspective contributed by “HK” on social media exemplifies the feeling “The billable hour, with its bizarre, client-unfriendly incentive structure, has made lawyers and their clients miserable for long enough.” In any other industry, paying for incompetence would not be tolerated. To parallel this archaic model, one would be faced with an increasing cost of groceries the longer one had to wait in the check-out line.

Historically, I have argued that the billable hour is archaic and inane. Over the years, such approaches as fixed fee engagements and contingent cases have stepped onto the scene, but nothing has really taken hold. Realistically with all of the wealth of knowledge and precedents within the legal community, surely something better than the billable hour should have made its way from the swamp to dry land!

Change happens. I believe the fertility of the marketplace is at its highest for a new approach. Recently I stumbled across an article of a law firm with a fresh new approach. Sue Wang, partner at Clarity Law Group, uses the following description for her firm, “Clarity Law Group is designed like a timeshare, where clients pay a set fee for access to the entire firm.” According to their website, the firm provides the convenience of in-house counsel without the costs and headaches associated with the employee/employer relationship. In addition, the firm exploits 21st century technology to minimize cost and inefficiencies.

Clearly the billable hour is inane, just look at the receivables of any legal practice. Clients simply hate to be charged for ‘training’ and inefficiencies. If the business model was fair and reasonable, firms would not carry such huge receivables all year and have to discount them within the last ten weeks of the year! It is very possible that the Clarity Law Group may have created their own Blue Ocean and, in time, will leave the billable hour mongers wondering “where did my clients go?”

Tuesday, June 08, 2010

Beware of - The Herd

After a three year hiatus, this year’s credit conference was once again in sunny Las Vegas, Nevada. I always enjoy these credit/collections type conferences as the presenters and attendees have a lot to share. For some it is intense research in the field of finance that is shared during their one hour time slot. For others, it is the less than scientific grasp of the economic system that is poured out along side a tonic and gin. Regardless of the information, I always come away from these events with a deeper appreciation for our economic system and basic human nature.

This year’s conference was filled with many exuberant speakers (and guests). Although it appeared that attendance was seriously down from previous years, most sessions were well attended. The underlying theme of the conference, as with all conferences, is to navigate the sea of information toward finding a way to getting one’s accounts paid. After all, the life blood of any organization rests in its ability to be compensated for the goods and services which it provides its customers.

For any organization, non-profit or for profit alike, is the basic need of liquidity – cash. Without cash, the greatest product in the world will never leave the drafting table. However, it continues to bemuse me how little commitment some organizations pay to their ‘fluid-of-life’. Take for instance, Christine, a credit manager for a large national professional services organization. Christine sports a business degree from a small local college and a few years work experience as an accounting clerk. However, four years ago she landed her current position as a credit manager. She talks about her diet of BI reports and meetings, yet her receivables continue to age. Christine shared with her business specialty unit her firm’s frustration with their current cash flow predicament. However, not surprising that many in the room chimed in with their similar frustrations, at one point, a peer shared his experience at a recent conference where he attended a session ‘What others are doing in collections?’ Without missing a beat, that session was now re-enacted … here.

Here I was in Las Vegas listening to a session that occurred a few months earlier, as one attendee said, almost verbatim. What I found most interesting about this dialogue was that everyone was sharing their ‘efforts’ in getting their bills paid, but no one was sharing if these ‘tactics’ were effective, much less if their organizations had a similar receivable portfolio. It was almost as if a major firm is doing ‘it’, ‘it’ must the right thing to do.

Later that evening, I had the opportunity of dining with academics in the field of finance and credit. What became very apparent to me was that many attendees to these educational sessions only pick up tidbits of the core knowledge they need to be successful. What many firms are failing to realize is that the customer, who holds the checkbook, controls THEIR cash flow. So the big dilemma is what must YOU do to get YOUR bills paid – on time.

Most organizations have a standard diet of customer intake which includes a credit application, a credit check and some type of order. The credit application and credit verification, when completed and processed, is simply a means of heightening the probability in your favor that your bills will get paid. There is no guarantee at this point, and your terms are simply your SUGGESTED terms. The customer will do what the customer CAN do. Once the product or service transaction is complete, then the process of collecting on the invoices becomes paramount.

