Burnarounds: Unlocking The Double Digit Profit Code

Other People's Opinions Are Wrong

It is true that people will be wrong 99% of the time when asked about an idea you have. If you have an idea for something, a new product, a business, a new way of manufacturing something, I have no clue as to whether it will work or not-and neither do you.

Ideas are vaporware until you bring them in the material world and try them out. Until then, nobody really knows if they will work or not. The problem is there are too many "yea-buts" in the world who are afraid your idea will make them look bad if it works. And the business world is full of "idea assassins" (see my previous post on this), who have a vested interest in your failure. That is why so many people will tell you your idea is no good. If it never sees the light of day it proves them right. And remember, trying something new risks failure. Idea assassins are more comfortable never trying anything.

I don't ask opinions on a new idea-I get it out there into the world and let the market be the judge.

How Turnarounds and Obesity Are Alike

Turnarounds can be compared to someone who is overweight. They probably didn't get that way over night. It wasn't one meal, or even a dozen meals that caused the problem. It was a variety of factors, day in and day out that caused the condition. Whether it be lack of excercise, eating late at night, or eating high fat content foods, the actions, or inactions of the overweight person caused the now urgent need to fix it.

Turnarounds are the same way. They are caused by the daily actions, or inactions of a lot of people. Small decisions or no decisions on a day by day basis create turnarounds. Not one single event, or even series of events lead to a turnaround.

Turnarounds can be diagnosed early enough to avoid the necessity of the gut-wrenching, life-threatening, slash and burn actions required to save a company in a turnaround. Just like a doctor can diagnose your health and prescribe small medications to avoid heart surgery later, an outside expert can diagnose the health of your company and prescribe small actions to avoid a turnaround later. And don't forget, after a turnaround your company won't be a shadow of itself, if it survives at all.

This is where a burnaround comes in. The great part about a burnaround is not only can it save your company from a turnaround, it can vastly improve your profit to boot. See your doctor today and get the check-up-before it's too late!

Profit, profit, and more profit

Are you satisfied with the profit you have? I doubt it or you wouldn't be reading this blog. You can't be too rich, or too thin, or have too much profit. But perhaps you have gotten complacent and are content with the profit you have. Or more likely, you blame other factors for why your profit is not double digit. Such things as "my customers won't allow me to raise prices", or "my suppliers are raising my costs and I can't do anything about it". Let's try a few more. "Health care costs are rising uncontrollably", or "I have to give my employees raises at least in line with inflation".

Chances are you have used one or more of these excuses. But the truth is-you are the problem. If your profit is not double digit, you're to blame. Stop playing those same old recordings in your head. Challenge convention and take a chance.

If your sales guys are afraid to go to the customer and raise prices, you have a serious problem. If you simply accept cost increases from your suppliers you have a double-serious problem.  If both of those conditions exist in your company you have a life-threatening disease. You need a burnaround, before it gets to the point that you need a turnaround

CEO Coaching-Is It Really Coaching or Cajoling?

I have done a lot of CEO coaching. Most times, I am telling them things they already know, but just haven't done. Sometimes, most of the time, they are just plain scared. That's right, I said it-scared. They are afraid of upsetting the applecart. Worried that a change they know they should make won't turn out right. They fail to remember the old axiom-no decision is the wrong decision.

I talked to a fellow CEO the other day who knows he needs to make a change with his VP of sales (read:fire him), but he won't do it. Why? Because he is afraid customers will leave in droves and the sales force will be upset. What he doesn't know is he is probably losing customers anyway because this guy is a jerk and the sales force is already upset.

No doubt, CEO cajoling is what it is. Perhaps that is why CEO coaching is so popular these days. Keep cajoling the CEO until he makes the right move. That's kind of sad isn't it? Aren't CEO's supposed to be decisive action heros?

Extraordinary culture

Something extraordinary happened this week. Actually, it has been a whole week of extraordinary events. I am in an area of the midwest severely impacted by flooding. One of my employees lost his home so we took up a collection for him and the company matched employee contributions dollar for dollar. About 30 people raised $1,200 in two days. Bear in mind, these are people who make blue collar wages. But that was not what was extraordinary. This is what was: The employees asked me to cancel the annual company golf outing (which is attended by almost 100% of the employees and very well-liked) next month and give the money it would have cost to the fellow who lost his house!

