Business-novel – chapter 19-21
And yes, another instalment for the business-novel that I’m working on at present – the previous posts to date have been for Chapters 00-03, Chapters 04-08, Chapters 09-12 and Chapters 13-18.
(For reference, everything so far I’d written back in 2013, and this will continue for a while yet – until Chapter 47, in fact, plus a few other chapters scattered later in the story. The first ‘missing piece’ was the second half of the change-plan described in Chapter 19, which is now complete enough as first-draft to include here. Oh, and yes, I’ve had to, uh, bowdlerise somewhat some of Margaret’s language, in Chapter 20, for posting here – this is a public site, after all…)
The section I’d greatly appreciate help and comments with is the change-plan in Chapter 19. The whole aim here is that Marco develops something that’s entirely plausible, pretty much exactly ‘by the book’ (if perhaps from a somewhat outdated textbook?), still solidly mainstream in many places, and yet what anyone with a reasonable modicum of awareness of systems-thinking and suchlike would recognise as almost exactly what not to do in most real-world business-practice. (In short: yeah, I do know that Marco’s plan is ‘wrong’! – from a story-perspective, it needs to be wrong, so as to provide a contrast for what comes up later.) All of the items I’ve included in his plan so far are things that I’ve seen myself, or read about in journals and elsewhere – usually in context of some or other actual or narrowly-averted business-disaster. But what else that’s similarly plausible-but-wrong should we add to Marco’s plan? Any suggestions?
And, of course, any general suggestions or comments would be much-appreciated, too – so over to you, if you would?
That’s the plan done.
Well, the first cut of it, anyway.
Pretty straightforward, really, just the kind of routine stuff we did on my MBA course.
I’ve reworked those previous categories into six different sections, more along the usual organisational boundaries:
- Top-level strategy
- Finance and governance
- Marketing and sales
- Operations and supply-chain
- Innovation and technology-management
- HRM, leadership and change
The top-level strategy, for the organisation as a whole. That’s at the exec level, Margaret’s turf – that’s where I’m reporting into – and that’s where we hit the big tricky questions, some of which I’ve had to sidestep for the moment.
Core strategy is that we’ll make the business more efficient, and make more money, by cutting costs right to the bone. Automate everything, as much as we can. That’s the central focus of the whole plan.
Leave the profit-centres alone, of course. But there’s plenty of fat that we can cut out of the cost-centres: they’re all just overhead, most of which we can either automate or outsource or both.
As long as we can cut costs, we don’t need to touch our business-model: cutting costs will make it more profitable all on its own. Cost-cutting should make everything simpler, too – so that’s the easiest way to get rid of complexity.
Gonna do a big boost on management-reporting for exec and upper-management. Set up targets for everything, traffic-light flags on everything, but keep the detail at bay, because that doesn’t need to go to the top at all. Traffic-light flags will give us all the info we need to pick out priorities for action.
That other remaining question here about ‘public image’ we can just handball on to marketing: that’s their responsibility, it shouldn’t be a top-level concern.
On finance and governance, that’s the CFO’s territory. I know I won’t have any authority to change anything there, but I’ve made a few suggestions.
All we’ll really need from them is the list of cost-centres to target for cost-cutting – and we have that list already from the accounts in the SAP system, pretty much. Nothing difficult there.
On the governance side, we’ll also need some help from them to pin down the right metrics for our new performance-targets, which is the core of what Alicia will be working with.
As for those questions on compliance and new laws and so on, well, there’s always new law coming up, we’ll deal with it when it happens, is the best approach – no point in wasting resources on it until then. Automating everything will get rid of a whole bunch of compliance hassles, too.
On marketing and sales, that’s the usual stuff that the CMO deals with. For here, that’s mainly the questions about products and the sales side of the business-model, and I’ve also bundled customer-service in there too.
The core here is that we’ll make a big shift to online, with a new sales-website. That’ll reduce our reliance on the bricks-and-mortar stores, and even allow us to close down a fair few of those, so it’ll cut costs that way too.