Once the bill/invoice is out the door, firms don’t believe they have options. For Christine’s firm, the daily dose of BI deposited in everyone’s email is ‘believed’ to generate payment. For a small portion of her portfolio, statements and dunning letters fill plastic bins awaiting postage. This unscientific ‘spray & pray’ approach yields its expected results. It is no wonder that her receivable portfolio has accounts that have aged beyond two years.

Amidst the conversations, Mary-Ann shared her tactics for getting her accounts paid. Her firm, with their 30 days net due, is currently running at 45-52 days past invoice date. Her take on the economy, ‘If my customers are not getting paid on time, how can I expect to?’. Mary-Ann, instead of filling the postal system with printed correspondence, has chosen to reach out to her clients to understand their pains and provide options that ultimately have her bills getting paid. Mary-Ann’s approach has kept her organization alive while several of their competitors have either perished or already on the slippery downward slope.

Organizations have the essence to their survival, cash, tied up in receivables and so many undertake a careless stance in getting their bills paid. Vincent Ryan in his article Lien on Me, looks at how organizations are exploring many different approaches to keep their blood flowing. Ryan discusses how many finance chiefs are finding receivables-based financing a stable source of fast funds. Although the funds are fast, it is no panacea, reporting requirements are strict and there are hefty costs. Guy Guinn, a partner at Squire Sanders Dempsey says “The lender has an iron grip on the company’s cash flows”. However, Ryan reports that many companies welcome the discipline that an asset-based loan brings to receivable management and collections. Although factoring is the most expensive and stringent approach of turning receivables into cash, Ryan suggests auctioning off receivables in an electronic market as a means of turning receivables into cash without relinquishing total control.

I believe that firms have many options available to them when managing their receivables, all of which come down to how much, and the timeliness, of the cash they need and how much they are willing to invest in their most valuable asset. If their modus operandi is herd mentality, then continue to ‘do what others are doing’ and the herd will eventually fall from the cliff. Alternatively, get in touch with your clients (Mary-Ann). Seek to understand their pains and suggest options that are mutually beneficial. And when all else fails; remember there are STILL options!

Tuesday, May 11, 2010

It’s all about …ME

So often we go through our days fighting the current fire and stashing a little time away for the long term projects. It isn’t until a radical change comes to light that it often leads one to have a double-take. Sometimes the double-take is that two second ponder and then back into the trenches. Other times, it spawns a whole thought process that causes one to critically analyze the how’s and why’s of the ways things are done.

Several weeks ago I was engaged in a lengthy engagement with a geothermal engineer whose company was struggling under the weight of the current economic climate. Although the geothermal energy represents a constant and almost infinite energy source, its adoption has been stymied because of several key factors.

During our numerous discussions, a concept that Tony had been pondering for some time came to light. Through our discussions he referred to it as ‘margin of error’. The concept of margin of error finds its basis in the world of statistics, wherein the margin of error defines the credibility of the data. For Tony, he defined it as the amount of deviation from doing the job ‘right’ that is permitted.

In following the seed of Tony’s thought I found that the amount of error we tolerate in business is so complex and so multi-faceted it is amazing. Why is it that an earthquake in Haiti creates devastation while a similar quake else where doesn’t? This was the point Tony made. From our discussion, it became apparent that tolerable error in this type of case is rooted in socio-economics. Simply the regulatory bodies don’t exist in Haiti to adequately oversee construction of buildings.

However, in business the same deviations from ‘acceptable limits’ exist. Recently it made the news where an investment banker had years of tenure with his employer because of falsification on his resume. When questioned how this could happen, the hiring committee rested on ‘we didn’t have the bandwidth to complete a full and thorough background check.’ About a decade ago, a Stoney Creek (Ontario) doctor was found to be practicing without a license, for almost a decade. The investigation revealed extraneous entries in his past were never thoroughly investigated. Recently a person on the ‘no-fly’ list made it onto an international flight.

What, I feel, is evolving consists of a mode of behavior where workers are doing the basic that is required and often less than the minimal. So long as no one identifies the less than satisfactory performance, it simply goes unknown. Unknown, until the deviation is so critical that it is a full blown problem. It seems that our quest to output more from less has driven us to the realm of higher degrees of personal acceptable error. This concept was reinforced by a recent engagement with a statewide food distributor. The main receiver, Sandy, has a comic framed on her desk. The comic depicts a manger approaching an employee saying ‘Why aren’t you working?’ The employee responded with, ‘I didn’t see you coming.’

