Albert Bandura, in Principles of Behavior Modification, stated: "One of the major obstacles to the development of effective change programs arises from the failure to specify precisely what is to be accomplished. When the aims remain ambiguous, learning experiences are haphazard."
Creating objectives or priorities is hard work if you do it right; you might as well get as much benefit from the process as you can. Create a learning processvia a living-growing set of objectives: your business bible.
Here's a real example. You have determined your number one priority is to create $21M net in cash by October 1. You know some of the obvious categories from which cash can be obtained, but not all of them and not by how much in each. Create hard targets using soft data, a combination of intuition, outside-the-box thinking, judgment, data, opinions and guesses and create an embryonic plan--determining targets such as these:
Working capital $10M
-collection policy 3
-w.i.p. inventory 2.5
-finished good inventory 5
-raw material inventories 5
Capital expenditures reductions $7M
Sale of non critical assets $4M
New expense reductions $3M
Total $29.5
Each month your team meets to go over progress. Some targets will be attainable, some new target opportunities may appear, some will have shortfalls. It's up to you to determine when sufficient creative juices and energies are being applied. At each month you can then amend this plan accordingly. Your knowledge of where the cash is buried is being enhanced, your awareness of the capability of your individual managers is going up, and your cash balances are growing. The key is to set these individual categorical targets, breaking it down to the smallest level of detail measureable, and have your team go at it.
Comments