We’ll need to do some heavy marketing on that in the media, a bunch of television spots and big banner-ads, stuff like that. Maybe a campaign in the social-media in Facebook, if that’ll keep the marketing guys happy, but I don’t see it as important. Big-data on the website will make it easier to push upselling onto our customers, so we’ll get more from them that way; same for customisation and personalisation, all with the same branding.
The other big shift will be to shut down all of our own manufacturing plants and move the whole lot offshore – not only cheaper, but faster turnround on new products.
We might have to place a few of our product-development guys over there for a while, to make sure quality stays enough up to standard to avoid upsetting anyone – but we can probably even outsource the whole of our product-development out there too once our providers get the hang of it.
For operations and supply-chain, that’s the COO, of course. That’s where most of those front-line questions connect, but there’s also procurement, which we hadn’t really touched as yet.
What’ll happen here is pretty much as per my first ideas on this: automate everything. That way, the front-line staff know exactly what to do, when to do it, and no arguments or confusions – just do it. And all our reporting will become automated too, from the computers, not from people. Also means we can cut our front-line and back-office staffing right to the bone, because there’ll be no more ad-hoc decisions and almost no paperwork for them to screw up. Hugely simpler.
Supply-chains will get a bit longer because we’re offshoring all of our own manufacturing, but it’s just longer lead-times, no more complicated than we already have. And moving all of our manufacturing offshore means we won’t have to worry about health-and-safety any more, or any of those hassles about environment, either – that’s a big bonus.
On customer-service, we’ll move everything on-line – we can handball all of that to the IT-department – plus a call-centre, which we should be able to shrink over time. Run everything from pre-defined scripts, we can hire cheap for that. We can shut down the customer-service booths in-store – we’ll save a bit of money there, cut out the hassle of customers complaining for no reason. If all the manufacturing is offshored, returns become their problem, not ours. No more customer-service – that’s the real target here.
With innovation and technology-management, that’ll be the realm of our slob of a CIO, Kim Lee. He’s right, unfortunately – his over-hyped IT really will be ‘the centre of everything’ for this one – but we’d better not tell him that…
The main one is gonna be all the support we’ll need for the new sales-website – web-services and all that stuff. Kim’ll be happy, too, because we’ll need his beloved big-data to analyse customer clicks and purchases so we can automated personalisation and upselling.
Some new software for supply-chain tracking, but that’s straightforward off-the-shelf stuff, he says, so no big deal there either – though we’ll need to silo it off so sales and stores can’t meddle with our offshore ordering.
A new ‘business-rules engine’ – whatever that is – to control the new automated workflows for our front-line staff to follow. And a whole bunch of new reporting software, which he’ll have to write in-house because of the interfaces to all of new our scanners and other in-store automation.
He says he wants a new in-house data-centre with enough capacity to cope with our peak sales-periods, such as Christmas and so on – and we’ll have to give it to him, I guess. But overall, that’ll give enough us competitive advantage not only against our immediate competitors, but also claw back all of the market-share we’ve lost to online-retailers like Amazon. That’d be good.
For HRM, leadership and change, that’s Alicia’s world. Who, oddly isn’t a CxO – the only one who isn’t. That’s kinda strange… oh well.
The big focus is going to be on using automation to trim back staffing as much as possible. The automation will also help enforce reporting, with targets for everyone, and bonuses for those that hit the targets. Failing to hit targets will become grounds for dismissal, so that should help improve discipline and commitment to the job. Alicia will provide us with all the targets, performance-metrics and performance-pay that will help us get more from all of our employees. That should all be straightforward there.
On staff-turnover, that shouldn’t be a problem for a while, because there’ll be a lot of layoffs, and we can pick and choose from the best. Can avoid any union problems with the workers from the factories we’re shutting down, because there’ll still be some jobs in retail, and we can move them there. It’s just a job, after all.