Although Tony refers to the concept of margin of error, there is an accounting concept that is analogous to the behavior; materiality. The concept essentially says that if the amount of the change is enough to cause a reasonably prudent person to make an alternate decision, the amount of the change is significant; or material.

What ever the term, margin of error or material exception, it points to a business mantra of ‘it’s all about ME’. Possibly economic recovery may find its roots in a kaizen like philosophy of continually striving for making a better product and not making it better for ME!

Monday, March 08, 2010

And...Size does Matter !

I would be hard pressed to recall a conference, seminar or corporate material I have read in the last few months that doesn’t tout the miraculous change of some company’s process or widget. It appears that many organizations have jumped on the recessionary band wagon with the intent of using the moment to peddle their wares. I strolled through the vendor area of this year’s Law Firm Financial Management Conference and spoke with a few vendors, as I was introduced to their latest offering. I was then given canned pitches of how their offering would make a difference in my practice.

It wasn’t until I was saturated with these presentations that I engaged a sales manager in an introduction to macroeconomics. As I proceeded to explain the complex web of global economic dynamics and how a ‘quick’ fix of a $25,000 piece of technology greatly missed the mark of remedying not only my organization, but the global economy as a whole, I could see the glazed look become part of his demeanor. As I ended my soapbox rant with the idea that no small fix is sufficient to remedy a wallowing economic system I realize that to move beyond our current economic circumstance, something significant needs to happen.

From a cursory review of much of the economic thought of the day, it has become blazingly clear to me that what the global economic superpowers need now is a significant jolt to the economy; almost a radical “kick-start.” Continuing along as we have with small local changes only drip-feeds the economic engine to continue along its path; granted its path is slowly making a turn around. However, this turnaround according to the literature is 5 years in the making. With that said, the some of the current literature professes the US unemployment rate will continue to hover in the 10% range and prime lending rates will continue to be at an all time low.

The ‘kick-start’ must be significant enough to jolt the economy back into a positive momentum, somewhat like a strong earthquake. To make an analogy, most earthquakes although significant in attracting attention only a few have reached ‘significant’ proportion. One such quake recently occurred in Chile. According to Richard Gross, a geophysicist at NASA's Jet Propulsion Laboratory, the 8.8 quake was enough to shift the earth’s axis by 3 inches, resulting in a 1.26 microsecond shortening of an earth day. Previous to this was the 2004 earthquake off the coast of Sumatra that again moved the earth’s axis. Before this, it was in 1964 when an earthquake was enough to alter the length of a day. These were ‘significant’ jolts!

It was from the January 15, 2010 Harvard Business review that cited a recent Ernst & Young study on innovation, that leads me to believe that our ailing economy hinges on something ‘big’ happening. The article presents survey statistics of companies in the $5M to $5B range and how there is simply a lack of big idea innovation in these organizations. I am beginning to believe that our small innovations represent only tiny blips on the heart beat of the economy. These small innovations get swallowed up in the volatility of consumer sentiment with each passing day.

This “kick-start” innovation must not only be large, but it must be radically different than any other offering currently present. In addition, its appearance in the marketplace must also be innovative; otherwise its true value will get diluted. For many organizations, this concept of radical innovation is nothing more than repacking the old bag of goods in a new wrapper or modified business process under the guise of ‘innovative strategy.’ Sadly this ‘bag of tricks’ simply won’t cut it any longer, as a viable strategy; I believe that “strategy” is probably the most overused word in business. In my experience with many organizations in several different markets, business strategy is not much more than the documenting of historical tactical approaches. Chan and Mauborgne in their book Blue Ocean Strategy, support this belief of strategy in saying “…a closer look reveals that most plans don’t contain a strategy at all but rather a smorgasbord of tactics that individually make sense but collectively don’t add up to a unified, clear direction that sets a company apart.”

With the lack of corporate innovation and a ‘mish-mash’ of bringing mediocre ideas to the market, it is no wonder that the economic engine continues to sputter and will for probably the next decade; if not longer. Our only hope – an 8.8 or higher jolt with innovation!

Tuesday, February 09, 2010

No Savior in Technology

The global economic melt down has given rise to a whole new form of economic organism. The organisms are almost purely parasitic in nature and their survival depends on their ability to manipulate organizations currently struggling toward survival. Hardly a week goes by when I don’t hear about some new company with their ‘new’ analytical tool that will unleash the power in a firm’s data.

