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It’s all a hoot until the money runs out

April 29, 2009

Ever meet a trust-a-farian?

They’re the kids and then adults blowing through big money and big problems (often of their own cause) who can then rely on the family to fix things up. They breeze through life happy as a lark, leaving a debris field behind them. Unless you’re a trust-a-farian as well, you’re never quite a member of the inner circle, even if they make you feel that way because they need you at that exact moment.

Actually, sounds like Wall Street after recent reports stating The Street is ready to pay bonuses equaling the level of 2007, a very very nice year indeed. When things were dire, the US Government, and its citizens (i.e. you and me) changed status from suckers to family in a nanosecond, just in time to bail them out of their self-imposed mess. And we’re stuck with a multi-trillion dollar debris field that will outlive me, my children but hopefully not my still-to-be-born grandchildren.

So why is The Street back to its old ways? Didn’t they learn anything? There’s a joke in the Mideast about a scorpion and a frog crossing a lake. The biblical tale is one of 2 seemingly arch enemies helping each other cross to the other side, the lesson being obvious. On The Street, the joke goes with the scorpion stinging the frog mid-lake, who looks up and says “we’re now both going to die – why did you do that?”. The scorpion replies “welcome to my world.” Slight problem – their previous ‘my world’ no longer exists and they haven’t’ come to grips with it.

Now that this recession is about mid-way at 18 months (and it now being the longest recession since the Great Depression), should we too resort to our old ways, our version of ’my world’? Not in your life. The old ways are gone. Ended, finished, kaput, finito. In this now more damaged but flexible world, we’ll all have to learn how to run with a mix of highly focused and rigid operations, wrapped in a flexible company. For example, chipset manufacturers must produce to tight yields but have to adapt to ever changing markets and new competitors. Thinking you can set up a production line and run it forever at a fixed selling price is over. Given the human reality of different personality types best equipped to deal with rigid processes and a different DNA set for extreme flexibility, many companies are going to have multiple cultures going forward, adding complexity to managing the Enterprise. Flexibility equals thriving, if not survival.

The only way to thrive going forward is to think in terms of what the Military and Press now call Asymmetric Warfare, but we’ll call it Asymmetric Business. Just like the former, the latter involves being highly flexible but always guided by very distinct goals and it drives the slower moving, more formal organizations, absolutely crazy. Think of our Special Forces vs., say, Napoleon’s army lining up and walking forward en masse, just like the good old days. We’ll keep control in Asymmetric Business by using core principals more specific than the usual platitudes of Mission Statements. We have to run our companies using organization-wide KPIs such as ‘ROIC of 23%, CAGR of 15%, EPS of $1.36 minimum, 97% Quality Production Yields, #1 market share; Strategic Business Units will have to balance the rigid with constant adaptation to meet corporate KPIs. In this world, business cases based on Excel may be passé and hands-on experience may matter more.

Is this the end of process-thinking? Exactly the opposite, but it will have to be combined with Breakthrough Thinking. To balance agility and control, you have to design a different type of process – a non-linear, highly adaptive process more akin to human thought, where we have a plan but adapt as needed while keeping the goals in mind.

To manage this, we’ll need different types of IT organizations and infrastructures, these being enhancements on what we already have. For example, SAP implements end to end process, but if you’ve ever installed it (and I have), it hates being touched once implemented.

Finance, as a function, will have to change as well, with the added complexity of the move from US-GAAP to IFRS, allowing flexibility in accounting, but opening the door for added reconciliations for Enterprise consolidated reporting unless you implement a broad Common Financial Language.

Operations will require less of a traditional assembly line approach and more of a Honda Flex Manufacturing approach where Honda designed it’s own Breakthrough – interchangeable ‘hands’ allowing each robot to weld a range of parts with only 5 minutes downtime to swap out ‘hands’, enabling each line to produce a range of vehicles in agile and rapid response to market swings.

Organizations will have to change from straight numbers oriented Executives, to those with hands-on cross-functional experience, just like Special Forces where each team member is trained to proficiency in multiple specialties. Strategic Business Units may have to be smaller to remain flexible, which has Compliance and Regulatory impacts. Change Management will become as important an ongoing function as is Supply Chain.

What of those who, like The Street, maintain their old style behaviors? Trust-a-farians and inflexible companies have one thing in common – life is a hoot until the cash runs out.

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years experience reshaping companies and key initiatives as well as operating units of Global organizations. He can be reached at

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