I’d thought training was gonna be a bit of a stumbling-block, until I realised that the more we automate, the less training we’ll need to do. Should be able to cut our training budget in half, at the least – almost to zero, for manufacturing, since almost all of it is going to be outsourced. Gonna need a few more people in IT, but no need for training there – just get the recruiters to check their certifications, that’s enough. Tick-the-box exercise, that’s all. Only thing we do need for new training is to get people to know what we expect from them in our strategy, and make sure they know the penalties if they don’t follow through on it. Should be enough.
Nothing new needed on ‘How do we develop new leaders’, because there’ll be plenty of managers left over from the manufacturing plants we’ll be shutting down. Okay, they’ll be from manufacturing, not retail, but I don’t see any problem there – management is management, after all, it’s all transferrable skills. And again, we’ll be able to pick and choose from the best. If they’re any good, we can move them up the management-ladder from there. The right targets and bonuses will help in that, too.
That’s the lot; that’s it.
Okay, I’m biased, but I reckon it’s a pretty good plan. Can’t see any problems with it, anyway. Feeling good about it – really looking forward to putting it into action.
Only hurdle left is getting it past the Queen of No, that’s all. Appointment’s tomorrow afternoon: see how that goes.
She’s not happy. Understatement of the year…
Even from here, sitting in the ante-room to her office, I can hear the rage in her voice – she’s suppressing it, of course, with forced-politeness, but there’s no doubt at all that it’s there.
“Yes, of course”, she says. “We’ll talk later. Thank you. Goodbye.” And at that she slams the phone down. Hard. Could probably have heard that throughout the whole darn building. Ye gods… Even Penny ducks for cover, over there at the reception-desk on the far side of this room, and she’s Margaret’s PA… – yeah, it’s bad. This is not a good time to be here, looks like. Oh shit…
“F***ing MacGregor! Who does he think he is?” I’ve never heard her swear like that before: I’m really glad it’s not me that’s in there with her.
“Well, he is the chairman of the board…”. That’s Jo Ioannidis, the CFO. Poor fool: trying to be rational and reasonable with someone in that kind of a rage? Big mistake… A loud crash – something’s just gone flying…
“You think I don’t f***ing know that? And I’m the f***ing CEO – not him! Chief Executive Officer! I do the f***ing work round here – he doesn’t!”
MacGregor… a nasty little fish of memory seems kinda calling for attention… MacGregor… what was that about, something I heard, someone I met?
“He thinks he can f*** around with my f***ing bonus, my f***ing package? And yours too, Jo – think about that, hey? I am not going to take it, I am not going to do what he says! He’s just one stockholder, f*** it, one stockholder among how many thousand?”
“He’s by far the biggest stockholder, though.” Ioannidis just doesn’t know when to shut up: not clever… “Counting all his proxies, he’s probably about thirty-eight percent now. And we know he’s buying more. Not far off overall majority already: he nearly has full control.”
“Yeah, I know that already, thank you!” She’s still close to screaming. “Just can it, will you?”
Hang on? – MacGregor – wasn’t that the name of that old guy in the cafe? The one who stuck his nose in? He seemed to know more than he let on, maybe I ought…
“He’s got his hooks in here somehow. Someone’s been talking to him, letting out more than they should. If he’s got a f***ing mole in here, find the bastard, get ’em out of here, give ’em a boot up the ass as they go! Find him! Fire him! Now!” That last bit was a full-on scream.
Oh shit: oh shit indeed… If it is the same guy, I’m utterly screwed – I knew he was bad news…
“Okay, Margaret, I’m going, I’m going, okay?” That’s Ioannidis, pretty much backing out of the room now, hand up in placation. Not that it’s going to do much good if she’s in that kind of mood…
“Lachlan f***ing MacGregor – what kind of f***wit calls himself ‘Lachlan’?” That yelled at the CFO’s rapidly-retreating back. “No-one! No-one in my f***ing company!”