You can't lose if you have employees that are that bonded together. But this bonding is a process that took us years to create. But create it we did with a variety of tools from recruiting to benefit programs. I will address how we did this in a later blog.

The Language Witch-hunt

In an earlier blog I talked about my "zero" tolerance swearing policy which lead to a number of firings in the factory. Some people thought I was on a witch-hunt for people who swear. I was-oh not the hell and damn kind. You know the kind I mean, the filthy, vulgar, violence and bad-feelings provoking kind. After the second day and the 3rd firing of the new policy, I was wondering if I would have a factory left when the smoke cleared.

Finally, after the 6th day and 5th firing, people finally caught on-and the swearing stopped. And guess what? After a while, the uncomplimentary and rude language subsided. People started to tolerate each other and even treat one another with respect. And that lead to teamwork-which eventually lead to improved productivity.

Believe me, you cannot have a snakepit for a factory and expect to have high productivity. It just isn't going to happen. Go on your own witch-hunt-you'll be amazed at the results.

Idea Assassins

Idea assassins are trolling the halls of your company. Their mission? Kill any and all ideas. Don't believe me? Try this today. Get in a group of people and bring up a new idea. It doesn't even have to be a radical idea-just an idea. Watch how many people in the group try to kill it on the spot. If you have a group of 5 people, at least 4 will immediately dismiss the idea as unworkable. Or not worthy of consideration. Or "been there, done that".

And this is only a group of amateur idea killers. But you have a hard core group of trained killers, professional idea assassins who's sole purpose is to snuff the life out of new ideas before they can take root. Why? Because it will make them look bad because they didn't think of it. Or because they tried the idea once and couldn't make it work because of their incompetence. And if someone else makes it work, their incompetence would be exposed.

The idea assassins  are ruining the best and brightest ideas in your company every day-and you don't even know it.  Find them and eliminate them.

Casino Leadership

I recently spent 2 days in a casino hotel in Minnesota. What amazed me is the high level of customer service. We needed extra towels-bam, 5 minutes later we had them. How many times have you asked for extra towels, only to have to ask again an hour later? Room service was fast, good, and affordable. When I called for the shuttle service to go between the marina (where my boat was) and the hotel, the person on the phone was actually pleased to talk to me.

Now, I suppose Casinos have high margins so you could make the case they can pay more and get better people. But in my experience paying more hardly ever guarantees a more motivated employee. No, this is all about leadership-plain and simple. I wonder what secrets Casino Leadership holds for us?

Anal about the numbers

Watch your numbers like a hawk. Watch them every single day. Not once a month like some people do. I always insist on an orders report every day. Every day. And when I don't get it (which is not often, as my team knows I expect it), I ask for it. Why? It's easy to spot a problem when it first appears. A smoldering fire can be put out quickly. A 3-alarm fire is life threatening.

Watch for changes in your numbers and at the very first sign. Find out what's going on. Has a competitor started chewing into your share? Has a customer bought too much inventory and is cutting back? Has the market softened? Find out what's going on immediately, then do something about it.

Be anal about the numbers. That is one of the principles of a Burnaround.

Turnarounds and Burnarounds

People often ask me what is the difference between a turnaround and a Burnaround. In a turnaround, the company is in dire straits and probably won't survive if drastic and immediate action is not taken. In fact, many don't survive even though drastic and immediate action is taken. In a Burnaround, the company is chugging along with single digit earnings and may or may not show signs of impending distress. Drastic and immediate action is seldom needed. However, a Burnaround can turn into a turnaround unless significant improvement is made. But the great thing about a Burnaround is it has the potential not only to avoid a turnaround,  but to turn lackluster earnings into a double digit powerhouse.

A Burnaround incorporates the urgency of a turnaround. A Burnaround requires detailed attention to the numbers and immediate action if they  aren't going the right way. Burnarounds don't tolerate "the next quarter will be better" mentality. In a Burnaround, you focus on making tomorrow better. Yet on the other hand, Burnarounds don't "slash and burn" as is often the case in a turnaround.