As organizations continue to feel the pressures of recessionary economy, they become easy prey for those who believe they have the power to release the bull [market] from within their data. Sadly no matter how one dices, slices or purees the data – the reality is pretty much the same; figures don’t lie.

I believe weathering this economic storm goes beyond data mining and data analysis; it comes down to understanding your purpose and acting in alignment with your vision. The organizational adoption of a mission and vision statement ranges from a deeply rooted effort of the company to put something together at the local print shop that now hangs in the lobby.

The Mission Statement is a clear and succinct representation of the enterprise's purpose for existence. This is the reason the organization exists in the first place. Although the mission statement is the cornerstone management literature so many organizations continue without giving it [the statement] a moment’s thought. In the hay days of economic boom, companies were coming online by the hour. Almost no thought was given as to their purpose. They had a widget and they had a market to sell it in – and they were off. Sadly these organizations, who could not explain their purpose, have fallen prey to the storm.

Whether the Mission Statement is displayed throughout the organization or is something discussed at the coffee station, it defines the culture of the organization. What is more interesting; some organizations may have more than one Mission Statement, the one on display and the one that drives management directives. It is the unpublished statement that is more in alignment with behavior and therefore becomes the compasss for the organization.

It is actions more so than the gold inlayed plaque that determines the fate of the company. Many years ago I happened to meet the president of a company whose mission statement, proudly professed, “We are here to have fun, and make money.” As the statement professed, the company was predominately about a fun upbeat positive environment and secondarily about producing goods for their niche customer base. However, after a decade of ‘fun’, competition came from over the horizon and the company was depredated.

Conversely, a southeastern United States service organization which I had the pleasure of working with, proudly has their mission statement framed throughout their building. There is hardly a corridor in their offices that does display their Mission Statement. However, I don’t believe anyone in the company is able to repeat their statement much less follow its premise. The reason, the actions of their president, George, continues to act contrary to their mission. George’s every action resound with ‘Our goal is to make the numbers we need to satisfy our shareholders’. With that mantra, the organization slashed staff, and instituted a deep furlough policy. Currently, the company continues to hobble along, with most of the staff disconnected from their roles.

I feel, knowing your organizational purpose [Mission] and keeping it as the foundation of your every action solidifies your place in the market place. Keeping your mission as one to ‘serve’ a certain need in the marketplace keeps the organization focused on the basis of business. With the organization’s identity solidified, the plan for the future is paramount, the plan – the Vision.

I have found that small to medium sized organizations give almost no time to the Vision Statement. Without a goal or vision as to what we are working toward, how do we know when we have achieved success? For many organizations success may be year-over-year increase in sales of X% or simply making budget and getting our distribution. What ever the ‘vision’, more often than not, if the Mission is in place, the organization will achieve their vision. In an upcoming contribution, I will share some radical thought on how there is really no limit to organizational success and the correct framing of the Vision Statement is the first step.

The Vision Statement, when acted under the pretense of the Mission Statement will take the organization down its charted path. Organizations can also have more than one Vision Statement, the one proudly displaced in the boardroom and the other is the product of management actions. Either way, the result is the same, vision leads to action which leads to results/expectations. From my endeavors, I am amazed how tight this correlation is. Kathryn, the president of a small consumer products company, openly professes her company’s vision during board of directors meetings as ‘we are changing the world, one [expletive] at a time.” What I found so ironic is, Kathryn constantly complains about her market and customer base; probably because they are seeking the wrong customers?

Recently I had the opportunity of meeting Wendy, the president of a small consulting company in Glendale, California. Wendy’s dedication to her clients and her vision was the clearest and strongest I have experienced in a very long time. As I congratulated her on her strong business acumen, she shared something very profound with me. Her organization has a staff of less than 20 people; everyone knows, and embraces the organization’s mission as well as the board’s vision and can explain their part in the puzzle. What I found most amazing, beside the plaques of the Mission Statement, and Vision Statement was a plaque with the following:

Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.

For Wendy, it is important that every person in her organization constantly manages their thoughts to continue to be in alignment with the Mission.

Over the years the power of a ‘serving’ Mission Statement and a solid Vision Statement continues to be enforced as the very foundation of a good organization. Without a solid foundation and hope for a goal in the future, all of the analytical technology available will not make a difference. Maybe it is time for organizations to return to their foundation.