Lachlan? That guy’s first-name was Stuart, wasn’t it? Stu, he said? Thank the gods for that, it’s not the same guy. Probably safe to breathe now. Sh*t. Definitely best not say anything about him, in this state she’d fire me on the spot just because it was the same surname. Sh*t.
Penny and I exchange a quick glance at each other, and then quickly look away again. No comment, no comment: ain’t seen not nuffin’, ain’t heard not nuffin’, not neither of us, nobody here but us chickens…
Nothing happening any more in there now, at least, apart from what sounds like Margaret muttering under her breath, and perhaps a small grunt of breath as she picks up papers or whatever it was from where they landed on the floor. Then silence, or maybe the quiet clicking of keys on a keyboard – I can’t quite tell.
After a while, Penny takes a risk, goes up to the office door, taps on the door-frame.
“What’s that, Penny? Mr Pellegrini? Oh yes, I’d forgotten; of course, yes, do show him in.”
Penny beckons me over. I take a deep breath, gather myself and my papers, and walk in through the door, shepherding a carefully neutral expression on my face and movements. But no, no immediate danger, it’s all smiles there. That shark’s-smile again, but still a smile, of sorts.
“Mr Pellegrini, Marco – come in, do! Thank you for coming. You’ve come to talk about the change-strategy, yes?”
I’m impressed: from her expression and the way she’s holding herself, you’d never know what had happened in here barely two minutes ago.
Other than that great long streak of a coffee-stain all the way across the bright green carpet, of course.
All right, I’ve survived that meeting – we have the go-ahead from Margaret.
I’m pleased with what I’ve done on that plan – she pretty much approved the whole thing as-is, without much change, or even much argument at all. That screaming-match of hers just before our meeting might have had something to do with it, of course.
Ye gods – I got a ‘yes’ out of the Queen of No! She only made one significant change, but which I know the marketing people won’t like: she’s vetoed their entire social-media plan, as a waste of time and resources. She says we can just opt out of the whole social-media thing, not bother with it, not let it bother us. I’m inclined to agree with her, though: after all, it’s only another marketing-channel, and we’re spending more than enough on advertising already. As for the ‘reply-channel’ that they talked about, all it would be is another way for customers to complain at us. And we need to stop that happening, as much as we can, otherwise our customer-service costs will go through the roof – and that’s another overhead we really don’t need. No, just opt out of social-media entirely – we don’t need it.
Okay, let’s go put this into action, and fast: we need to be able to show real returns from at least some of this within the current quarter.
It appears that for a change I’ll be the first to comment. I’m restricting comment to chapter 19, as that’s what you appear to have requested and it’s a big enough bite for me at one go anyway.
I’ll start with a general comment. Some of these things are a bit too obvious. I don’t dispute that they happen but your potential readership is, I suggest, likely to already be some way along the road to where you’re at. The danger is then that people say “well, of course I’d never do that” and therefore miss the more subtle and insidious stuff.
An example could be “Leave the profit-centres alone, of course.” It’s a classic error and in that sense a bit too obvious. That said, I think enough of us have actually experienced the opposite: apparently illogical slashing of (profitable) revenue generating areas. I’ve encountered three “logics” for this. First is the x% cuts everywhere approach. Easy to trace and therefore makes the accountants’ lives easier. These things are usually dreamed up by accountants anyway. Another accountancy trick is making P&L responsibility ever more granular. Same logic, same results. The third is more interesting. It’s the “not core business” situation, which often arises in organizations that have no idea what core business (purpose) actually is. Maybe they did once but the world has changed on them or they “diversified” and lost sight of it. You may recall us discussing one such real life case over coffee and cakes in Paddington some six years ago.
Now this last example may be the most fun, because it relates directly to the “core strategy” problem/misunderstanding that you’ve captured in the first paragraphs.
More exploration of the misconceptions in “plenty of fat that we can cut out of the cost-centers” will, IMHO, be more rewarding – but I suspect that’s already your intent, so nothing to add there.
I’ll leave it at that for now but more is coming. Promise.