Friday, December 30, 2011

"My job is to make arms and legs"

We should be incredibly grateful for people like Alberto Cairo.

The video below is from TED and is titled 'Alberto Cairo: There are no scraps of men'. 

Alberto Cairo's clinics in Afghanistan used to close down during active fighting. Now, they stay open. At TEDxRC2 (the RC stands for Red Cross/Red Crescent), Cairo tells the powerful story of why -- and how he found humanity and dignity in the midst of war.

I wish there was a transcript of the talk that I could share as Alberto has some of the most powerful words entwined in his story.

The video is only 20 minutes long, but I think it is an amazing 20 minute experience.

Enjoy.

Monday, December 26, 2011

What Is YOUR Vision For 2012?

"People who soar are those who refuse to sit back, sigh and wish things would change. They neither complain of their lot nor passively dream of some distant ship coming in. Rather, they visualize in their minds that they are not quitters; they will not allow life's circumstances to push them down and hold them under."
- Unknown Author

So what is your vision for 2012? And I am not talking about world peace etc! What is YOUR personal vision for 2012 and when Dec 2012 rolls around and you reflect on your year, how will you measure your success.

Are you using a Vision Board to visualize your year ahead? Seriously I am not trying to be funny here, the fact is Visualization is a part of all of our lives. Ever heard of a Vision Statement? Almost every company I know has one. A Vision Board simply allows one to use imagery rather than text.

Personally I do not use a Vision Board although I acknowledge the potential merits of using one. Nor do I have a Vision Statement. What I do is simple but it works for me. I divide my year into 2, Family and Work. Then I come up with 5 MAXIMUM measurable objectives for Family and Work.

For example, if one of my Family objectives is "to be a better Father", whilst noble is not really measurable. So instead I could have a think about what being a "better Father" means i.e. reading my son a bedtime story each night. That way at the end of each week I would know if I achieved the objective. Similarly, if my objective "was to become more healthy in 2012" how would I know if I achieved it or not?  Hence I would find it of greater benefit to create a measurable objective i.e. "to exercise 4 times a week at my local gym"

Please note:
  1. These are my own two categories. You need to decide what works for you.
  2. My definition of family includes, other personal activities. The reason that I use the term "Family", is because with 2 young sons much of my personal time is centered around my family.
So why do I only choose 5 objectives for my 2 categories. It is simple... 10 objectives are already too many to simply remember (for me anyway) and anymore would not be effective (the law of diminishing returns).

At the end of the day this exercise is a personal choice. Some of you may set New Year's resolutions, some may be very happy with the status quo. Either way, the choice is obviously yours however I leave you with this thought. Why is it we so often plan to the n'th degree various strategies in our work life and yet seldom do we see the same effort applied to our personal lives?

Perhaps the cat was on to something... "One day Alice came to a fork in the road and saw a Cheshire cat in a tree. Which road do I take? she asked. Where do you want to go? was his response. I don't know, Alice answered. Then, said the cat, it doesn't matter." - Alice in Wonderland by Lewis Carroll

Saturday, December 17, 2011

The Problem With Profit!

Profit is everything right? Wrong!

I could have called this article "what small business owners can teach managers in large corporates", but:
a) that is a crap title for an article
b) does not do justice to the importance of understanding how simply looking at profit can be so dangerous.

Take this example. A stand alone business unit of a publicly listed company ran its own Profit and Loss (P&L) that was consolidated up to the parent company. On one particular month the business unit sold (I am going to make the numbers up for purposes of confidentiality) $4mil worth of product to various retailers. The Cost of Goods was around $2mil and the Expenses were around $1.5mil. So if you do the simple maths you can see the EBITDA (operational profit) was $500K or 12.5%. Good business right? Well not quite. You see the same month the business had forecast sales of $6mil, although because of lead times to manufacture the product the forecast was required by the Inventory Manager to purchase the stock 5 months before the stock was shipped to the retailers. Unfortunately the business had actually forecast $6mil for 3 months in a row but about 1 month out of the first of the $6mil months the retail market tanked and whilst the Sales team were trying to come up with initiatives to make up the shortfall, the reality was the retailers were reducing their spend. So the long and short of it was that the business was having to pay for stock that is was not selling. In essence we have here a negetive cash position i.e. more money is going out than is coming in. In fact the reality was that if this business unit had not been part of a much bigger company it would have been in serious financial trouble with an inability to pay creditors.

But wait a minute, the business made an operation profit of 12.5%. So to summarise - a profitable business in serious financial trouble.

Putting the market challenges aside one of the key contributors to such a problem is the lack of all round financial skills that managers learn in large corporations.

Whilst larger companies can teach some great business skills they often don't teach great all round financial skills. Small business owners come to know the saying "Cash is King" very early on. However in large companies Cash Management can be part of Accounts Receivable, Treasury and often the domain of the Chief Financial Officer. Hence many employees, even General Managers with P&L responsibility, don't learn great financial skills as Managing Cash flow may be outside their remit. What they learn is primarly centered around the Profit and Loss.

So the next time you see a profit number, ask the question, "How does the cash position relate to the profit number?". If you do, and are in a large corporate, you are already ahead of many of your peers (and in many cases those above you). If you are in a small business and have not asked the question, God help you because your Bank Manager won't.

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I appreciate there may be readers who are questioning the forecasting, inventory management, supply chain, sourcing process etc that should assist in helping to manage the stock risk. The purpose of this article is not to overlook the various stock control mechanisms but to illustrate the problem with only focusing on profit.

Friday, December 9, 2011

My finger used to hurt when I dialled the phone!




My youngest son is 7 weeks old. I was thinking the other day about how different my upbringing was compared to the world he has entered. Feeling a little nostalgic I thought I would put pen to blog.

Then (I was born early 70’s) Now
School Assignments
(Text)
If we had a school assignment the school would call the local library to ensure that the assignment books could only be loaned for 3 days max. That way everyone had a chance of reading the books. Google it.
School Assignments
(Images)
As above, but we used to have to use tracing paper to outline and colour in the pictures we were going to use. Google Images.
Phone Big phone with a round plastic dialling button. Lots of Zero’s sucked as it hurt your finger when you went around the whole way and hit the metal piece. For the kids it looked like this : link I’m skyping from my tablet.
Tablet Was the dosage pharmaceutical companies used for how humans took a drug. It’s not a computer but it is. It is also “magical”.
Flying on an aeroplane This was a BIG DEAL back then. My parents actually bought me a suit for the first time I went on a plane. Its a flying bus with seatbelts.
Computer Games We had a ZX Spectrum in the early 80’s. You had to load a tape that took 15min+ to load the game. Play in real time with someone else on the other side of the world.
Portable Computer The first first portable computer I ever used was an Olivetti M21. It weighed about 15KGs. It had a 8MHz CPU and 640Kb of memory My Samsung Galaxy II weighs 116g has a Dual-core 1.2 GHz and up to 32gb internal memory. Specs.
Music Player Something that played a vinyl record or a tape. My phone.
Music Shop A shop that sold vinyl records, tapes and later cd’s. You used to browse the collections by flicking through the collections with your fingers. The internet.
Cars My fathers car had 4 wheels, an engine, a steering wheel and he would fix it by opening the hood and doing things :) My car has wheels, an engine, a steering wheel and when it needs fixing a mechanic opens the hood and then I am required to pay a fee that helps to pay off the debt of a small 3rd world nation.

I appreciate this post is atypical of my normal Execution & Strategy type posts but there is nothing like a little reflection to bring about a smile. I am sure many of you have thought similar things about your past vs present. Feel free to share your thoughts in the comments section.